Insurance Post

East meets west

With an influx of foreign drivers from countries with far lower driving safety standards than the UK and significant claim rises as a result, demand for government action is increasing. Rachel Gordon reports

In November 2006, 25-year-old Sheena Grant was a passenger in a friend's car, her five-year-old daughter, Mia, with her in the back seat. On the approach to a Basingstoke roundabout, they collided with another driver, 32-year-old Polish woman Joanna Filipiak who was on the wrong side of the road.

Ms Grant died later in hospital, Mia survived but had a ruptured spleen. This January, Ms Filipiak was jailed for nine months - and banned from driving for two years. Superintendent Mick Doyle, head of roads policing for Thames Valley Police, said: "There has been a huge influx of lawful migrants but there is no obligation upon them to learn in much the same way as we do, and drive without restriction. The Baltic States have a particularly poor safety record, and other Eastern European countries also have high fatality rates compared to the UK."

Xenophobia is not the issue - there are plenty of bad British drivers. But the figures involving overseas drivers speak for themselves: a 47% rise in five years in the number of foreign drivers involved in accidents on UK roads, according to the Association of British Insurers. Notably, the number of crashes involving Polish drivers has risen tenfold, from 361 in 2001 to 3132 in 2006.

Figures revealed by police to The Sunday Times show a rise of 27% in the arrest rates of Eastern European drivers since 2005, in the 15 police-force areas that provided data. The largest proportion of the increase was down to drink-driving.

Yet, many in the insurance industry are too scared to talk about the challenges presented by an influx of foreign-registered vehicles. LV is one of the few to raise its head above the parapet, producing research that states the impact of drivers from the European Union on UK roads could cost the economy £795m this year.

Meanwhile, the ABI produced a report last November entitled European Drivers, Crossing Borders Safely. The trade body has also made several proposals on how matters could be improved - in particular, it has called on the UK government to do more to establish "an accurate and consistent picture of cross-border driving in the UK, in order to measure the risk that this represents and, therefore, take proportionate action".

That is all well and good, but is it enough? Press coverage has been sporadic and government action limited, with an ABI spokesman admitting the issue remains live but is "not top of the agenda".

There are plenty who think the ABI should be jumping up and down. Ashton West, chief executive of the Motor Insurers' Bureau, is more aware than most of the rising number of claims. As well as its role in compensating victims of uninsured driving, the MIB also acts as the UK's green card bureau, collating numbers of claims involving accidents suffered by UK citizens caused by drivers in foreign-registered vehicles. For example, eight of the 10 new accession states have generated 95% of the 50% increase in such claims since 2001.

Double trouble

And Mr West believes that if you took the uninsured claims the MIB is currently dealing with and added them to those where companies are dealing direct with foreign insurers to try and recoup losses, the ABI's accident figures could double.

His concerns are numerous. First, he says a potentially large number of drivers are turning up in the UK with their vehicles, but then not re-registering them - despite there being a legal requirement for foreign drivers to re-register their vehicles and buy insurance from a UK-authorised insurer after six months or immediately when residency is granted. "They are either renewing insurance in their home country or not buying cover; many will find prices quoted here are way more expensive, perhaps 10 or 20 times as much." He adds that with personal injury payouts being far higher in the UK a multi-million pound claim could potentially render an overseas insurer insolvent.

Also, having toured the accession countries in his capacity as MIB boss, he was alarmed by the cultural driving differences being imported. "No wonder more accidents are happening when it may be seen as OK to go through a red light or not to wear a seat belt. This is not about bashing foreign drivers - there is a human and financial cost and we need solutions."

The MIB is looking to provide an advisory role where possible. "Often, a foreign lorry will be insured in two parts - - the cab and the trailer. Take down the wrong number and a claim will almost certainly be invalid," explains Mr West. "And if it was down to driver error, they may not willingly divulge their cab insurance. We explain this on our website."

