New proposals will give policyholders more rights and ensure they receive full compensation, but the ABI and Biba express concerns over its VNUK proposal

The European Commission (EC) has laid out proposals to strengthen the EU rules on motor insurance, but the ABI and Biba are worried.  

The EC says the proposals will better protect victims of motor vehicle accidents and improve the rights of insurance policyholders.

It says in a press statement that the proposals will ensure that victims of motor vehicle accidents receive the full compensation they are due, even when the insurer is insolvent.

Valdis Dombrovskis, vice-president responsible for financial stability, financial services and capital markets union said the proposals will ensure “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.”

The Commission proposes the following changes:

  • Insolvency of an insurer: 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.
  • Claims history statements: Insurers will have to treat claims history statements issued by an insurer in a different Member State equally to those issued domestically.
  • Uninsured driving: Member States’ powers to combat uninsured driving will be reinforced. This should help to tackle uninsured driving which increases premiums for honest motorists.
  • Minimum amounts of cover: EU citizens will benefit from the same level of minimum protection when travelling in the EU. The proposal sets out harmonised minimum protection levels for personal injury and material damage across the EU, as current minimum levels differ slightly between Member States.
  • Scope (VNUK): To enhance legal certainty, the proposal incorporates recent case-law of the Court of Justice of the European Union into the Directive. 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.

‘Unworkable and unfair’

The ABI has slammed the proposals relating to VNUK, labelling them “unworkable and unfair.” It also warns that these proposals could lead to the next hunting ground for claimant lawyers.

James Dalton, director of general insurance policy for the 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.

“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.”


Biba says it is overall quite happy and supportive of the new proposals, except for the point about ‘scope’.

Martin Bridges, technical services manager at Biba said: “Relating the need for compulsory motor insurance to rely on operating in respect of any ‘use, intended normally as a means of transport, consistent with the normal function of the vehicle…. irrespective of the terrain…’ will potentially still bring many more vehicles into scope from mobility scooters to motorsports because of them because of the possible legal interpretation of the definition of ‘transport’.

“This leaves considerable uncertainty for potentially vulnerable customers wondering if they now need to buy insurance for a disability vehicle.”

Graeme Trudgill, Biba executive director said: “Following the original Vnuk ruling BIBA, the UK Government, a number of other EU states and insurance bodies put forward a solution that would have brought considerably more clarity to this situation and prevented these potential unintended consequences.

“In the commission’s roadmap document one of the key suggestions was to consider changing the definition of a vehicle to ‘one used in traffic’. This would have resolved many of the issues, however, the EC has moved towards motor insurance being the compulsory solution for liability wherever a vehicle is used - effectively including on private land. This goes beyond current UK legislation.”

“Currently users of a vehicle such as a tractor or fork-lift truck being used on private land would simply purchase public and employer’s liability insurance to fund any liability for compensation. It is unhelpful that customers will now potentially have to buy wider cover for many more vehicles types being used in more places.

“We intend to express our concerns that these proposals may increase bureaucracy, cost and uncertainty for personal and commercial policyholders, resulting in potentially significant unintended consequences in areas such as motorsports and for vehicles not previously requiring motor insurance.”