As a motorhome insurance broker, you will likely spend a large amount of your time keeping up to date with legislation and directives that are published on a regular basis. However, this is not always an easy job, which is why in this month’s article Victor Millwell investigates the new Insurance Distribution Directive (IDD). The IDD was adopted by the European Parliament on the 24th November 2015 and the Council of the EU on the 14th December 2015. The IDD has been altered so that it can replace the current Insurance Mediation Directive (IMD) which has been around since 2002. These new rules will regulate EU insurance brokers, agents and other intermediaries alike. These changes to the IMD were prompted by: • A larger focus on buyer protection across all financial sectors since the 2008 credit crunch. • The advance of the insurance market and product offerings since the IMD was first implemented. • Member states being inconsistent in the way in which the IMD regime had been actioned.
The IDD is a “minimum harmonization directive”, simply meaning that it sets a threshold in which national legislation must meet. Member states are allowed to maintain this or even introduce stricter requirements relating to selling insurance. As previously mentioned, the new IDD will apply to a wider regulation of insurance “distributors” including: • Every kind of insurance product seller, including anything that is sold directly to customers. • Anyone who is involved in assisting with administration or performance of insurance contracts. This includes someone acting on behalf of insurers e.g. claims management activities. • Supporting insurance intermediaries. Insurance expert Alexis Roberts of Pinsent Masons, said: “It is good to see that the IDD’s journey through the European legislative process is progressing at a steady pace. “The IDD has been on the radar for the UK insurance industry for some time and the UK has the advantage of having ‘gold-plated’ the current Insurance Mediation Directive, so requirements will not be felt as stringently as in other member states. It will be important, though, for relevant industry players to keep the new requirements of the directive and its implications for business, particularly for insurers’ direct sales processes, at the forefront of their minds in 2016.” Once implemented, the IDD will require a minimum of 15 hours each year for professional training and development for some involved in the distribution of insurance. This includes “relevant persons within the [distributor’s] management structure” and anyone “directly involved” in insurance distribution. All channels of insurance being distributed should have consistent information and buyer protection in place unless they are not liable due to meeting certain conditions. Insurance undertakings must implement, document and regularly review any internal policies. Furthermore, upon payment, clear information must be given regarding what the distributor will receive for selling an insurance product. The IDD will introduce a general rule that it is essential for distributors to “always act honestly, fairly and professionally in accordance with the best interests of its customers.”
Cross-selling and package products
Any time an insurance product is sold or offered along with another service or in a bundle, the insurer must inform the customer as to whether the different components are available to be brought separately. If they are able to do so then an adequate description of each component should be provided. The new IDD regulations include specific and tighter requirements regarding package retail insurance-based investment products (PRIIPs). The new IDD is very comprehensive so brokers should take time to read all the changes that have been made and start making small changes where they can. There is still plenty of time as the next step is for each member state to enact its own version of the law (i.e. an update of the Financial Services and Markets Act) and this means that it is likely to be at least 2 years before this become effective in UK law. However by starting now brokers can get a head start and be ahead of the game once the law is implemented.
Motorhome insurance providers will note with interest that foreign diplomats have run up a £58 million motoring offences bill that appears to have little chance of ever being settled.
The massive bill came to light from information given out by the Foreign and Commonwealth Office (FCO) who revealed that the bill was made up of unpaid motoring fines from a total of 64 different countries. At a time when insurance companies come under increasing pressure from all sides of the motoring spectrum to bring down motor insurance premiums it seems remarkable that the incumbent government have failed so miserably at collecting fines from fellow diplomats.
The USA is the biggest fine dodger by far having run up an unpaid bill of over £6 million for congestion charges and apparently they refuse to pay the fines saying diplomatic immunity excludes them from having to pay local taxes which they claim congestion charges are. So much for the special relationship then! Japan, Russia and Germany all owe figures in excess of £3 million. If the London Olympics offered medals for countries that owed the most in parking fines then Nigeria would run away with the gold. They rattled up a bill of £67,000 last year alone… all of it unpaid of course.
Foreign Secretary William Hague insists his department badger the foreign embassies for payment of the fines and Earl Atlee reported in the House of Lords last year that London mayor Boris Johnson had tackled President Obama about payment of the £6 million when he visited the UK. On a more serious note the FCO also revealed that 5 foreign diplomats were suspected of breaking the UK’s drink driving laws in 2011. The embassy officials came from Angola, Kazakhstan, Korea, Kuwait and Ukraine. All managed to avoid criminal charges because of their diplomatic immunity.
British holidaymakers have long been labelled the blight of the European holiday season, because of the difficulty they have in adapting to different driving conditions. New research probably indicates this to be true as it shows that 73% of United Kingdom motorhome owners who will drive abroad this summer have a fear of foreign roads because of the confusing road signs and the different laws that come into force when entering a different country.
In fact this is far from being a falsified phobia because research reveals 12% of road trips from Britain to Europe in a motorhome end in some kind of a bump, and a massive 66% have experienced some kind of minor mishap. This is worrying news for the 25% of UK drivers who go abroad each summer without checking they have adequate motorhome insurance that will cover every possible situation. Yes, that’s right, a report reveals that a quarter of mobile home owners casually assume that their UK policy automatically covers them in Europe, when in fact it is quite possible their policy will not be as comprehensive as when driving at home. The research also showed that those who are new to motorhome driving are 67% more likely to head to Europe with inadequate motorhome insurance.
