LMA urges UK government rethink of compulsory motor insurance scope
The Lloyd’s Market Association (LMA) has urged the UK government to rethink the consequences of the ‘Vnuk’ judgement, a European Court of Justice decision that broadened the scope of compulsory motor insurance.
As a consequence of the judgement, various vehicles currently not covered by the UK’s Road Traffic Act could be brought into scope and use of vehicles on private property may also require insurance in the future, according to the LMA.
The UK Government had requested input from those involved within the motor insurance industry following the 2014 ‘Vnuk judgement’.
The Department for Transport (DfT) is considering two options; a ‘comprehensive option’, which will require UK insurers to comply with the European law as laid out by the ‘Vnuk judgement’, and an ‘amended directive option’. This second option would broaden the definition of a motor vehicle, but crucially, only require drivers to hold third party insurance on land the public has access to, and not private land.
In its response to the Government’s consultation the LMA has challenged the DfT’s ‘comprehensive option’ as unworkable, and has also raised concerns about the ‘amended directive option’. The LMA is concerned that the ‘amended directive option’ will be difficult to enforce and could lead to increased fraud, resulting in higher costs for insurers and ultimately consumers.
The LMA has recommended the Government delays taking action until further consultation is undertaken to consider how the possible increased cost and risk of fraud are mitigated.
In addition, the LMA has also recommended to the DfT that the existing Road Traffic Act laws should be retained once the UK has left the European Union.
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