1.What impact will this Act have on road traffic accidents claims?
The Act is a very short one, just two sections. Section 1 sets out what it is intended to do; within Great Britain:
(1) To the extent that Article 3 of the 2009 Motor Insurance Directive (as it had effect at any time) is relevant to any question as to the interpretation or effect of any provision of this Part, references in that Article to liability in respect of the use of vehicles are to be read as not including liability in respect of the use in Great Britain of vehicles—
(a) other than motor vehicles, or
(b) otherwise than on a road or other public place…
(3) Relevant section 4 rights cease to be recognised and available so far as they relate to compensation in connection with the use in Great Britain of vehicles—
(a) other than motor vehicles, or
(b) otherwise than on a road or other public place.
Essentially, then, it is no longer compulsory for motor insurance to cover vehicles other than motor vehicles or vehicles being used on private land, and the body of caselaw which followed the decision of the Court of Justice of the European Union in Vnuk v Zavarovalnica Triglav (Case C-162/13) will not be followed in respect of accidents occurring after the Act comes into force.
2.What impact will this Act have on insurers?
The Act has no direct effect on individual insurers at all, in the sense that the decision in Vnuk only ever had the effect of rendering the Motor Insurers’ Bureau, as an emanation of the state, liable for uninsured losses arising out of accidents involving vehicles such as those referred to in the Act; mobility scooters, go-karts, farm machinery and the like, and accidents occurring on private land. However, following the decision of the CJEU the government commissioned a report on the likely cost to insurers of imposing compulsory insurance for these categories of accident, and this report concluded (with some very significant caveats) that the cost might be almost £2 billion a year, which would of course be passed on to motorists in the form of increased premiums (hence the headlines stating that the Act will save every motorist an additional £50 per year in premiums). However, the authors of the report pointed out that their figures were subject to ‘a high level of uncertainty’ and that ‘alternative reasonable assumptions could produce very different results’. The resulting figure of £2 billion should therefore be treated with a degree of caution. Perhaps the most that can be said is that the Act will undoubtedly save insurers money in that they will no longer have to contribute to the MIB’s coverage of claims of this nature, but that it is very difficult to evaluate the extent of this saving with any degree of certainty.
3. How does this development fit in with the wider impact of Brexit on PI claims?
As with so much about Brexit, notwithstanding the time that has elapsed since Exit Day on 31st December 2020 it is too early to say what the impact on PI claims has been or is likely to be. There can be no doubt that a number of claims which could have been brought within the courts of England and Wales under the pre-Brexit jurisdictional rules must now be brought in foreign jurisdictions, with all the service and other difficulties that entails; on the other hand, some other claims can now be brought within this jurisdiction which formerly could not have been heard by the English and Welsh courts. There can be no doubt that the Act will prevent some injured Claimants from recovering damages adequate to compensate them for their injuries; Claimants injured in these types of claims may not, now, seek damages from the MIB and will, instead, have to consider whether it is economical to pursue a claim against the tortfeasor directly. On the other hand, the Act was foreshadowed (at least to some extent) by amendments to the underlying EC Motor Directive (Directive (EC) 103/2009), which come into force next year, and which exclude mobility scooters and motor sports from the post-Vnuk regime (although compulsory insurance will be required in member states for accidents occurring on private land, where the vehicle was being used as a means of transport). Essentially, then, people injured as a result of accidents occurring on private land and involving motor vehicles such as cars will now be better off under the European regime than under that of the UK, because the former provides for compulsory insurance, whereas the latter has the effect that any claim must be brought against an individual tortfeasor, who may be impecunious.
4. What are your predictions for future developments?
The repercussions of the decision in Vnuk were a matter of significant concern to insurers, both in their capacity as underwriters of the MIB but also because they feared that the government would be forced to legislate for compulsory insurance in these cases, causing them to increase premiums by as much as £50. Now that the UK has diverged from the EU in this area, albeit by way of a Private Member’s Bill, it is to be anticipated that further divergences will slowly emerge as insurers and others lobby for further divergence. Early indications are that the present government is sympathetic to some at least of this lobbying; there is a desire to streamline the system by which injured litigants are compensated and to reduce the costs associated with such claims. It seems at present that some future claimants are likely to go un- or undercompensated as a result, but that public opinion is content with this in view of the resulting savings on premiums and (in the case of claims against the NHS) in taxes. To that extent, the future may yet hold a significant retrenchment from the principle of full compensation on which the law of England and Wales has historically been founded in this area.
This article was first published by Lexis Nexis, 23 May 2022