Foreign legion

Mike Monaghan, CEO of vehicle repair body MVRA, is also troubled by foreign drivers and the growing evidence that is not being acted on. "I would like to see an organisation properly tasked with identifying the scale of the problem. I believe we should have a driving test for all those planning to use our roads - at least this could be done on a simulator if not practically. We must have more regulatory control. I am certainly not saying all foreign drivers are bad but I have heard of hit and runs, of the police struggling to cope, of drivers unable to understand road signs and of a huge variation in driving standards. Action must be taken."

He adds: "The government will probably say such action would cost too much. But we now have vehicles that are not roadworthy being driven because they haven't been subject to an examination on entering the country. The current spot checks are too little, too late. I would prefer to see drivers fill in forms - as you do when entering the US - giving full details so that we have proper records of who is on the road."

The fact law firms are also seeing more claims in this area should alarm a motor insurance industry that is already struggling to raise premiums to keep pace with the increasing cost of bodily injury. Geoff Owen, consultant for solicitors Greenwoods, comments: "Anecdotally, I know the police in Lincolnshire, for example, are pulling a lot of drivers over who are from Eastern Europe. Their cars are often not well-maintained and driver errors are causing accidents. It is obvious we are going to see more accidents and we need to impose stricter controls."

Claims involving foreign drivers can be extremely problematic - bringing additional potential problems. "I am aware of cases where there has been an injury to an overseas driver and they have said they planned to remain in the UK, even though they were due to return home," says Mr Owen. "This is because UK courts award higher levels of damages."

As well as figures revealing the rise in accidents and claims caused by foreign drivers, they are also at risk of becoming victims of fraud when driving in the UK. Cath Williams, complex technical services manager for Cunningham Lindsey, has seen her workload rise as a result of claims caused by - or involving - foreign drivers. And she explains that UK fraudsters are now targeting this group of drivers. "I'm dealing with a number of cases where fraudsters have seen an overseas vehicle as a prime target. The fraudster will slam on the brakes, often have no lights and a number of passengers in the back of a van to generate a collision The foreign driver will often be less aware of these scams than UK ones."

Cynical criminal gangs

She says fraudsters target commercial vehicles as they are often part of a self-insured fleet, from which they feel a payout will be easier to extract. Beyond this, she says some foreign drivers are themselves fraudsters. "Incomplete or no records can mean it's very hard to track them down; there are language problems and they may well leave the country. Some are also involved in people smuggling, stolen vehicles and arms dealing - this is serious crime."

Meanwhile, lawyer Charlie Jones, Weightmans partner and chair of the motor special interest group at the Forum of Insurance Lawyers, comments: "This is a big area of concern for insurers. There is more fraud and genuine claims are complex. Some overseas drivers are driving without insurance and there are far too many unanswered questions about how we tackle this issue."

Solicitor Rachael Collins of Browne Jacobson explains insurers are having to take advice on a number of claims. "Insurers have to deal with the complex and seemingly impenetrable maze of jurisdiction - the applicable procedural and substantive law that surrounds these cross-border accidents. Longer term, the answer has to be greater harmonisation in terms of vehicle maintenance and driving standards."

Her colleague, Browne Jacobson partner Maurice Nichols, adds: "Insurers need to have experienced lawyers on board. Forum shopping - where the claimant chooses a jurisdiction from a number open to them - is relatively easy and opposing it requires some deft footwork. Not so long ago accidents involving cross-border issues were few and far between, but the latest statistics reveal they will become commonplace and insurers risk haemorrhaging funds."

Knee jerk reactions rarely bring results and Steve Kershaw, managing director of Interiura - which settles claims with overseas insurers - says a sense of perspective should be kept. "We have a network of offices across Europe and, while there are more claims and some problems, I would emphasise that we achieve settlement in 93% of cases without litigation. This is not just a problem for insurers - the government also has a part to play."

He adds pejorative attitudes can exist towards EU insurers, which may be unfair. "There are two major Polish insurers, for example, and in almost all cases we find they handle claims fairly. This is not the case in all countries, but there are EU laws in place and often things are not as scary as some make out. It's now also possible to sue in your home country under the Rome II regulation. Lack of insurance is more of a problem - but this has to be tackled by the authorities."

