Recent case law suggests motor insurers could raise premiums despite new measures announced by the Competition and Markets Authority (CMA), a solicitor has warned.
The new measures, drawn up after a two-year investigation by the CMA into the private car insurance market, are designed to increase competition.
However, solicitor Nicholas Bevan, who has campaigned for better protection for road users, says the measures are likely to be eclipsed as the impact of the recent European Court of Justice ruling in Damijan Vnuk v Zavarovalnica Triglav C-162/13 is felt.
In Vnuk , the court found that compulsory motor insurance must cover any accident occurring in the use of a vehicle that is “consistent with the normal function” of that vehicle, including cars driven on private property.
Bevan says the UK government can no longer ignore the fact that its national law provision breaches the minimum standards of compensatory protection and cover required under the European Directives on motor insurance.
“The UK will have to legislate to require insurers to guarantee third party cover for any use made of an insured vehicle – subject to rare exceptions. This will come at a price – the insurers are bound to argue that this will necessitate an increase in premiums,” Bevan adds.
The CMA investigation also came under fire for failing to resolve the issue of replacement cars. Its investigations highlighted that at-fault insurers pay “significantly” more for temporary replacement cars than the actual cost of providing this service, but concluded there was no “effective and proportionate” remedy.
Nigel Teasdale, of the Forum of Insurance Lawyers, described this as “disappointing to say the least”.
