The final word on import insurance

[donna miller]

As no doubt, many members will have read the latest thread regarding importing a van from abroad, but more specifically Germany.

 

A question was asked by Mark about obtaining cover, and I gave him what I considered to be helpful advice regarding my experiences and the broker I used, I warned of the inevitable flak that would ensue, and I was not wrong.

 

Several members including one that writes the "Guide to importing" slated my views, others demanded to see written proof that I had obtained cover and generally picked fault with every one of my posts.

 

I was accused of getting irratable when people didn't see things my way, and that I expected people to believe me "because I said so" and that my views were totally without any back up, Indeed, there was a posting yesterday that accused me of taking the attitude of "I'm right, you,re wrong.

 

I would respectfully ask people to read through the thread concerned "insurance on the continent"

 

Anyway, to the matter in hand, The member writing the guide stated that his guide was extensively researched and that he hoped it put an end to the confusion, now not being the type of person to be put down as someone who doesn't know what they are talking about, I decided to investigate for 1 hour, no more no less, and if I found no evidence to back up what I had said, I would post an apology to the people who's strong views and beliefs dispelled my advice in the matter.

 

Within 3 minutes I was on the web pages of the insurance branch of HM treasury department, this is the branch of the government responsible for incorporating the 5th MID into statute in september 2007. I emailed the head of the treasury department, I was informed the person it was addressed to had moved to a different department, but his successor would contact me as soon as possible.

 

I have included the original email from myself, it was sent through company email, so is therefore addressed to my husband and not me.

 

Before you read this, I have no intention to prove right or wrong, I am merely following up my original advice with the proof that some people claim did not exist, and picked fault with everthing I said.

My only hope is that this advice will aid people in their personal import of a motorhome, and that any "guide" being put out by the owners or representatives of MMM is suitably ammended.

I am strong willed and strong natured, when I know what I am talking about I will defend my beliefs,

 

The following, I hope, will end the anguish some people have encountered.

 

 

 

-----Original Message-----

From: mark miller [mailto:markoneplastics@btconnect.com]

Sent: 05 August 2008 08:52

To: Wronka, Richard

Subject: 5th MID

 

Sir,

 

My apologies for this intrusion into your time, however I have an extremely important issue that is in need of urgent clarification.

 

I am in the process of personally importing a motor home from Germany, I have thoroughly researched the issue of comprehensive insurance, including reading the article 4(4)-4a(1) of the 5th MID, which clearly states that my insurance needs can in fact be obtained on a comprehensive ( to include 3rd party cover) from a UK based insurer.

My broker is happy to provide such cover.

 

However, certain members of a forum dedicated to motor home matters have argued that this cover is not available and that my broker cannot offer such cover, they claim that they are in contact with senior insurance experts.

 

They have also informed me that the above legislation has been withdrawn and the information offered on your website is no longer correct. I , however cannot find such information.

 

As I am sure you can appreciate, this has caused problems of huge proportions, and is a great worry to myself. Of course mandatory 3rd party insurance is included in the temporary export plates purchased in Germany for the duration of the journey, it is however the information I am receiving that my UK based "comprehensive" cover is invalid that is causing my concern, a £40000 van being driven on 3rd party only insurance is not an ideal situation to find yourself in, through no fault of your own.

 

If you could clarify the situation regarding the above legislation, I would be extremely grateful, in the event that my cover was not valid, English law does not allow a plea of ignorance, and I am confident a magistrate would not be influenced by the say so of members of a public discussion forum.

 

Yours in anticipation.

 

Mark Miller.

 

 

Mark One Plastics: Recyclers to the Moulding & Packaging Industry.

 

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Mr Miller,

 

Your broker is correct in offering you insurance while you transport your vehicle from Germany to the UK provided it takes no longer than 30 days. Broadly, in circumstances where a vehicle is dispatched from one EEA State to another, Article 4(4)-4a(1) provides for a 30-day derogation from the general rule that motor insurance cover can only be provided by an insurer authorised to write business in the Member State in which the vehicle is registered. You will of course need to register it as a UK vehicle.

