Duty bound: the Motor Insurance Bureau and road traffic accidents in the EU

Directive 2009/103/EC codified into a single directive the five previous motor insurance directives and their subsequent amendments, which had sought to give effect to the general principle of freedom of movement and freedom to provide services in this area.

Some practitioners will be aware of the scope under the directives – and particularly following the European Court of Justice decision in case C-463/06 FBTO Schadeverzekeringen NV v Jack Odenbreit – to sue a foreign insurer where there has been a road traffic accident directly from the home state of the injured party. But there has been much less take up by claimants of the particular parts of the directive which attempt to fill any gaps of insurance.Each member state is required to take all appropriate steps to ensure that civil liability in respect of using vehicles normally based in its territory is covered by insurance. If there is no insurance for a particular vehicle or if the vehicle is unidentified, there must be a member state body tasked with providing compensation in such situations. The Motor Insurers Bureau (MIB) is the body responsible for compensation for England and Wales.

More important are the duties of the MIB, where it acts as the compensation body tasked with compensating nationals of England and Wales where they have been injured in an accident in an overseas signatory and
one or both of the requirements above have not been
complied with.

While practitioners may be concerned that as a directive there is no direct effect to use against the MIB, in Farrell v Whitty and MIB [2008] IEHC 124, the Irish court did find that the Irish equivalent to the MIB was an emanation of the state. The Motor Insurers Bureau of Ireland (MIBI) was set up using the same rationale as our MIB. In that case, the European Commission had submitted an opinion to the ECJ that the MIBI was indeed an emanation of the state.

The decision in Jacobs v Motor Insurers Bureau [2010] EWCA Civ 1208 meant that the compensation that claimants are entitled to for claims presented to the MIB is actually the same as that which a claimant would be entitled to if they suffered a loss in England or Wales. This rationale was affirmed in Bloy & Ireson v MIB [2013] EWCA Civ 1543.

It puts claimants in a favourable position because if their claim was being presented to a foreign insurer, it is most likely that the level of compensation they may receive would be in line with the country where the accident happened. This is generally lower than compensation under the law of England and Wales.

In terms of time limits, which apply to establish that an insurer is unidentified in the meaning of the directive, and therefore the MIB must step in, it is clearly stated as two months. Presumably, therefore, if a request for information about a foreign insurer is made to the MIB, and remains unanswered for two months, the MIB is
liable for the damages under English law.

The directive clearly lays out the mechanism for recouping the damages paid out by the MIB on behalf of another compensation body, so there should be no burden on UK policy holders if the directive is properly enforced.

Further, even where an insurer has been identified, if they fail to make a reasoned reply to the claimant’s claim within three months, the MIB must step in and deal with the claim.

Finally if no UK representative has been appointed by the foreign insurer, the MIB must deal with the claim. SJ

Johnny Farrell is a solicitor