Some thoughts on the proposed EU Motor Insurance Directive (2021?)



Historical inheritance & key themes

European Union legislation in this area has been the product of a (very) slow process of evolution. The green card system (1949) pre-dates the First Motor Insurance Directive (72/166/EEC) by a couple of decades. It came into being after the Economic Commission for Europe of the United Nations asked European Governments whether, “… the legislation of your countries [could] contemplate an agreement by which insurers or a Bureau of insurers … undertake to reimburse an insurance company or Bureau of insurers in another country, amounts paid by the latter to victims of road accidents?” This question and the scheme that it anticipates – in which the Bureaux “underwrite” certain rights of the road traffic accident victim across the EU – continue to lie at the heart of recent reform proposals. The positive response to the Economic Commission’s question resulted in a system for an International Certificate of Motor Insurance: the Green card. The Green Card scheme was followed in the early 1970s by the First Motor Insurance Directive. There are now 6 Motor Insurance Directives (the last in time a consolidating Directive: 2009/103/EC) and there is – as this paper will discuss – a further iteration in the somewhat clogged legislative pipeline.

Consistent policy objectives – developed over time by the EU and its ancestor institutions through the Directives – can be discerned:

a) That Member States should ensure that civil liability in respect of the use of vehicles is covered by insurance: see, for example, article 3.1 of the First Motor Insurance Directive (72/166/EEC);

b) That information should be provided to the road traffic accident victim promptly (and such information be provided by the national insurers’ bureau or compensation body): see, article 5 of the First Motor Insurance Directive and article 1.4 of the Second Motor Insurance Directive 84/5/EEC);

c) That there should be expedition, rather than delay, in the response to and, if appropriate, settlement of the claim presented by a road traffic accident victim: see, article 4 of the Third Motor Insurance Directive 90/232/EEC, “In the event of a dispute between the body referred to in Article 1(4) of Directive 84/5/EEC and the civil liability insurer as to which must compensate the victim, the Member States shall take the appropriate measures so that one of these parties is designated to be responsible in the first instance for paying compensation to the victim without delay” and recitals (25) and (26) to the Fourth Motor Insurance Directive 2000/26/EC, “(25) It is necessary to make provision for a compensation body to which the injured party may apply where the insurance undertaking has failed to appoint a representative or is manifestly dilatory in settling a claim or where the insurance undertaking cannot be identified to guarantee that the injured party will not remain without the compensation to which he is entitled; the intervention of the compensation body should be limited to rare individual cases where the insurance undertaking has failed to comply with its duties in spite of the dissuasive effect of the potential imposition of penalties. (26) The role played by the compensation body is that of settling the claim in respect of any loss or injury suffered by the injured party only in cases which are capable of objective determination and therefore the compensation body must limit its activity to verifying that an offer of compensation has been made in accordance with the time limits and procedures laid down, without any assessment of the merits”;

d) That there should be availability of redress within the Member State of residence of the road traffic accident victim: see, again recitals (25) and (26) to the Fourth Directive and article 6(1) of the same (again, carried into the 6th, consolidating, Directive 2009/103/EC).


Headline issues

While the policy objectives of the EU institutions (and the drive to harmonise across the EU) have been expressed in ever-tighter regulation, the detail in the resultant legislation has generated an increasing volume of litigation and authoritative case law (not all of it wholly easy to reconcile). In recent years, headline issues have arisen (at European and domestic levels) in the following contexts (among others):

a) The insolvent EU insurer which is unable to provide compensation (see, Csonka v Magyar Allam C-409/11; [2014] 1 CMLR 14 (CJEU)) and/or which, by reason of its insolvency, fails to provide a reasoned answer to the claim within time (see, Wigley-Foster v Wilson & MIB [2016] 1 WLR 4769 (CA)).