 

You can contact the DVLA for advice on importing a vehicle.

 

I hope you find this helpful,

 

Best regards,

Tom

 

> Tom Allebone-Webb

> General Insurance | Financial Stability and Risk | HM Treasury | 1 Horse Guards Rd London SW1A 2HQ | 020 7270 5389

 

 

-----Original Message-----

From:

Sent: 05 August 2008 09:39

To: 'mark miller'

Cc: Allebone-Webb, Tom

Subject: RE: 5th MID

 

 

 

 

 

 

[fred grant]

could be a stampede to germany now my biddies. thanks to the millers.

 

f

[fred grant]

could be a stampede to germany now my biddies. thanks to the millers.

 

f

[eric 83]

the silence is deafening ?

[w1ntersun]

I bet it,s not

 

 

The final word :-D

 

 

 

Richard

[Leicaman]

Mark

 

Many congratulations for all your work and persistence, it will be of great benefit.

 

I am currently experiencing a long drawn-out battle with my UK dealership and the German manufacturer, even now reporting the matter to the Euro Parliament and Financial Services. I am quite tempted to deal direct with Germany, they appear to be more honest and sympathetic. (I hope I am proved correct?)

 

These Forums can really be of benefit, through members standing by their beliefs.

 

Well done!.......

[Mel E]

Well done, Donna, for doing the research and I have no doubt that the information you have been given by the Treasury mandarins is correct as far as they are concerned. I too have been in touch with some of my contacts, so let me try and explain why I still have concerns.

 

If you look back in the Forum Archives, you will see that I and others were well aware of the 5th EU Insurance Directive and the specific sections relating to personal importation, and eagerly monitored its incorporation into UK Law just over a year ago. We all anticipated new freedoms to self-import. Fantastic!

 

Unfortunately the 5th Directive's implementation was somewhat complex as it involved both the Treasury (as it is about insurance) and the Deprtment for Transport (as it is about road vehicles). It is in this latter area that the problems started to manifest themselves, specifically with the Motor Insurance Database.

 

The Motor Insurance Database (MID) was set up as a comprehensive database of all vehicles registered in the UK. One use is to enable police to check whether a vehicle is being driven without insurance. Already incorporated into UK Law was a requirement that all new vehicles have their insurance details entered onto the MID within 7 days of insurance cover being given. Of critical importance here is that the MID has no provision for entries to be solely of the VIN (or chassis) number; the UK registration mark must be entered. This is not a problem of which the Treasury will necessarily be aware, of course.

 

When, a couple of months after the 5th became UK Law, I phoned several insurers to check that they were now able to offer Fully Comp cover (including Third Party) under the provisions of the 5th, I could find none that were. Either they themselves had decided that they didn't know how to work it or their underwriters had told them to hold off. A couple of the principals/managers said they could not see how they could meet their legal obligation to put the insurance cover and registration number on the MID within 7 days on a vehicle that very well might not be registered in the UK within that time (OK, it might and Donna's was very quick, but no insurer I spoke to was willing to take the risk).

 

As I write, of the 12 brokers who advertise regularly in MMM, only one is willing to offer '5th Directive Cover'. That ought to tell us something.

 

Eventually I was advised that the section of the 5th Directive that applies to personal imports had been referred back to Brussels as unworkable in association with existing UK Law. I have re-checked and understand that this is still the position. So we have a rather complex situation - a stand-off between existing UK Law and the 5th Directive. Technically, the Treasury are quite right - the relevant sections of the 5th are now part of UK Law. But so are the MID requirements, and the two conflict.

 

This conflict affects also the issuance of paperwork. As evidence of insurance your insurer must issue you with either a Certificate of Insurance which incorporates an EU Green Card or a Cover Note and a physical Green Card (because the Cover Note does not provide a 'built-in' Green Card). The Certificate can only be issued once the vehicle details are on the MID (not possible on chassis number only) and a physical Green Card cannot be issued on Chassis number alone but requires the registration mark. So how does the insurer provide the paperwork?