Andrew Dodd, head of motor for insurer Brit, says this issue must remain high on the agenda. "Insurers are not necessarily capturing information on where drivers are from and often cannot tell where there are increases in claims." But he says he fully understands why the industry does not want to make blanket critical statements. "We know that many Polish drivers, for example, are hard-working and good people. We cannot discriminate, although I imagine overseas drivers would be loaded more as 'new' drivers. There are going to be problems if, say, UK-specific tests are set - the EU is about treating states equally."

John O'Roarke, managing director of LV, concludes: "It is not for us as insurers to solve this problem, but we can raise awareness. We should not be hiding behind the argument that it is a sensitive issue. It could be that UK premiums will rise as a result of more claims - and no one wants that. The EU is quick to tell us what shape bananas should be - let's urge them to raise standards in driving and other areas of road safety. That would be far more beneficial."

Pole position on the buses

Bus company Arriva has been hit by a shortage of drivers and, in 2005, began recruiting in Poland. Spokesman Francis King says bringing experienced drivers in from other countries can increase the flexibility to meet local, short-term skills shortages safely - avoiding some of the early life incidents sometimes seen with newly qualified drivers.

Standards of bus driver training tend to be high, he says, and the UK Driving Standards Agency has agreed that a Polish driver with relevant qualifications can start work in the UK as soon as they arrive. But Arriva also provides an extra 20 hours practical training in road safety, as well as more than 100 hours of English tuition. Successful applicants must hold a PCV licence and have a DVLA medical before being accepted.

"While insurance premiums do not increase where overseas drivers are employed, the company believes experienced drivers, given the right induction and support, can help keep the numbers and costs of claims down."

Allan Briscoe, motor consultant with Aon, explains cross-border driving and insurance issues are increasingly on the agenda. "There is an acute shortage of commercial drivers in the UK and so companies are looking to the EU. We work with a number of driver training companies and they have seized opportunities, producing course material and handbooks, for example, in Polish."

Philip Tracey, partner a law firm Beachcroft, adds: "Let's not forget the positive aspects. There are plenty of examples of best practice whether in terms of driver training or health and safety on building sites. This should be increased yet further as a result of corporate manslaughter legislation. Anything linked to immigration can be a hot potato but we're also benefiting from some skilled people who are making a positive contribution to this country."


We're not ignoring the problem - DVLA

In 2006, the DVLA announced it was clamping down on foreign registered vehicles that flouted the UK registration and licensing laws, with enforcement measures, including wheel clamping and impoundment.

Karen Joseph, a spokeswoman for the DVLA, says the enforcement scheme introduced by DVLA to tackle drivers of foreign registered vehicles not complying with UK registration and licensing rules was introduced on a limited basis involving Lithuania, Poland, the Republic of Ireland and Sweden.

"This is now in the process of being expanded to include other EU countries. The scheme is made up of three parts - education, followed by warning and finally enforcement."

She admits identifying and contacting the keeper of a foreign registered vehicle can be difficult. So, unlicensed foreign vehicles have warning stickers placed on them to allow sufficient time for their keepers to make the vehicle compliant before it is wheel-clamped or impounded.

"It is the intention to inform foreign registered vehicle keepers of the rules so they become compliant out of knowledge and choice rather than having the agency target the vehicles by taking direct enforcement action."

DVLA is unable to provide an estimate on the number of overseas registered vehicles currently in circulation in the UK as EU member states are not allowed to operate any form of border control for persons who are EU citizens.

She adds: "No member state is able to make automatic checks on the motor insurance status of every vehicle entering its territory from another member state. The same applies to checks of their details. Such checks would in any event potentially lead to very long delays at all ports."

Similar rules exist in relation to MOT requirements. An MOT is only required when the vehicle has been in the country for more than six months in any 12.

Currently prosecution of offenders driving foreign registered vehicles relies on them being stopped and summoned to appear in court.

But, under the new provisions in the Road Safety Act 2006 the Vehicle and Operator Services Agency will be able to issue fixed penalties to offenders as well as prohibiting vehicles and drivers for various offences.

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