Reading motorsports websites all over Europe today, you would think it was Doomsday for motorcycle racing, and all forms of motorized sports. Even in as august a publication as The Times (of London, that is), the headlines warned of impending disaster:. "EU insurance rule ‘will destroy British motor sport’". Is the end nigh for motorsport in Britain?
The short answer is "No, but it's complicated". So where did these warnings that the sky is falling come from? On Wednesday, the MCIA (the Motorcycle Industry Association, the body representing the British bike industry), the ACU, and the AMCA (both representing motorcycle racing, on road and off road) issued a joint press release, warning that motorsport in the UK could come to an end due to a ruling by the European Court in Luxembourg.
The ruling stems from a judgment in the case of Vnuk v Triglav, case C-162/13 before the European Court of Justice, and known as the Vnuk judgment. The case involved a Slovenian farm worker, Damijan Vnuk, who was injured when he was knocked off a ladder by a tractor reversing with a trailer. Vnuk was working on a farm at the time, and sued for compensation from the motor vehicle insurance policy of the tractor. The lower Slovenian courts rejected his claims, but the Slovenian Supreme Court referred the case to the ECJ.
From farmyard to racetrack
How does the case of an injured Slovenian farm worker result in the end of motorsports in the UK? At the heart of the case is the fact that Vnuk was injured in an accident which happened on private property. The European motor insurance directive (2009/103/EC), aimed at allowing vehicles to travel freely within the EU by ensuring that vehicles registered in the EU must have third party liability insurance, is not worded clearly enough to make a distinction between use on private property and use in traffic. This lack of clarity is at the root of the problem, and the reason the Slovenian Supreme Court referred the case to the ECJ for clarification.
In the Vnuk judgment, the ECJ interpreted the directive to mean that any motor vehicle, whether on private or public land, must be covered by third party insurance. That would also extend to racing vehicles, be they racing motorcycles or cars, racing on circuits on private land. It would mean, for example, that at every European round of MotoGP, every Grand Prix rider, from Marc Márquez and Valentino Rossi down to Romano Fenati and Patrik Pulkkinen would have to be insured against any damage they would cause to other riders in a crash.
Arguably, Valentino Rossi and Movistar Yamaha could easily afford that insurance, though the smaller teams in Moto3 might struggle. But the real issue is with the bottom level of racing, at club, regional, and even national level. Insurance for a club racer, or even a national racer, could end up being so prohibitively expensive that it becomes basically uninsurable. Without club racing and track days, operating a race track is not economically viable. Silverstone struggles to stay afloat financially as it is; if it was forced to rely solely on the income from MotoGP and F1, it would be bankrupt within days.
Tidings of doom
This is the Doomsday scenario which the MCIA press release was warning of. But why do it so publicly? On 21st December, the UK government formally opened the consultation process for incorporating the Vnuk judgment into UK law, and was calling for public input into how to implement it into law. By issuing their press release now, the MCIA ensured maximum exposure for the issue, grabbed the headlines, and galvanized people into taking part in the consultation process. The aim, of course, is to see the worst effects of the Vnuk judgment avoided, and for motorsports to continue to function as they have in the UK.
It is a shame, however, that the press release generated such a batch of alarmist headlines. The reality of the situation is that while there is genuine cause for concern, the chances of motorcycle racing ending in the UK – or anywhere in Europe – are close to zero. Not because motorsports are such an important part of the economy (even though they are) but because the implications of the Vnuk judgment are so far reaching and touch on so many different industries that the EU is already working on fixing it.
But first, we have to talk about Brexit. Why does the UK have to implement the Vnuk judgment if the people voted to leave the EU in the referendum held on 23rd June 2016? Firstly, as the UK government consultation paper makes clear, because the UK remains a full member of the EU up until the moment the UK actually leaves, two years after the government sends the Article 50 notification. If the UK does not have legislation to deal with the effects of the Vnuk judgment, anyone involved in a crash on a race track will be liable for damages, and will have to carry insurance to cover third party liability.