 

Much of this was discussed at length at the time the 5th became UK Law, but I repeat it here to demonstrate that I'm not simply being negative but trying to ensure that advice I give on behalf of MMM does not lead people to any risk at all of being unintentionally uninsured. The waters here are extremely muddy and until they have cleared, I will continue to advise importers not to rely on the 5th Directive or on any insurance cover provided under it. Maybe I'm erring too much on the side of caution, but I'd rather be wrong that way and let people make their own choice to take the risk if they wish to do so.

 

Of course, the advice I am given may all be wrong or out of date - there's always that possibility, even though I check frequently. Indeed, further checks are being undertaken on my behalf as I write. But until I get definitive evidence that things have changed, my advice will not change.

 

For those who think I'm too cautious, there have been documented cases of self importers writing off £50K+ motorhomes without having valid accident cover.

 

Let me add that Insurance has become increasingly complicated: a broker needs almost to be a fully fledged lawyer as well to understand all the intricacies. Certainly if I were a broker, I would target only mainstream insurance policies and let someone else lose money writing special cover for that 0.001% of people who need it. I believe we are lucky that we have such a choice of brokers that really understand motorhome insurance - it's well under 0.5% of the domestic vehicle insurance market.

 

Mel E

====

[donna miller]

Ref your point over the Motor insurance database, as someone who holds a traders policy, My only obligation to the MID is that I inform my broker (not Motorcaravanwise in this instance) of any vehicle that is permanantly registered to myself (within 14 days) or any vehicle in my possesion for a period exceeding 7 days.

General members of the public do not have dealings with the MID, it is all done through their broker. However, the database only allows the police to check whether the vehicle details are on the database. The fact that it is, is not definitive proof of insurance, and further checks may be needed. Also, you should remember that input to the database is carried out by humans, therefore is open to mistakes.

 

I cannot understand your reluctance to accept written confirmation from the government that the law says the cover in question is valid and a broker is right to offer it.

 

The articles mentioned in the 5th directive gave a concession of up to 30 days from the normal laws and rules regarding issuing of insurance in the country of destination, as opposed to the country of origin.

 

Maybe it is as you suggest, that many insurers simply do not want to provide cover, The law however, says that they can. I find it incredibly hard to believe that senior officers or the treasury who control insurance law, are unaware of the motor insurance database.

 

Whilst this was passed in may 2007, it was not implimented into British statute until september 2007. Maybe this delay was whilst it was returned to Brussels, I do not know, however, I specifically mentioned that I was informed the statute was returned to brussels and the reply I had from HM Treasury was that the law had been passed.

 

I was asked for proof of my claims, and I gave it from the highest possible source, I cannot give any better than that.

I wish anyone who intends to import their own vehicle, the best of luck, please don't say I didn't try for you.

 

[Mel E]

Donna,

 

I have explained my reluctance very clearly - I'm sorry you cannot at least understand what I have written. I am not asking you to agree with it, merely understand.

 

Incidentally, I did not suggest that members of the public have access to the MID. I was trying to explain why insurers/ brokers (who make the entries) are telling me they cannot make the 5th Directive work in practice, and surely whether the MID is 100% accurate is beside the point?

 

The 5th was passed by the European Parliament in December 2006 and became UK law, after further consultation, on 10 June 2007, not in September. It is still UK Law (whether or not it's been referred back to Brussels) and so the 30 day period you mention for personal importers does indeed exist in Law, as the Treasury confirmed to you. It's just that insurance brokers and/or their underwriters can't make it work for the reasons I gave - and these are reasons that affect the DforT rather than the Treasury.

 

Were I to use the broker you used for such cover, I would want written agreement from their underwriter (who is owned by RBS and thus totally reputable) that the cover was properly in place. Then I would be happy. I will update my advice to suggest this.

 

Mel E

====

[Mel E]

To use the title Donna gave to this post - can we now agree to make this 'THE FINAL WORD'?

 

 

[Brian Kirby]

Right, Kirby’s been back to school, and this time he read the textbook, and listened to teacher, more carefully!  I do not offer what follows as an expert, but as a reasonably attentive pupil (yes, I took notes!) who has consulted someone who is an insurance broker, who happens also to be a motorhomer.

