Motor Insurance Following A No-Deal Brexit

Changes to motor insurance in the event of a no-deal Brexit will mean UK citizens will no longer be able to pursue claims in the UK following an accident in an EEA country, resulting in more UK nationals making claims in foreign jurisdictions.

The Motor Vehicles (Compulsory Insurance) (Amendment etc) (EU Exit) Regulations 2019 (the Regulation) rectifies deficiencies in the compulsory motor insurance framework that will arise following the UK's departure from the EU in the event of a no-deal Brexit.

It principally removes the requirements for the Motor Insurers' Bureau ('MIB') to act as a Compensation Body for UK residents injured in road traffic accidents in the European Economic Area ('EEA'), and to reimburse its foreign counterparts in respect of EU27 visitors in the UK who have been compensated by their 'home' Compensation Body following the UK's departure from the EU.

Compensation Bodies and accidents abroad

The role of a Compensation Body is to assist victims of road traffic accidents ('RTAs') abroad if the foreign insurer has failed to appoint a claims representative in the Member State where the accident occurred, or if the foreign insurer or its claims representative has not provided a reasoned response to a claim within three months. The Compensation Body will also act when either the insurance policy for the other vehicle involved, or the vehicle itself, cannot be identified.

Directive 2009/103/EC gives EU citizens injured in an RTA within a foreign Member State the right to bring proceedings in their home country and language, rather than the jurisdiction where the accident occurred. The Regulation will remove this right in the UK from Exit Day.

Following Brexit, if a UK resident has an accident in a Member State and wishes to pursue a claim, this will have to be brought in the State where the accident occurred, against the Member State's MIB equivalent (if the other driver is uninsured or unidentified), the relevant insurer in the Member State or the driver directly.

In the event of a no-deal, if a UK resident is involved in an accident in an EEA country caused by an uninsured or an untraced driver they may not receive compensation. This is because not all EEA countries have an MIB equivalent that pays compensation to non-residents. If a Member State has no MIB equivalent there is the possibility for the UK driver to pursue the uninsured driver directly. However, given the relatively limited prospects of recovery and added...