Insurance Law Monthly

EU law has made elaborate provision for ensuring that the victim of a motor accident secures compensation for his injuries. There have been five EU Directives, recently consolidated in the Sixth Motor Insurance Directive, European Parliament and Council Directive 2009/103/EC. The primary mechanism for this is compulsory insurance. However, if the driver is not insured, the victim has a claim against a compensation body; in the UK that body is the Motor Insurers’ Bureau. Under EU legislation the MIB is also required to meet a claim brought by the UK-domiciled victim of an accident occurring elsewhere in the EU where the wrongdoer was uninsured. InJacobs v Motor Insurers’ Bureau [2010] Lloyd’s Rep IR 244 the question was whether a claim against the MIB in such a case is to be measured under English law or under the law of the EU state in which the accident occurred. Owen J has opted for the latter.

Article 81(1) of the EC Treaty (now renumbered as article 101 following the adoption of the Amsterdam Treaty) prohibits all agreements, arrangements and concerted practices which have the object or effect of preventing, restricting or distorting competition within a substantial part of the European market. This is echoed, for the UK market, by the Chapter I Prohibition in the Competition Act 1998. A series of cases established that insurance fell within article 101(1), and in 1991 the European Council of Ministers adopted Council Regulation (EEC) No 1534/91 which authorised the European Commission to adopt a block exemption under article 101(3) of the EC Treaty exempting certain classes of insurance agreements from the prohibition. The most recent, and a more restrictive, version of the block exemption was published on 24 March 2010, Commission Regulation 267/2010/EC, and comes into force on 1 April 2010. However, there is a six-month transitional period during which agreements which were exempt under the earlier block exemption, but not under the new block exemption, remain exempt. The European Commission has published an explanatory communication: OJ 2010 C82/20.

AC Ward & Sons Ltd v Catlin (Five) (No 2) [2009] EWHC 3122 (Comm) is an unusual case in two respects. It is the first reported decision to consider the meaning of protections and burglar alarm warranties since that of Woolf J inMelik v Norwich Union [1980] 1 Lloyd’s Rep 523. And on the facts, a variation to the insurance was avoided rather than the insurance itself. The case is discussed by Brendan McGurk of 4 New Square.

The latest step in the English and Scottish Law Commissions’ review of insurance law has been taken, with the eagerly awaited publication in March 2010 of Issues Paper 6, entitled Damages for Late Payment and the Insurer’s Duty of Good Faith. The question under discussion by the Law Commissions was whether a policyholder should be entitled to damages where the insurer has failed to pay a valid claim either at all or within a reasonable time. The Issues Paper sets out the Law Commissions’ provisional views, but poses a series of questions on which views are sought by 24 June 2010.