1.           The 5th EU Motor Insurance Directive has indeed been passed into UK law. 

2.           The Financial Services Authority has made the necessary regulatory changes to enable UK insurers to issue insurance on vehicles that are being imported, but are not yet in the UK.

3.           It is therefore legal, under EU Regulations, for UK insurers to sell insurance for this purpose, and the UK has thereby met its EU obligations in this respect.

4.           The obstacle to actually implementing these changes arises with the Motor Insurer’s Database (MID), to which UK insurers are legally required to enter details of all vehicles they insure within 7 days of issuing the insurance.  The penalty for failure is a substantial fine, or loss of their licence, so insurers are anxious not to fall foul of the system.

5.           The MID does not accept vehicle identification numbers (VIN), or chassis numbers, so vehicles insured on a chassis number only, cannot be entered.  The MID accepts only UK format vehicle registration numbers, and will not accept other, for example foreign, formats.  As a result, I am advised, the matter has been referred back to Brussels.  The problem apparently affects the UK only, so it is not the number one priority.  Permitting pre-registration might offer a solution, but the UK government is nervous about potential fraud and corruption if this was permitted, and is reluctant to accept this until other avenues have been exhausted.

6.           I am advised there is no interest in changing the MID to admit the VIN, because the VIN is not externally visible on the vehicle, and the authorities have invested heavily in Optical Character Recognition (OCR) technology for surveillance purposes.  Those nice little cameras you see on motorway bridges, for example, pick up you Registration No as you pass, identify you, and check on the MID and DVLA databases that your vehicle is taxed and insured.  We therefore have a sort of Catch 22.

7.           Comprehensive insurance is a package of insurances covering the risks of accidental damage, fire, theft, and injury to third parties or damage to their property.  The latter, third party, element is legally required throughout Europe, including the UK, before a vehicle may be driven on public roads.  Since comprehensive insurance includes third party insurance, all vehicles so insured must be entered onto the MID – but, as above, this is only possible after the vehicle has been registered.

8.           An insurance “Cover Note” is issued to allow a vehicle to be driven, but within the UK only, to provide legal evidence of insurance (as required by the Road Traffic Acts) pending entry onto the MID, and receipt by the insured of the Certificate of Insurance.  The cover note has no legal validity as evidence of insurance outside the UK, only the Certificate of Insurance provides this.

9.           Any variation to a standard insurance contract must be formally written into the insurance: this is usually done via an endorsement.  Brokers are authorised to issue endorsements, but are subject to restriction imposed upon them by underwriters.  Such endorsements must be approved by the insured before the insurance is finalised (so that the basis for the contract is clear to the insured), and by the underwriter (because it varies the basis of the contract, as set out in their standard Conditions of Insurance), or it is liable to rejection should a claim arise. 

10.      Were a claim to be rejected on grounds that an unauthorised endorsement had been issued, or that no endorsement existed, the insured would have to sue the broker for compensation, and would therefore need to be able to prove what endorsement they had agreed with the broker.  If adequate proof were available, the broker’s compulsory Professional Indemnity Insurer (PII) would have to assume responsibility for payment.  From personal experience, PII insurer’s are not a pushover, and resist claims by all available means, often seeking an out of court settlement below the claim at the last minute.  This is not a situation to get into!

11.      It is perfectly possible and quite legal, to abstract the third party element of a comprehensive insurance leaving only the accidental damage, fire and theft elements in place.  However, this is unusual and, I am advised, such a policy could not be issued by a broker without formal approval from the underwriter, who would have to write a “one off” endorsement expressly for that purpose.  Whether this would be worthwhile, would be a commercial judgement by the underwriter.