The Motor Insurance Directives do not make any or any express provision for cases where the relevant insurance undertaking has been declared insolvent. Historically, the Motor Insurance Directives have not been concerned with the regulation – at a European level – of corporate insolvency. Instead, as pointed out above, the concern has been to establish machinery for the provision of information and settlement of claims by a compensation body located in the country of residence of the RTA victim where – for whatever reason – there is no identifiable insurer or the identified insurer is manifestly dilatory in responding to the claim. Further, and as to the latter instance, the compensation body’s liability to compensate the injured party in those “rare and particular cases” where there has been a failure within time to provide a “reasoned reply” has not been made contingent on the compensation body’s right to reimbursement from the local compensation body (such right to reimbursement in full or in part is a separate matter which is the subject of private agreement between the Bureaux – an agreement which was anticipated, but not mandated, by the Fourth Directive (although see the UK Supreme Court’s consideration of the inter-Bureaux agreement in Moreno v MIB [2016] 1 WLR 3194 (SC)).

b) The requirement of compulsory insurance in the context of what was Article 3.1 of the First Directive (72/166)[1]Each member state shall … take all appropriate measures to ensure that civil liability in respect of the use of vehicles normally based in its territory is covered by insurance. The extent of the liability covered and the terms and conditions of the cover shall be determined on the basis of these measures.” There has been extensive jurisprudence on the meaning of “use of vehicles” in this context (and, in particular, with respect to the use of agricultural vehicles/vehicles on private land/stationary vehicles not formally withdrawn from use): see, Vnuk C-162/13; [2016] RTR 10 (CJEU); Rodrigues de Andrade C-514/16; [2018] 4 WLR 75 (CJEU); Fundo de Garantia Automovel v Juliana C-80/17; [2018] 1 WLR 5798 (CJEU); MIB v Lewis [2019] 1 WLR 6298 (CA).[2]

Vnuk was a Slovenian case in which the Claimant was injured when a trailer attached to a tractor being driven on private (farm) land struck the ladder on which he was standing. The questions referred related to the status of the tractor/trailer (as a “vehicle” subject to the compulsory insurance requirement) and its use at the relevant time. The Court held that the definition of vehicle was not dependent on the use to which it was being put at the material time. The objective of the Directive (and its requirement of compulsory insurance) was to guarantee a right to compensation irrespective of where (in the EU) the accident occurred and did not exclude the use of vehicles on private land. It was sufficient – for compulsory insurance purposes – that the accident be caused by the use of a vehicle if such use was consistent with the normal function of the vehicle.

The CJEU returned to these issues in Rodrigues v Andrade, a Portuguese case, where the Claimant’s spouse was killed while working in a vineyard. At the relevant time a stationary tractor was being used to power a herbicide spray device. The vibration created by the running of the tractor’s engine conspired with other factors to cause a landslip which swept the tractor into collision with the deceased worker. In the context of its consideration of the compulsory insurance mandate, the CJEU held that the “use” of vehicles was not dependent on terrain, but on whether the vehicle was being used (primarily) as a means of transport, rather than as working machinery. It did not necessarily matter – in this context – that the index vehicle was stationary (even with its engine switched off), but it did need to be used primarily as a means of transport at the material time. It was held that the tractor was not being used primarily as a means of transport at the material time: accordingly, Article 3.1 of the First Directive was not engaged on these facts.

The somewhat irregular manner in which EU Member States have implemented (or not) these and other imperatives of the Directives has resulted in actions against EU Member States (for failure to implement) and against local compensation bodies (on the basis that the Directives have direct effect and the local compensation bodies are, for these purposes, emanations of the State):[3] see, in respect of the UK Government and MIB, MIB v Lewis [2019] 1 WLR 6298 (CA) where the English Court of Appeal followed Vnuk in holding that Article 3.1 of the First Directive (Article 3 of the 6th Directive) was engaged when a vehicle was driven on private farmland into collision with the Claimant. It followed that the UK Government had failed properly to implement the Motor Insurance Directive (see, section 145 of the Road Traffic Act 1988)).


Revision & reform?

In common with its evolutionary legislative processes, reform also moves slowly in the European Union. In 2016 a Commission work programme announced a revision of the present, consolidated, Motor Insurance Directive (2009/103/EC) and a formal proposal for revision was tabled by the Commission on 24 May 2018. Thereafter, the EU embarked on the road to trilogue (Commission: Parliament: Council) and a final, agreed draft of the revised legislation. The EU Parliament has described its proposals for revision of the Directive in the following terms:[4]

It clarifies the scope of the directive, drawing on recent Court of Justice of the EU rulings, to ensure uniform interpretation of the obligation for motor third party liability insurance. It harmonises the minimum levels of compulsory cover for personal injury and material damage so as to ensure sufficient level of minimum protection of victims of motor vehicle accidents in the EU Member States, where currently differences exist.”

