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European Union considers “existential threat” that court ruling poses to motorsports

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Photo by Matthew Exley.

“In traffic.” Two words that could have spared motorsports across Europe from what some have called an “existential threat” brought on by a European high court ruling three years ago. And they could still make a difference as the European Commission weighs the broad implications of that ruling.

“Substantial, rapid economic damage to multi-billion euro European and U.K. motorsport businesses would result if motorsport vehicles, of any kind, are included within the Scope of the Directive based on the interpretation of the Vnuk judgment,” wrote Chris Aylett, chief executive of the U.K.-based Motorsport Industry Association, for a European Commission review of the Motor Insurance Directive. “We do not believe these unintended economic consequences were realised when the Motor Insurance Directive was reconsidered by EU legislators.”

Opened in late July, the EC’s Inception Impact Assessment – which replaces a similar assessment issued last year and a U.K. Department for Transport consultation on the matter from earlier this year – outlined problems with the EU’s Motor Insurance Directive as well as the directive’s likely impacts and in turn opened the review of the directive up to public comment.

According to a comment from the Motor Cycle Industry Association of Great Britain, the Auto Cycle Union of Great Britain and the Amateur Motor Cycle Association, implementation of the Vnuk ruling “would threaten to end all legal motor and motorcycle sport activity in the UK” and in turn would threaten an industry “which currently employs over 50,000 people, produces a total of £11 billion of sales each year and generates much needed income in rural areas of the UK.”

The referenced Vnuk ruling took place in September 2014 when the European Court of Justice determined that the EU’s 2009 Motor Insurance Directive did not clearly distinguish between on-road and off-road use and therefore, any motor vehicle – regardless of its use on public or private property – must be insured. While some translations of the directive suggested that it only requires that vehicles used in traffic must be insured, other translations suggested that any usage of a vehicle requires insurance.

As pointed out in several comments to the assessment, motorsport insurance is generally not available in the European Union, and where it is available, it has become prohibitively expensive. According to Motorsport Ireland, Finland did introduce motorsport insurance “leading to an increase in the cost of a typical policy from €200 approximately to €4,000 approximately in 2016.”

In its prior impact assessment, the EC outlined four options for addressing the failings of the Motor Insurance Directive that the Vnuk ruling highlighted: do nothing, in which case “some activities are unlikely to be able to be insured at a viable cost, (and) these activities risk becoming unviable;” mandate that EU member states provide insurance for non-road vehicle usage; alter the scope of the directive so that it applies only to in-traffic vehicle usage, leaving the member states to individually decide how to deal with non-traffic usage; or to specifically exclude certain non-road vehicles from the directive and thus leave them uninsured.

The EC review of the Motor Insurance Directive closed last month. Any action resulting from the review is expected to take place sometime later this year. In addition, the U.K. Department for Transportation is still analyzing comments submitted during its consultation, which closed in April, and has yet to issue any announcements on how it will address the failings of the Motor Insurance Directive.