12.      Such an endorsement would need to suspend operation of the third party element of the policy until such time as the vehicle (which would have to be identified by its VIN only), is registered in the UK, while confirming that all other elements of the insurance remained in force.  Once registered, the vehicle details could be entered onto the MID, so activating the third party element.  In the absence of the third party element, the insurance would not warrant issue of a Cover Note (required, as 8 above, only for UK road traffic acts purposes).  Confirmation of the insurance, including the “one off” endorsement, would therefore be by letter alone as, in the absence of third party cover, no Certificate of Insurance could be issued (this being required only as evidence within the EC of the necessary legal minimum cover).  Because the vehicle would not be in the UK, would be driven on public roads, and would be subject to third party insurance from a different insurer, until it is registered, these facts would also need to be written into the endorsement.

13.      Whether this much detail really is necessary, or whether it can be adequately covered during a telephone conversation with a broker’s telephone sales staff, I leave you to judge.

14.      However, based on what I have been told, repeated above as fully as I can manage, it seems to me the implications are obvious.  If you want to obtain comprehensive insurance to import a motorhome from across the Channel, it will need to be a specially endorsed policy omitting the third party element.  You will therefore need to start your search in good time because few underwriters offer this.  My informant does not know of any who do.  Make sure all the risks you want covered, and the manner in which the insurance is to be operated (i.e. who needs what notifications from whom, and when), are properly set out, in writing, and that it is clear the insurance relates to an unregistered vehicle that will be being driven, on public roads, outside the UK.  In this context, euphemisms such as “transported” will not do.  Do not pay the premium until you are satisfied.  Any cover note supplied will be irrelevant outside the UK; do not proffer this as proof of insurance until back in the UK.  If you buy from Germany, you will get basic third party cover with your temporary German “export” plates, and that insurance is valid throughout the EU, including the UK for, I believe, 14 days (but check this).  If you feel relaxed about driving on third party only insurance, therefore, and can guarantee to get your vehicle registered within that timescale (possible with a bit of organisation), you can leave the comprehensive insurance until after registration and not bother with insurance on the VIN.  If you buy elsewhere, the issue of third party must be checked, but I believe this to be unobtainable in France.  If you cannot get the insurance you want, and are unhappy about driving on third party cover only, consider alternative means of getting the van safely back to the UK.  Do all of these things before you go to any shows, such as Düsseldorf, and before you visit any European dealers, so that if the right vehicle is on offer, you are in a position to take advantage of it there and then, and don’t run into unforeseen problems getting it home.

I’m sorry this is yet another lengthy post but, as I hope you can see, this is not a straightforward matter.  However, it is one that it is vitally important to get right before buying abroad.

I apologise for crossed lines with Mel's post above.  I was writing while he was posting, and I haven't the time or energy to re-edit it to remove the crossovers!

However, I hope this helps.

[donna miller]

It is evident from the content of Mel and Brian's postings, that they are digging their heels in. So I shall leave you to decide whether confirmation from the treasury and the people who actually make the law is more credible than a relayed phone message from a broker.

 

Mel has openly contested the details I gave about the date this legislation was introduced, so for the benefit of the forum, here is my original source of info, it's not a friend of a friend or anybody else. The dates are clearly shown, as is the horrendous truth that the British government cannot refuse the directives of the EU.

The document clearly shows the statute was introduced on the 5th September 2007. I have had enough claims that my information was wrong, why would I claim a date that wasn't right.

 

 

Many of you will fall asleep before reaching the end, but the truth and the facts are there, and extremely easy to read. I have had to leave the article in it's entirety as is required by the conditions of it's reproduction.

 

 

 

August 2007

Implementing Article 4(4)-4a(1) of

the 5th Motor Insurance Directive

Final Regulatory Impact Assessment

© Crown copyright 2007

The text in this document (excluding the Royal Coat of Arms

and departmental logos) may be reproduced free of charge

in any format or medium providing that it is reproduced

accurately and not used in a misleading context. The material

must be acknowledged as Crown copyright and the title of

the document specified.

