VIEW: On seizing opportunity in Brexit

Although the coronavirus pandemic is still very much at the top of the agenda, thoughts are beginning to turn back to issues that were set in train before lockdown, and not least the UK’s departure from the European Union at the end of the year.

Insurers tend to approach things with a can-do attitude, and they continue to look for opportunities to use the UK’s departure from the EU as a means to make things better. One such example is in the motor insurance market. In 2014 the European Court of Justice created a difficult situation for the UK with the Vnuk judgement, which ruled that all motor vehicles, from lawnmowers to Formula One cars, should be covered by compulsory motor insurance for liabilities incurred while using them, even if they are never driven on public roads.

The EU is currently debating an update to the European Motor Directive that will, it is hoped, create a more coherent approach to the problem. However, the UK itself needs to consider what it wants going forward, and how it will coordinate its laws with whatever is agreed in the EU.

It is not just a case of taking things back to how they were before the European Court of Justice made its ruling in 2014. Since then, the risk landscape has changed, with the line between toys and vehicles becoming blurred as electric bikes and scooters become more powerful. Just as we have seen with the increasing use of drones, technology has created new challenges around the liabilities that can be caused by new kinds of property, and raised questions around what kind of insurance should exist for victims of accidents.

It is not just a question of what kind of compulsory insurance should exist, but also the kind of registration process that should support any system of insurance. Clearly, a licencing system to determine ownership and responsibility that exists for motor vehicles would be a huge sledgehammer to crack a relatively small, risk management nut. Nevertheless, a light-touch system of insurance, based on sound risk management principles, could be one of the good things to come out of 2020 – and goodness knows, we need some of those.

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