In this introduction, it is possible to discern the drivers of EU policy in this field (throughout the evolutionary process referred to above): a threshold level of (minimum) protection across the EU, clarification (if not reflection) of CJEU case law on the key concepts found in the Directive and the harmonisation and uniformity required to achieve these goals.

The EU Parliament subsequently picked up the reform baton and adopted a report on 13 February 2019. The Council then published their position on 13 December 2019.[5] As at 20 September 2020 (and to date) trilogue consultation continues.

In the report that it adopted, the EU Parliament identified what it regarded as the key aims/objectives of the revision. First, as to the problem of uninsured vehicles, allowing checks of insurance undertakings in EU Member State A of vehicles registered in Member State B (providing that such checks formed part of a general system of checks, did not discriminate and did not involve stopping the vehicle). Second, as to insolvent insurers, designating an administrative body to provide compensation in the event of insolvency. The EU Council’s position on insolvent insurers is close to that advanced by the Commission and Parliament respectively (it being proposed that the compensation scheme in the EU Member State of residence of the RTA victim should provide compensation in the first instance and this compensation body then to be reimbursed by the compensation scheme in the insolvent insurer’s home EU Member State).

It may, however, be in the Parliament and Council’s respective treatments of “use [of a vehicle]” that most interest lies. As I have indicated, these reform proposals have followed CJEU activity in this field: the expansive approach taken in Vnuk C-162/13 [2016] RTR 10 (CJEU) being contrasted with the rather more restrictive approach evident in Rodrigues de Andrade C-514/16; [2018] 4 WLR 75 (CJEU). The EU Parliament proposed that the compulsory insurance requirement should apply where there was “use of a vehicle in traffic”. In its 2019 proposal the EU Council defined “use” in this context as follows, “… any use of such vehicle as a means of transport, that is, at the time of the accident, 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 Council supplemented this with the following suggested definition of “vehicle”: any motor vehicle propelled exclusively by mechanical power on land (but not running on rails) with a maximum design speed of 25 km/h or more or a maximum net weight of 25 kilogrammes or more (including any trailer used with such vehicle whether coupled or uncoupled). The Council proposal seeks to exclude (from the requirement of compulsory insurance) wheelchairs intended for use by the “physically” disabled (even where such “vehicles” might otherwise fall within the criteria described above). However, the Council sought to exclude motorsports from the compulsory insurance requirement only where, “… the Member State ensures that the organiser of the activity or any other party has an alternative insurance or guarantee policy covering the damage to any third party including spectators and other bystanders and that the organiser has taken such an optional alternative insurance or guarantee policy.” (cf. the EU Parliament reform proposal which had suggested a blanket exclusion for motorsports).



In contrast to the Parliament (which sought a 12 month transposition timetable), the Council proposes that an Amended Directive be transposed/implemented 24 months after entry into force: “This Directive shall enter into force on the twentieth day following that of its publication in the Official Journal of the European Union”.

By such time the UK will have (br)exited the transition/implementation period provided by the withdrawal agreement (on what final terms?). However, the UK Government has already revealed an intention to provide guidance and, indeed, a degree of continuity in this area by filling some of the gaps created by Brexit: see, The Motor Vehicles (Compulsory Insurance) (Amendment etc) (EU Exit) Regulations 2019 (SI 2019/551). Most commentators expect the new Motor Insurance Directive (when in force and implemented) to have continuing relevance for the UK and for there to be a desire for continuing regulatory alignment in the field of road traffic accidents and insurance regardless of the eventual settlement immediately on and after 31 December 2020.


[1] Since threaded through the succeeding Directives: see, Directive 2009/103/EC, Article 3 (and definition of “vehicle” in Article 1.1 of the same, 6th, Directive).

[2] A case in which permission to appeal to the SC has been refused.

[3] See, Farrell v Whitty C-413/15; [2018] QB 1179 (CJEU): a case about the status and obligations of the Irish MIB.

[4] See:

[5] See, 2018/0168 (COD) and COM (2018) 336.

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