Any enquiries relating to the copyright in this document

should be sent to:

Office of Public Sector Information

Information Policy Team

St Clements House

2-16 Colegate

Norwich

NR3 1BQ

Fax: 01603 723000

e-mail: HMSOlicensing@opsi.x.gsi.gov.uk

HM Treasury contacts

This document can be found on the Treasury website at:

hm-treasury.gov.uk

For general enquiries about HM Treasury and its work, contact:

Correspondence and Enquiry Unit

HM Treasury

1 Horse Guards Road

London

SW1A 2HQ

Tel: 020 7270 4558

Fax: 020 7270 4861

E-mail: public.enquiries@hm-treasury.gov.uk

Printed on at least 75% recycled paper.

When you have finished with it please recycle it again.

ISBN 978-1-84532-329-5

PU335

Implementing Article 4(4)-4a(1) of the 5th MID: Final Regulatory Impact Assessment 1

TITLE OF PROPOSAL

1.1 Implementing Article 4(4)-4a(1) of the EU’s Fifth Motor Insurance Directive (“5th

MID”).

PURPOSE AND INTENDED EFFECT

1.2 The UK is required to implement the 5th MID. Responsibility for implementation

of the majority of the provisions of the Directive has fallen to the Department for

Transport (DfT). However, implementation of Article 4(4)-4a(1) of the 5th MID1 will

require amendments to the Financial Services and Markets Act 2000 (FSMA) and the

Financial Services and Markets Act (Law Applicable to Contracts of Insurance)

Regulations 2001 and responsibility has therefore fallen to HM Treasury.

1.3 Article 4(4)-4a(1) provides, in circumstances where a vehicle is dispatched from

one EEA State2 to another, a 30-day derogation from the general rule3 that motor

insurance cover can only be provided by an insurer authorised to write business in the

EEA State in which the vehicle is registered. This is either because that State is its home

State or because it has a passport to cover risks situated there through a branch or on a

cross-border basis. This means that it will be easier for individuals to obtain insurance

cover for imported vehicles by switching the EEA State in which the risk is situated (the

‘State of the risk’) from the State of origin of the vehicle to the State of destination.

CONSULTATION

1.4 This final Regulatory Impact Assessment concerns implementation of Article

4(4)-4a(1) of the 5th MID.

1.5 A consultation seeking views on the proposed approach to implementation was

launched on 1 March 2007 and closed on 24 May 2007. Three responses were received

to the consultation from an insurer and an individual and also a joint response from

two trade associations. A summary of responses to the consultation is available on HM

Treasury’s website (www.hm-treasury.gov.uk).

1.6 This final RIA sets out the options open and considers the qualitative, and where

possible, quantitative costs and benefits. Risks, unintended consequences and any

compliance and enforcement issues have also been incorporated as costs and benefits.

Competition issues and the impact on small firms have also been considered.

OPTIONS

1.7 As with all proposals for legislation, HM Treasury have considered the option of

making no changes.

1 Strictly speaking, Article 4a(1) of Council Directive 1990/232/EEC of 14th May 1990 (OJ No L 129, 19.5.1990, p. 33), the Third

Motor Insurance Directive, as inserted by Article 4(4) of the Fifth Motor Insurance Directive.

2 Article 4a(1) refers only to Member States, i.e. EU States, but the EEA Agreement of 7th March 1993 extends its application to

all EEA States i.e. the 27 EU Member States and Norway, Iceland and Liechtenstein.

3 See second indented paragraph of Article 2(d) of Second Council Directive 88/357/EEC of 22 June 1988 on direct insurance (OJ

No L 172, 04.07.1988, p. 1).

1 FINAL REGULATORY IMPACT ASSESSMENT

Rationale for

Government

intervention

Objective

Do nothing

1 FINAL REGULATORY IMPACT ASSESSMENT

2 Implementing Article 4(4)-4a(1) of the 5th MID: Final Regulatory Impact Assessment

1.8 The UK Government has no discretion to avoid implementation of EU

Directives. The Commission would be able to begin infraction proceedings. The

Government would also potentially be open to claims for damages. The Government

also believes that Article 4(4)-4a(1) of the 5th MID will benefit UK consumers and

insurers.

1.9 HM Treasury will therefore implement Article 4(4)-4a(1) of the 5th MID in line

with the Statutory Instrument (SI) provided alongside this RIA. Following a supportive

response to the consultation, no changes have been made to the SI from the draft

version presented in the consultation document.

