The Financial Services Authority (FSA) has published a consultation paper setting out how the European Union Fourth Motor Insurance Directive will be implemented in the UK.
The directive is intended to assist claims in cases where an EU resident suffers loss or injury in a motor accident in another EU state.
And the vehicle of the driver responsible for the accident is insured and normally based in an EU state. The FSA said in a statement: "It can be difficult for such a person to pursue a claim when they have to deal with an unfamiliar legal system in a foreign language, and many claimants abandon their claims."
Implementing the directive in the UK will provide protection for people from other EU states who suffer loss or injury because of an accident here.
UK residents will also benefit from implementation of the directive in other EU states, which will require insurers based in Europe to have a claims representative in the UK.
The main impact of the changes will be on motor vehicle liability insurers.
There are around 350 insurance companies and various syndicates at Lloyd's in this category.
The main elements of implementation are:
Where action is taken through a court, injured parties will have the right to take action directly against the insurer of the driver or vehicle at fault in the accident.
The Lord Chancellor's Department will introduce
the necessary legislation to give residents of other EEA states a right of direct action against UK insurers.
Every insurer carrying on motor vehicle liability business other than carrier's liability (motor vehicle liability business) will be required to appoint a claims representative in each EU state other than the state in
which the insurer received its authorisation.
The Treasury is implementing this in the UK by adding a new threshold condition to the conditions for authorisation laid down in the Financial Services and Markets Act 2000.
The directive lays down the responsibilities of claims
representatives and the powers that insurers must give them.
In particular, the powers must include authority to handle and settle relevant claims.
In certain circumstances, where time limits are not met, insurers will be required to pay interest on compensation.
Also EU states must set up an information centre and a compensation body, and define the responsibilities of each.
