Motor insurance: Analysis of the UK Government decision to diverge from Vnuk
Assurance et réassurance
The Motor Vehicles (Compulsory Insurance) Act has now passed, representing a significant divergence between UK and EU compulsory motor insurance legislation.
In 2017, the High Court held in RoadPeace v Secretary of State for Transport and MIB  EWHC 2725 (Admin) that various provisions of UK law governing compulsory motor insurance contravened EU law. This followed the European Court of Justice's (ECJ) interpretation of the Motor Insurance Directive (MID) in the 2014 decision in Vnuk v Zavarovalnica Trigalev (C-162/13).
The Vnuk decision pushed third party liability coverage provided by compulsory motor insurance into new realms, specifically that accidents on private land should be covered by policies. However, the Road Traffic Act (RTA) only compels policies issued in the UK to cover liabilities “caused by, or arising out of, the use of a vehicle on a road or other public place”.
With the RTA no longer compliant with the MID, the RTA required amendment. In the absence of such an amendment, claimants injured by motor vehicles on private land were left without recourse to compensation as compelled by the MID. Claimants were therefore entitled to pursue direct claims against the UK Government (for failure to implement) and, per Lewis v Tindale  EWCA Civ 909¸ against the MIB (as an emanation of the State).
No steps were taken to amend the Road Traffic Act to rectify this issue in the intervening period. In March 2021, the Government confirmed that the UK would no longer follow the decision in Vnuk, after undertaking impact analysis of the proposed cost of implementation. However, despite this analysis, it required the introduction of a Private Members’ Bill, advanced by Peter Bone MP, to bring about this change.
With cross-party support, the Motor Vehicles (Compulsory Insurance) Bill received Royal Assent on 28 April 2022, and the new Motor Vehicles (Compulsory Insurance) Act will take effect two months thereafter.
Effect of the Act
The Act itself does not alter the current drafting of the Road Traffic Act, reiterating that Section 145 of the RTA deals with liability in respect of death/injury or property damage where “caused by, or arising out of, the use of a vehicle on a road or other public place”.
However, the Act inserts Section 156A confirming that any retained EU case law, such as Vnuk, will cease to have effect in the UK.
There will therefore no longer be a requirement for motor insurers to insure against liability for accidents taking place off-road unless it is appropriate to the particular risk or policy being addressed.
This will generate a significant divergence in the regulatory positions of the UK and the EU in relation to the issue of compulsory motor insurance.
European Union position
Whilst the passage of the Act represents a move away from regulatory alignment with the EU, the bodies of the European Union have themselves addressed reform to the MID to codify Vnuk and subsequent decisions.
The most recent update confirmed the European Parliament and Council of the European Union have adopted changes to the Motor Insurance Directive.
Amendments to Article 1 provide updated definitions of ‘vehicle’ and ‘use of a vehicle’, to reflect Vnuk and subsequent decisions. The amendments make clear that 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.
There is a carve-out for motorsport within the amendments requiring separate insurance guaranteeing coverage for third parties such as spectators and other bystanders in Member States. In addition, despite initial suggestions to the contrary, the EU bodies agreed that compulsory motor insurance would not be required for “wheelchair vehicles exclusively intended for use by persons with physical disabilities.”
Member State compliance with the changes set out in Article 1 is expected by June 2023, with other necessary measures, such as changes to the minimum amounts of compulsory coverage to apply per injured person, to be taken by December 2023.