1.10 The Government’s approach to implementation is to amend paragraph 6 of

Schedule 12 (transfer schemes: interpretation) to FSMA and Regulation 2

(interpretation) of the Financial Services and Markets Act 2000 (Law Applicable to

Contracts of Insurance) Regulations 20014, so that where insurance relates to a vehicle

dispatched from one EEA State to another, for the 30 day period following the delivery

of the vehicle only, the insurance risk is situated in the EEA State which the vehicle is

being delivered to. This will give the buyer time to register the vehicle in the UK.

1.11 Schedule 12 to FSMA sets out conditions for the appropriateness of the

certificates required by the courts in relation to an insurance business transfer scheme.

An insurance business transfer scheme is a legal process under Part VII of FSMA by

which, following sanction by the courts, an insurance company can transfer its

obligations under insurance or (reinsurance) policies to another insurer.

1.12 The Financial Services and Markets Act 2000 (Law Applicable to Contracts of

Insurance) Regulations 2001 specify the law that applies to contracts of insurance, in

particular general insurances such as motor insurance, and hence the regulatory regime

with which any insurer offering such contracts must comply.

1.13 This option for implementation is not intended to go any further than required

by the 5th MID.

COST AND BENEFITS

1.14 The following main groups have been identified as potentially being affected by

these proposals:

• individuals, companies, or specialist dealers importing vehicles into the UK

from another EEA State;

• motor insurers;

• insurance brokers.

1.15 According to the Association of British Insurers’ (ABI) statistics of March 2006,

there were around 380 insurance companies authorised to write motor insurance in the

UK during 2004. However, the ABI estimate that in practice there were probably around

60 companies, plus 6 Lloyd’s syndicates actively transacting motor insurance business.

1.16 The Government believes that implementing Article 4(4)-4a(1) of the 5th MID

will make it easier for individuals and companies in the UK to import cars from other

EEA States. The Government is aware of concerns that individuals or companies

wishing to purchase new or second-hand vehicles in one EEA State and dispatch them

4 S.I. 2001/2635.

HM Treasury’s

SI

Groups

affected

Benefits

FINAL REGULATORY IMPACT ASSESSMENT 1

Implementing Article 4(4)-4a(1) of the 5th MID: Final Regulatory Impact Assessment 3

into another EEA State often experience difficulty in finding insurance cover. During the

journey and until its final registration in the EEA State of destination, the vehicle has to

be covered by an insurance policy issued by an insurer authorised to operate in the

state of origin of the vehicle (either because that State is its home state or because it has

a passport to cover risks situated there through a branch or on a cross-border basis).

Such short term insurance is harder to obtain and is normally more expensive pro rata

than insurance for a full normal term. Following implementation of this part of Article

4(4) of the 5th MID, individuals or companies will be able to purchase motor insurance

from a UK-authorised insurer to cover the whole process of importing into the UK a

vehicle from another EEA State.

1.17 The Government also believes that this change should be beneficial for UK

insurers by allowing them to insure a vehicle being imported into the UK without

having to 'passport' into the EEA State from which the vehicle is being imported (and

also by removing the requirement to enter into the exporting State's guarantee fund

and motor insurance bureau). The Government understands that at present few UK

motor insurers use a passport to write business in other EEA States, and this measure

will therefore allow for a potential growth in the business of motor insurers by allowing

them to cater for this market.

1.18 Responses to the consultation also identified specific problems with the current

system:

- short-term insurance is seemingly unobtainable for personal motor vehicle

importers from EC States other than Germany;

- where such insurance cover is available, they are limited to basic levels of

third-party cover. In practice cover for fire, theft and personal loss was

unobtainable;

- difficulties for the importer in understanding the level of cover he or she is

protected by, due to policies typically being written in the language of the

State of origin and problems around the provision of information by both

UK and foreign insurers. For instance, some personal importers believe that

they are covered by a ‘comprehensive’ level of cover, when they in fact their

policy only afford them third-party liability cover.

