Fourth Directive Explained
The intention behind the Fourth Motor Insurance Directive was to provide a mechanism for victims involved in accidents abroad, to pursue claims in their own country of residence.
The Fourth Directive Scheme applies to accidents occurring in any country participating in the Green Card System (all EEA countries in addition so some non-EEA countries), where the victim resides in an EEA Member State and the accident arose from the use of a vehicle normally based in another EEA Member State. It also covers the scenario where a victim is injured in another EEA Member State caused by the use of an unidentified vehicle.
The Directive required all EEA insurers to appoint a claims representatives and for each Member State to set up and approve a Compensation Body and an Information Centre.
The Directive required all motor insurance undertakings to appoint a claims representative in each Member State (other than the Member State in which it received its official authorisation).
EEA residents involved in accidents abroad may present their claim in their own country and own language to the appointed claims representative of the foreign insurer.
The claims representative is responsible for handling and settling claims on behalf of the foreign insurer who appointed it.
The benefit of pursuing a claim via an insurer’s claims representative is to enable the victim to pursue their claim in their own country of residence and own language. However, the appointment of a claims representative does not preclude the victim of the right to issue proceedings directly against the liable person or their insurance undertaking.
The Directive also required Member States to establish an Information Centre which will keep a register of all vehicles normally based in its territory, together with the insurance policies covering the use of those vehicles and the insurers nominated claims representatives in each other Member State. MIB fulfils the role as the Information Centre in the UK.
UK residents involved in accidents abroad may approach the UK Information Centre to obtain details of the foreign insurance company and its UK Representative, by providing the offending vehicle’s registration number and country of registration. Information Centres co-operate with each other to provide the necessary insurance and claims representative information.
The Directive also required Member States to set up and approve a Compensation Body. This role is also fulfilled by MIB in the UK.
The Compensation Body is set up to assist victims of accidents abroad in the following scenarios:
- When the foreign insurer has failed to appoint a claims representative
- When the foreign insurer or its claims representative has failed to provide a reasoned response to a claim within 3 months
- When a request for information from the information centre has been made and it has been impossible to identify an insurance undertaking within 2 months
- When it is impossible to identify the other vehicle involved
In any of these circumstances MIB will handle the claim in its capacity as Compensation Body on behalf of its foreign counterpart (either the foreign guarantee fund or Compensation Body).
When a claim is submitted to the Compensation Body due to a lack of reasoned response, the Compensation Body must terminate its action if the foreign insurer or its claims representative subsequently provides a reasoned response to the claim.
Equally, if the insurance undertaking has failed to appoint a claims representative, the Compensation Body cannot intervene if the claimant has already presented a claim directly to the insurance undertaking and has received a reasoned reply to that claim within three months.