The UK insurance sector has criticised proposed changes to the Motor Insurance Directive, following the Vnuk ruling as being “unworkable and unfair”.
The news follows plans by the European Commission to strengthen rules on motor insurance, which it says will better protect victims of motor vehicle accidents and improve the rights of insurance policyholders.
Proposed changes to the current EU motor insurance rules cover areas of insurer insolvency, claims history, uninsured driving, minimum cover, and scope.
Where the scope of the directive is concerned, the proposal incorporates recent case-law of the Court of Justice of the European Union into the directive following the European case of Vnuk, which saw a Slovenian farmworker successfully claim damages for being knocked off a ladder by a tractor.
The rules now clarify that accidents caused during the normal use of a vehicle for the purpose of transportation, including its use on private properties, are covered.
By limiting cover to vehicles being used for transportation and extending the scope of the directive to include vehicle use on private properties, the Association of British Insurers said this would could bring unregistered off-road vehicles into the scope of the directive and would also mean that motorsport could be unintentionally brought into the line of fire.
As such, the trade body said the Commission had failed to produce a lasting solution, and as such the current proposal was unworkable, difficult to enforce, and left personal injury claims open to unruly claimant lawyers.
James Dalton, director of general insurance policy, ABI, said: “The European Commission has let the answer to this issue slip through its fingers, by ignoring its previous workable solution. The current proposal is unworkable and unfair.
“It would be very difficult to enforce, and because insurers would have no reliable data to assess the risk, the market for cover could be very limited.”
Dalton added: “It could prove to be the next hunting ground for those claimant lawyers that encourage frivolous and exaggerated personal injury claims that end up being paid for by all motorists through higher premiums.”
Under the new proposals, if the insurer of the vehicle responsible for an accident is insolvent, victims will be rapidly and fully compensated in their Member State of residence.
Insurers will have to treat claims history statements issued by an insurer in a different Member State equally to those issued domestically. Member States’ will also be given powers to combat uninsured driving, which the Commission said should help to tackle increasing premiums for honest drivers.
Valdis Dombrovskis, vice-president responsible for financial stability, financial services and capital markets union said: “we are ensuring that victims of motor vehicle accidents will be better protected in future.
“In addition, when people move across borders and purchase a motor insurance policy in another EU Member State, their claims history will be treated in the same way as those of domestic consumers. This is good news for those who move across the EU and for all of us as EU citizens.”
The proposals will see all EU citizens benefit from the same level of minimum protection when travelling in the EU and sets out harmonised minimum protection levels for personal injury and material damage across the EU.
In order to enhance legal certainty, the proposal will use recent case-law of the Court of Justice of the European Union into the Directive.
The amendments follow work to evaluate the Motor Insurance Directive, launched by the Commission In June 2016, and a public consultation between July and October 2017.
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