Letter to Members on Green Card/Brexit (Dominic Clayden, CEO)

5 October 2018

Dear Colleagues

I am writing to members to highlight the risk of motor insurers having to issue green cards in high numbers as a consequence of Brexit. If the Government’s negotiations are unsuccessful and we end up in “no deal” territory, possibly exiting the EU acrimoniously, there is a risk that insurers will need to issue green cards for all policyholders wishing to travel abroad including to the EU. In a no deal situation, the proposed transitional period until the end of 2020 would not happen, so issuing green cards could become a requirement for insurers as early as 29 March 2019.

At present, as the UK is a member of the EU and bound by the Motor Insurance Directive, UK registered vehicles are not checked for insurance documents when driving in the EEA and three other countries that are recognised by the Commission and accepted as part of the ‘free circulation’ area, namely: Switzerland, Serbia and Andorra. The MIB stands behind this arrangement by guaranteeing claims caused by UK registered vehicles travelling to these countries whether insured or not. However, if the UK leaves the EU without a deal on 29 March 2019, UK registered vehicles may no longer be entitled to drive in the EU without insurance documentation. Under EU law, the document required as proof of motor insurance is a green card. EU Member States are required to check green cards at external borders before non-EU registered vehicles are allowed to enter.

The green card system originated at the UN in the late 1940s and has evolved little since then. It is a simple but very much low-tech solution for insurance checks. In effect, a physical piece of green paper must be checked at borders before vehicles can enter: it cannot be checked electronically or shown on a smart phone. The green card itself must follow a format set by the UN and Council of Bureaux.

Insurers already issue green cards to policyholders travelling outside the countries mentioned above, for example to Turkey or the Russian Federation. However, if the UK leaves the EU without a deal on this point, it could mean a requirement to issue green cards in much higher numbers. The Department for Transport estimate that 2.6 million private vehicles travel to the EEA each year, along with 100,000 haulage vehicles. (Figures are not known at this stage for buses and coaches).

We held a Brexit stakeholder event on 1 October, which included insurers, the Government, FCA, MIB Ireland and legal representatives. We discussed these risks in detail and also explained the work that the MIB is doing behind the scenes in the UK and in Brussels to ensure that green cards issued for UK registered vehicles are backed by appropriate agreements with other countries when the UK has left the EU. In the absence of a decision by the Commission to permit UK vehicles ongoing access to the ‘free circulation area’, my strong message to you is that insurers need to plan for no deal and having to issue green cards by 29 March 2019.    

We are planning a Brexit stakeholder event for Gibraltar based insurers on 1 November and will continue to hold events for members as developments unfold around the Brexit negotiations.     

Regards

Dominic Clayden
Chief Executive

Letter to Members on Green Card/Brexit (Dominic Clayden, CEO)