European Commission proposal to amend the Motor Insurance Directive

The European Commission (EC) announced to prepare a major amendment to the Directive 2009/103/EC relating to insurance against civil liability in respect of the use of motor vehicles, and the enforcement of the obligation to insure against such liability (Motor Insurance Directive, Directive) in 2016. After a public consultation which took place between April 2017 and October 2017 EC has submitted its proposal to amend the Directive on 24th May 2018. The proposal covers five areas:

a) Insolvency: The proposed solution ensures that if the insurer of a vehicle responsible for an accident is insolvent, victims will be rapidly and fully compensated by a compensation body located in their Member State of residence. If the insurer provides cross-border insurance services, the compensation body in the victim's Member State of residence initially pays the claim of the victim. It will then be reimbursed by a compensation body from the insurer's home Member State.

b) Uninsured driving: According to the proposal, Member States are required to take effective action to reduce risks of uninsured driving, such as carrying out roadside checks and imposing effective penalties for owners of uninsured vehicle. The proposal would allow the Member States to apply new, unobtrusive technological developments (such as number plate recognition technology) to verify the insurance obligation in relation with foreign vehicles entering the national territory.

c) Claims history: The proposal harmonises the content and the format of claims history statements across the EU. In addition, when taking into account claims history for the purpose of determining premiums, there should be no discrimination based on nationality or on the basis of the previous Member State of residence of the policyholder. To ensure the enforcement of this obligation, insurers are required to disclose how claims history is taken into account when calculating motor insurance premiums for current and prospective clients.

d) Minimum amounts of cover: The proposal will ensure equal minimum protection across the EU in case of an accident with a motor vehicle. The minimum amounts should be reviewed every five years. However, Member States remain free to set, at national level, higher minimum amounts of cover than those foreseen in the Directive.

e) Scope of the Directive: The proposed amendments add clarifications to the concept of 'use of a vehicle', following the recent rulings of the Court of Justice of the European Union (CJEU) [especially the Vnuk ruling and the Torreiro case, reviewed by us here: [link]]. Rulings of the CJEU made it clear that under the Directive a motor third party liability insurance shall cover all claims filed in connection with the normal use of a vehicle despite of the fact that the vehicle was used on a private property or on public roads.

Therefore, according to the proposal, the 'use of a vehicle' means any use of the vehicle, intended normally to serve as a means of transport, that is consistent with the normal function of that vehicle, irrespective of the vehicle's characteristics and irrespective of the terrain on which the motor vehicle is used and of whether it is stationary or in motion.

The proposal does not bring any changes in respect of driverless cars, also known as 'autonomous vehicles', since the existing requirement for mandatory motor third-party liability insurance also applies to autonomous or semi-autonomous vehicles (i.e. any motor vehicle must have motor third party liability insurance irrespective who is the driver).

According to EC’s point of view, new types of motor vehicles, such as electric bikes (e-bikes), Segways, electric scooters already fall within the scope of the Directive as interpreted by the CJEU. Furthermore, in accordance with the principle of subsidiarity, Member States have the power to exempt new types of electric motor vehicles from compulsory third party motor insurance on the condition that a national compensation fund will ensure compensation of victims in case of an accident.

We will keep you informed of the latest developments in the amendment of the Directive.

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