In the UK, where injury claims tend to be much higher than in other parts of Europe, the cost of insurance is also much higher, making it prohibitively expensive. Without legislation to cover this, it would also be extremely sensitive to fraud: two riders on a track day could simulate a crash, one could feign an injury, submit a claim, and then share the insurance payout between them.
Even when the UK does leave the EU, the terms of the Brexit deal could leave the UK still subject to EU legislation. If the UK opts for a so-called "soft Brexit", the UK would retain unhindered access to the single market, but still have to abide by EU law. Even in the case of a "hard Brexit", where the UK leaves the EU altogether, the UK may still decide keep motor insurance law in sync with EU law, to allow cars, trucks, and bikes to travel freely between the EU and the UK without complicated insurance and customs procedures. For the sake of cross-Channel tourism, the UK and France may want to keep customs complications more like Turkey than like Russia.
Not just the UK, the EU as well
Though the UK may be the worst affected by the Vnuk judgment because of the peculiarities of British law, the case also has implications throughout Europe. The other 27 member states of the EU will also have to implement legislation to deal with the insurance liability imposed. This could have a devastating effect not just in the UK, but especially in racing-mad countries such as Spain, Italy, Germany, and even Slovenia.
The EU recognizes this, and is taking action to fix it. The EU body charged with addressing this – the FISMA Directorate General of the European Commission – is urgently seeking to change the wording of the motor insurance directive. It was never the intention of the directive to force insurance on all types of motor vehicles, wherever they are used. The aim of the law was to ensure that anyone who was the victim of a traffic accident would be able to obtain compensation.
The directive was meant to cover normal traffic on public roads. But the wording was not clear enough to specify that, allowing the ECJ to interpret it to mean any vehicle in any location, on public or private land. That would include racing motorcycles and racing cars, but also Segways inside airports, mobility scooters inside shopping centers, forklift trucks inside warehouses, tractors in farmyards, and electric buggies on golf courses. Forcing all of these vehicles to cover third party insurance would be extremely expensive.
Even without compulsory insurance, any accidents would be covered by the general compensation funds set up to cover the cost of damages caused by uninsured drivers. The issue here is that these compensation funds are filled by contributions from motor insurance. Without modifying the motor insurance directive, ordinary road users could find themselves indirectly paying out for golfers being knocked over by golf buggies, Amazon warehouse staff being hit by forklifts, or Jorge Lorenzo being hit by Andrea Iannone. There is an issue of fairness here.
The fix is in
So the European Commission intends to fix this issue, by changing the wording of the European Motor Insurance Directive, to make it clear that it is only intended to cover vehicles being used for transport purposes on public roads or on areas accessible to the public. The proposal issued by the DG FISMA says " the scope of the Motor Insurance Directive should be limited to the use of vehicles in the context of traffic."
The preferred option set out in the proposal is as follows:
"The scope of the Directive would relate only to accidents caused by motor vehicles in the context of traffic. This would be done by defining locations and types of activities that are to be understood to fall within that definition. The use in traffic could mean where the use of a vehicle is for the transport of persons or goods, whether stationary or in motion, in areas where the public has access in accordance with national law. Activities that would fall outside of this definition would be regulated at Member State level and it would be for them to decide whether they wish to pool them with other activities by regulatory means. The guarantee funds would not be obliged, under EU law, to compensate consequences of traffic accidents unrelated to use in traffic. No changes in premiums or guarantee funds would be needed to absorb the potential need to compensate victims of accidents occurring in the context of purely agricultural, construction, industrial, motor sports or fairground activities involving vehicles where these occur outside of the sphere of use in traffic."
This proposal would basically exempt motorsports (along with many other activities) from the directive. The difficulties posed by the Vnuk judgment would be dissolved, while ensuring that all vehicles in the EU have to be insured when used in traffic. Innocent victims of road traffic accidents involving vehicles from other EU member states would receive compensation in full, and riders taking part in a motorcycle race would do so at their own risk, exactly as is the case now.
Of course, until the EU, through the DG FISMA, modifies the text of the motor insurance directive, all EU countries find themselves in a bit of a legislative black hole. The FISMA proposal states that action will be taken in the third quarter of 2016. The third quarter of 2016 has come and gone, but no new publications have been issued. Work is ongoing, but they need to hurry up. If they don't, it won't quite kill motorsports in the EU, but it will create a rather major inconvenience.