1.19 The Government believes that implementation of Article 4(4)-4a(1) of the 5th

MID should alleviate these difficulties.

1.20 The Government believes that there will be minimal costs arising from the

implementation of Article 4(4)-4a(1) of the 5th MID. There may be a cost arising from UK

insurers no longer being able to offer motor insurance to cover vehicles that are being

exported out of the UK into another EEA State (unless they have a passport to cover

risks situated there). However, the Government does not believe that this cost would be

significant.

1.21 The FSA have estimated in their Quarterly Consultation (No. 10) that they do not

expect this change to result in any incremental costs to the FSA5.

SMALL FIRMS IMPACT TEST

1.22 These proposals are unlikely to have a disproportionate impact on small firms.

5 The FSA’s consultation paper is available from the FSA website at:

http://www.fsa.gov.uk/Pages/Library/Policy/CP/2006/06_18.shtml

Costs

1 FINAL REGULATORY IMPACT ASSESSMENT

4 Implementing Article 4(4)-4a(1) of the 5th MID: Final Regulatory Impact Assessment

COMPETITION ASSESSMENT

1.23 These proposals should make it easier for individuals and companies to import

vehicles from other EEA States, hence impacting positively on competition in the UK’s

domestic motor vehicle market.

ENFORCEMENT, SANCTIONS AND MONITORING

1.24 The FSA is already responsible for enforcing regulation of UK authorised firms

carrying out insurance contracts of the type allowed for through the implementation of

Article 4(4)-4a(1) of the 5th MID.

IMPLEMENTATION AND DELIVERY PLAN

1.25 HM Treasury will take forward laying the Statutory Instrument which is subject

to the negative resolution procedure. Subject to Parliamentary approval, the revised

arrangements will come into force on 5 September 2007.

POST-IMPLEMENTATION REVIEW

1.26 Given that the Government is obliged to implement this Article of the 5th MID it

does not feel that a formal post-implementation review is appropriate. However if any

unforeseen impact on the motor insurance market arising from this measure is brought

to the Government’s attention it will assess the appropriateness of any available policy

responses.

SUMMARY AND RECOMMENDATION

1.27 The Treasury has decided to implement Article 4(4)-4a(1) of the 5th MID in

accordance with the approach put forward in its consultation paper.

1.28 Final legislation that will achieve implementation has been laid before

Parliament and will come into force on 5 September 2007, subject to Parliamentary

approval.

MINISTERIAL DECLARATION

I have read the Regulatory Impact Assessment and I am satisfied that the benefits justify

the costs.

KITTY USSHER MP,

ECONOMIC SECRETARY TO THE TREASURY

10 August 2007

FINAL REGULATORY IMPACT ASSESSMENT 1

Implementing Article 4(4)-4a(1) of the 5th MID: Final Regulatory Impact Assessment 5

CONTACT POINT

Richard Wronka

Financial Stability and Risk Team

HM Treasury

1 Horse Guards Road

SW1A 2HQ

Tel: 020 7270 5389

Email:

 

The person named to email has now moved departments.

 

I am not going to go round in circles anymore trying to convince Mel and Brian that the facts I obtained are any more or less credible than their own personal beliefs and worries, in fact I no longer care. The truth of the matter is that it will never apply to me again. Is that a wrong attitude to take, you decide, but look what happens when you try to help on here.

 

 

 

 

 

 

 

 

[fred grant]

let donnas be the final word please my biddies. i cant take ant more, aarrrggghhhhhhhh!!!!!

 

factualalwaysfred

[Mel E]

Fred,

 

I agree with you - let Donna have the last word. Whatever anyone else posts, she will anyway . . .

 

So it's goodnight from him . . .

 

Mel E

====

[Derek Uzzell]

I've resurrected this thread as it's been brought to my attention that there are some interesting observations on the MHF forum, including comments from an insurance brokerage representative. The MHF thread is currently 2 pages long and the links are:

 

Page 1:

 

http://www.motorhomefacts.com/ftopic-35741-days0-orderasc-0.html

 

and Page 2:

 

http://www.motorhomefacts.com/ftopicp-412073.html