The 4th EU Motor Insurance directive was issued on the 20th May 2001 and, like all such EU directives, needs to be incorporated in to law by each of the EU member states within a certain period of time.
For the UK, this means that the Directive becomes law on the 20th January 2003.
The Directive has been enacted by the EU Parliament as one of a series of such directives which seek to harmonise the law governing Motor Insurance across the EU member states. You may recently have heard of the plan to allow Cyclists to automatically be able to claim against a motorist in the event of an accident, irrespective of fault or blame – that is law in most of the EU, and will be brought to the UK by the 5th Directive.
The 4th Directive is intended to establish a level playing field for claims by citizens of one EU state against another, usually as a result of a motor accident.
The Commission estimates that approximately 500,000 accidents a year occur between citizens of different member states, and a substantial number of these end up not being satisfactorily resolved, either because language and other factors make tracing the 3rd party difficult, or because different customs and procedures prevent the claim being pursued properly.
To protect EU citizens, the 4th Directive requires each member state to set up an “information centre” which will ensure that inter-state claims are correctly handled. In addition, each Insurer in each member state will have to set up arrangements with “correspondent representatives” in each other state, so that (for example) if a UK citizen has an accident with a French driver, he or she can return to the UK and claim against the French driver’s insurer via an agency based in the UK, dealing with the claim as if it were between two UK drivers.
One of the functions of the Information Centre in each country will be to provide a mechanism which allows the aggrieved 3rd party to identify, based solely on the vehicle registration plate, who insures the vehicle. So, for example, an accident in Spain between a UK citizen and a Spanish driver which results, through language difficulties, in the UK citizen only being able to note down the registration number of the 3rd party, can be resolved by the UK driver on their return to the UK, simply by providing their Insurance company with the Spanish number plate. The UK insurer will then either be able to contact the Spanish Information Centre directly or, via the UK Information Centre in Milton Keynes, and will be able to identify the Insurer in question.
Furthermore, if the Spanish driver in question happened to be uninsured, the Spanish Information Centre would then be responsible for meeting the Insurance claim – and all the communications would be undertaken in English.
A final benefit to all this is that claims will also be able to be made even if the victim of the accident is a non-motorist (such as a pedestrian, or a cyclist).
The Information Centre in the UK is called the Motor Insurers’ Information Centre (MIIC) and is based in Milton Keynes, in Buckinghamshire. The MIIC is part of the Motor Insurers’ Bureau (MIB) established by statute in 1948 to be the insurer of last resort for the victims of uninsured drivers. For the last available full year, the MIB paid out over Ł300 million to people who have been involved in traffic accidents with people who can either not be traced or who were not insured.
To explain why the MIIC is involved in the 4th Directive, we need to explain its role in tackling uninsured driving:
Independently of the 4th Directive, the Motor Insurance Industry had already decided to act to limit the spiralling costs of uninsured driving. The MIB, together with the ABI and other bodies, decided in 1999 to allow the Police access to the insurance data held by each insurer so that they could check, at the roadside, whether a car and its driver were appropriately insured. The effect of this, it was hoped, would be to allow the Police to detect the crime of uninsured driving more effectively (there are already over 250,000 prosecutions annually for uninsured driving) and thus reduce the incidence of it.
As uninsured driving is most often associated with private motorists, the MIB decided to ask all private motor insurers to supply a copy of their insurance data from their computer systems to a central database, the Motor Insurance Database (MID). This was to become a central index of all private motor insurance, which could be quickly checked by the Police using the vehicle registration number. The MID was built in 2000 / 2001 and started being used by the Police in September 2001. To date, the Police have made over 12 million enquiries and have found that they are starting to make an impact.
Unfortunately, the Police often find that they stop a vehicle which doesn’t appear on the database in the belief that it is uninsured, only to find that it is fleet vehicle, and insured under a blanket certificate. So, for them to more accurately identify who is and is not insured, the database needs to be completed with all the fleet vehicle details as well.
So, by happy coincidence, the MIIC’s database of insurance is also exactly what is needed by the Government to meet its obligations under the 4th Directive. It was therefore natural for the DTLR to appoint the MIIC as the collector of information, using the Motor Insurance Database (MID) as the central register.
However, there is a down side too. In many EU countries, Insurance is issued to the vehicle rather than the policyholder; this makes it relatively straightforward for most EU member states to set up their information centre. Since the Vehicle Registration is the only piece of information required, a simple check around the motor insurers in each country will rapidly identify the vehicle.