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Politics and Brexit
For more of the background to this article, I can recommend the following article on the European website of Politico:
How a Slovenian farmhand could halt motor racing
Normally, I try to keep politics off the website, but this subject made it unavoidable. I would kindly ask all readers not to rehash the arguments over Brexit, the EU referendum held in the UK, or the relative merits or flaws of the EU and EU membership in general. This is not the place to be discussing those, and anyone veering over the line will have their comments deleted. That includes comments by subscribers.
Do please comment if you have anything to contribute on the legal and insurance aspects and threats to racing, especially if you are outside the EU. The most fascinating aspect of this issue to me is that a well-intentioned piece of legislation ends up having unintended consequences. This is a common thread in human existence, and one that makes life interesting, if also extremely annoying.
As someone who used to earn a living as a translator (something which my wife still does), and with a fascination for language, the fact that the wording of the EU directive was slightly inconsistent between the different EU languages was fascinating. Translation is much trickier than many people realize, and can have some surprising consequences.
Farm workers insurance
Great research David. Unintended consequences is an understatement :(
How does a farmworker on a farm doing farm work, who is injured by a piece of farm machinery, being operated by his employer, 'the farmer', or a co-farmworker, affect the world? It should not.
As an employee of the farm, he should be covered by a workers compensation scheme of some sort. The farm, whether private or leased land, is his place of employment. That juristiction ceases at the farm boundary. It must be classified as a workplace injury, and be dealt with under the industry schemes that apply to farming. Surely?
Maybe Slovenia does not have Workers Comp. schemes in place, so it was his only avenue. Sounds like the farmer has no employers insurance either. I agree with the Lower Court ruling, because its a worplace acident, at a workplace, while performing work duties. End of story.
Motorsport insurance is serious and expensive stuff now, without opening it up to the world of lawsuits and all that comes with that. It would kill grass roots Clubs and competitions. Not good at all, for anyone in motorsport. Hope they sort it quickly, and correctly word it.
Respectfully, Scot living in
Respectfully, Scot living in Oregon "almost Canada" USA. I plan to do track days next yr. Raced for years on my trim budget. Looks like some further consideration is due over there. Track use is VERY income sensitive, and somewhat cost sensitive.
Anyone know how much dough we are talking about here?
I am also curious how many Euros it is for a track day at Silverstone or Oulton Park is. It is fairly reasonable here to enjoy Laguna Seca or The Ridge. An ex racer can do an A group only day at Portland Intl Raceway for $120.
I did used to wonder what could come of an effort to litigate a wrongful or negligent injury or death on track. I had moments that could have been viewed that way, and at least one rider would say they weren't okay w me "taking them out."
First thought I had reading this was actually the British/EU recent legislation that mandated sport bikes have ABS, big emmision restrictions et al that was referred to (Asphalt and Rubber incl) as central to the discontinuation of middleweights like the CBR600RR, alongside the Great Recession. Last thing that had me pondering as such. Curious what folks will say here.
In reply to Respectfully, Scot living in by Motoshrink
Sorry I can't answer ur
Sorry I can't answer ur question on the European tracks, but as added perspective in Australia booking a spot at a track will generally set you back between 200 and 300 dollars depending on when and where ur riding.
Track day providers (or race meeting organisers) have to hold liability insurance. This is usually trotted out as a reason prices have doubled in 5 years or so.
It's still cheap compared to what you'll spend tyres.
In reply to Respectfully, Scot living in by Motoshrink
U.K. Track prices.
Oulton park is approx £170 and Silverstone about £200. Brands hatch is also about the same price.
most of the other tracks can be enjoyed for less than that though, those 3 are the most expensive tracks to hire for the attack day organiser.
I read this in the paper and
I read this in the paper and saw it on twitter. I thought there is no way it's as bad as it was being made out to be and I bet motomatters will provide a full, well researhced, hyperbowl-free explanation. How right I was.