Every year hundreds of blissful summer breaks are turned into holiday horrors. Driving on the opposite side of the road is the number one fear (39%), and one in five (20%) confess to having driven on the wrong side of the road abroad without realizing it. Switching the United Kingdom roads from left to right is never likely to happen but motorhome owners do feel that standardising Europe’s drink-driving laws is a must. Over half (53%) who have driven in Europe are strongly in favour of changes. Lack of preparation was further revealed when 50% admitted they didn’t realise it was illegal to use a hands free kit in Spain and 10% didn’t know that drivers in Spain and Italy who wear glasses need to carry a spare pair in the motorhome. Accidents can easily happen in an unfamiliar environment, so reading up on the rules of the roads in the country that will be visited is vitally important.
Motorhome owners who are planning to take off on holiday in the near future should brush up on the laws relating to the use of seatbelts within a motorhome. Some of the confusion around using seatbelts in a motorhome comes from the fact that, as recently as five years ago, manufacturers did not fit seatbelts as standard other than at the front. Thankfully it is now a legal requirement for all seats to be fitted with working seatbelts. If a motorhome is involved in an accident, because of its weight and height, there will be a good chance it will roll over onto its side. This could cause serious or even fatal injury to anyone inside the vehicle and it is true to say motorhome insurance companies deal with such claims every year. For roll-overs, seatbelts reduce moderate-to-critical injury by over 80%. Although the law says it is okay to use seats where there is no belt, the potential ramifications of doing this make it a wise move to have seatbelts fitted in every seat which will be used while travelling around the UK and Europe.
Restraint systems are designed to keep people away from the motorhome structure and distribute the forces of a crash over strong parts of the body, with minimum damage to the soft tissues. Not all seatbelt types offer the same level of protection though; the 2-point belt reduces moderate-to-critical injury by 32% but the 3-point belt reduces it by 48%. For those riding in the rear of motorhomes the research showed that rear seatbelts are 73% better at preventing fatalities. There was talk of a law change due to happen in 2009 which would make it illegal to carry passengers un-belted, however, it never materialised. It means that for motorhomes built before 2007 it is still okay for passengers not to wear seatbelts. However, there are some laws regarding children of a particular size, weight or age. This might mean, in the absence of any belts in the back a child must use the front passenger belted seat, while an adult passenger travels in the back, in any circumstances children aged under 3 must be in a belted seat.
In the UK it is very unlikely that any motorhome insurance company will provide cover unless passengers in the back are in forward facing seats and have a 3-point seatbelt. Also not having seatbelts fitted to all seats could possibly mean the police might prosecute the driver for being reckless if there is an accident. The police or the insurance company will not look kindly should anyone be discovered using a seat that is not intended for travel.
Motorhome insurance companies will take more than a casual interest in one of the latest Government proposals to expose road tax and motor insurance dodgers.
It is well documented that the Department for Transport (DfT) have been working together with vehicle insurance companies and other interested parties to clamp down on the number of motorists who will not comply with basic motoring laws and regulations. Latest estimates show that 4% of drivers in the UK have no motor insurance of any kind, and road safety experts believe uninsured drivers make up a big part of those motorists who leave accident scenes before anyone can ask questions. Last year approximately 150 people were killed and over 20,000 injured by drivers of vehicles who have not yet been traced.
The latest plan to stop such blatant law breaking involves the placement of CCTV cameras above the forecourts of fuel filling stations. The cameras will operate in conjunction with the systems already in place at many garages that use Automatic Number Plate Recognition (ANPR) to catch out fuel thieves. The Government plan is that the cameras will scan the number plate of the car and cross check it with data bases that hold the registration details of uninsured or untaxed cars. If the system picks up any anomaly with the number plate then the fuel pump will not flow. The DfT believe this could drastically reduce the number of illegal cars on the roads of the UK.
It is expected that most motorhome insurance companies will welcome the plan but it is far from certain that owners of fuel stations will be so enthusiastic. Already the body that represents fuel sellers in the UK has questioned the wisdom of the plan, saying such a policy could put forecourt attendants in danger of being attacked by frustrated motorists. Other critics say the plan could see the theft of fuel from other vehicles and the damage done to them in the process actually see motor insurance premiums rise. However, it is certain that something must be done to curb the problem of uninsured motorists and the DfT cannot be faulted for at least coming up with ideas.
In a move that is certain to be welcomed by insurers across the UK, the Queens Speech to Parliament today will include the introduction of “drugalysers” as a measure to combat the number of drivers who believe they can take drugs while driving a motor vehicle.
The announcement will also bring with it problems as each individual motor home insurance company has to decide on how it will deal with an insurance quote from a driver who has fallen foul of the new law, but most will see the legislation as a battle won in the war against rogue drivers. They will hope the new law will bring down further the accident rate on UK roads which in turn will lead to lower premiums for the majority of law abiding motorists.
There is no doubt that legislation is necessary. Only a few months ago experts at the Transport Research Laboratory estimated that drug abuse had been a contributing factor in approximately 1 out of 4 fatal accidents and called on the Government to take action. However, due to the difficulties the Police and Judicial systems have had in determining how big a factor drug taking affected the accident, drug abusers have usually walked away with lenient sentences. This should no longer be the case.
The new drug test, which will work in a similar way to the breathalyser, will bring uniformity to the way drug drivers are treated. Suspected drug drivers will be asked by a policeman to provide a saliva sample which will be then tested in the new machine. If the drugalyser gives a positive reading the motorist will then be taken to a police station where he will be tested using a specially calibrated machine. The machine will be capable of measuring the quantities of 13 commonly used drugs that can negatively affect a driver’s judgement. To back up the law new penalties will be put in place. A driver failing the test will be liable of fines up to £5,000 a driving ban for up to 1 year and in the most serious cases a jail sentence of 6 months.