By contrast, in the UK (and in the Republic of Ireland) insurance is issued to the policyholder (either a person or a corporate entity). For private vehicles, this distinction is generally of little consequence – vehicles are identified separately on the insurance policy, as are drivers, and this information can be sent by the insurance company to the Information Centre quite easily.
For Fleets (i.e. collections of motor vehicles insured under a single policy) the cover is often blanket and does not specify the particular vehicle registrations. This means that an enquiry from the Information Centre will not find the vehicle located on the policy of any particular Insurer. This was not a problem for Uninsured drivers, since (by definition!) a blanket policy covers Fleet drivers. For the 4th EU directive, it is an issue, and the extension of the Motor Insurance Database to cover Fleets is a major task.
Of course, this could still be resolved by using something like the Swansea (DVLA) system, except that for many fleets, the name of the policyholder is nothing like the name of the registered owner or keeper.
This means that, for the 4th Directive to work, the details of which vehicles are insured on which fleet need to be provided to the Information Centre. In the UK, the Department of Transport have decided to enact legislation that makes it the duty of the policyholder, not the Insurer, to send details of which vehicles are insured under which policy to the Information Centre.
Well, at the moment (September 2002) it doesn’t actually say anything, as the legislation has yet to be published. A consultation period has concluded, with submissions from many Insurance Industry bodies, and the Government is duty bound to take the responses in to account. However, we expect the law to say that: (a) Insurers need to tell the Information Centre which policyholders they insure and (b) these Policyholders need to tell the Information Centre which vehicles they own and drive on the policy.
It is also expected that the law will require this information to be submitted to the Information Centre in a timely fashion (for example, within a fortnight) and that failure to comply will be a criminal offence, probably punishable initially with some form of fine, perhaps escalating to individual criminal prosecution in the event of total non-compliance.
We also expect the law to make it optional for you to send your vehicle information either directly to the Information Centre or to your Insurer (for whom we work and who use our website), for us to forward on to the Information Centre.
As Motor Insurers are licensed by the Department of Trade and Industry, and belong to the Motor Insurers’ Bureau (and thus are bound by their membership rules) it has been decided that all Insurers will have to support their policyholders in supplying the vehicle data to the Information Centre.
We at Motor Data Solutions (MDS) are specialist suppliers of systems which load data to the MID. We have been commissioned by your Insurer to provide an Internet web site which will allow you, as the policyholder, to send your vehicle information to us, and for us to then send that on to the MID. This is provided free of charge to you, although you may have to make some investment in your own systems and processes if you wish to avoid manual re-keying of data or you wish to link your own Fleet Management Systems directly to us.
If you do not have Internet access we can arrange for you to send your data to us directly, where our operators will be able to enter the data on your behalf during a phone call or from a fax. Naturally, this means that we will have to have staff standing by to receive your calls, and we will therefore be obliged to charge you a small fee to accept your data.
All insurers will be amending their policies to make it a condition of insuring with them that you send the information in a timely manner to us, either electronically or manually. While, generally, insurers will not impose any sanctions on you if you do not, the MIIC and authorities will have access to reports showing what information is supplied and when, and will be able to bear down on policyholders who are not complying with the legislation.
More details of how you can supply your vehicle data to us, and any charges involved, are given below, in the section entitled Practicalities.
Your broker may or may not be able to help you with this situation; in law, the obligation is clearly on the policyholder, so if you do involve the broker, or some other agent, you should ensure that they are contractually committed to supplying the data on your behalf.
Many brokers already undertake a similar scheme on behalf of their policyholders, in which they send to your insurer the details, on a quarterly or half-yearly basis, of the vehicles on a policy. Except for the largest fleets, brokers customarily only list the vehicles out for insurers to review when renewals are being invited.
Sadly, much of this information is only ever retained in paper based format, or at best in word processed documents or in spreadsheets, and is not updated as regularly as the 4th Directive requires (i.e. every week). In common with most Insurers, it has not previously been a requirement for your Insurer’s policy management systems to be capable of holding the individual vehicle details, which is why we they had to involve MDS.
If you wish to involve your broker, you should first check with them that they are prepared to offer this service and to supply us with the information we require. We suggest that, if you wish to go down this route, you ask your broker to contact us directly, on 08707 515 959, or via email on enquiries@motordatasolutions.co.uk.