I'm so sick of all these
I'm so sick of all these broken systems being built upon and strangling everything. Whether they come to fruition or not is beside the point.
How much longer do people allow their passions and hobbies stand the risk of being destroyed by people who only act out of interest for their own wallets. Not to mention our health and living conditions. I know things aren't this black and white but it always boils down to the same thing.
To summarise the actual
To summarise the actual situation: Work in the Brussels institutions to amend Vnuk is currently going nowhere fast. The DfT waited as long a possible before acting hoping that the EC would get the ball rolling beyond their options document, but they haven't, leaving the gvmt little option but to start the implementation process.
David Emmet is not incorrect in his useful summary to the background to the Vnuk judgement. But to suggest that the EU will fix it, so we are OK really, is to take a dangerously relaxed view of the Motor Insurance Directive amendment process. The article assumes that work is ongoing to amend the Directive. The reality is that this work was driven by Lord Hill. He quit back in June. The EC consultation of member state governments seems to have led only to a further consultation. But the EC have yet to issue this consultation and basically work has stalled. In any case, even if they proposed an amendment tomorrow, it would have to pass through the full EU system, with an outcome which may not be the same as the proposal. This in itself could take years, as anyone who is involved in Brussels legislative work will attest. It is true that the EC itself is unhappy about Vnuk, but the momentum and leadership they need to demonstrate to 'fix' the Motor Insurance Directive in a timely manner is basically absent at the moment.
In the meantime, members states have run out of time and need to implement Vnuk as it is, or try and find a way around it. To the DfT's credit they are proposing an option based on a possible amended Directive. I support this approach, but I have my doubts as to whether it's on very solid legal ground.
So in the absence of movement in Europe to amend the Directive and no timetable in place for when anything substantial will happen, we are left in a very precarious situation, which is why it's important to create pressure on gvmt to not amend Vnuk as it is - which in reality is the only current legal option they have.
As for other EU countries, Germany and Ireland recognise the problem and Vnuk received a large amount of coverage in Ireland back in the summer. The FIM and FIA have done some limited lobbying on the matters. But the reality is that many other European countries have yet to wake properly up to what Vnuk will mean and like the UK are going to have to deal with it.
Several have third party liability and think they are OK, but this liability covers injury, not damage and in other senses also fails the Vnuk 'tests'. There are some huge wake up calls on the way, though if they opt to ignore the ruling, or successfully manage to fudge it, then we'll urge the UK to do the same. But to assume that this will automatically happen would be to make another risky assumption.
Until we get such certainty, then we have no choice but to point out publicly what full Vnuk implementation actually means. By just assuming that 'it'll never happen', or 'It'll get sorted', risks a very bad potential situation becoming reality. The truth is that Vnuk is too far reaching to simply ignore or take a relaxed view about.
This is why the industry and the sport have outlined their position in such a stark manner. We need to make it clear to Gvmt that whatever happens, Vnuk must not be implemented in a way that damages the sport.
Sometimes it's necessary to set out an issue in the starkest possible terms in order to create the pressure needed and this is one of those times as the stakes are so high. It's not about alarmism, but about defending the sport from a very clear and present danger. The DfT are not our enemies in all this, but they have limited room to manoeuvre. Strong pressure via the consultation offers them greater justification to produce a result which protects the sport. Talking down the risks will only serve to make them become more real.
The end is nigh
This was reported on the Cumbria part of the UK TRF FB page so I pasted a link to Davids article. This was the response, you can respond yourself if you wish (particularly the 'barrister' bit)?
Until something is done to deter the adoption of the amendment into legal requirements in accordance with Vnuk, it WILL affect all motorsport, including trackdays for many of us. The govt has also indicated which of four options it "prefers", and it aint good. Until action is taken, trying to explain it all away as some over egged hype by the motor racing bodies really does nothing to help the situation....David Emmet is a barrister, and has no idea of either insurance, or the motorsport "industry", let alone how politics works. DONT BE COMPLACENT ! Frankly, if they are stupid enough to suggest it, politicians are easily dumb and disinterested enough to not give a crap until it's too late....
It is a disaster allready now...
The changes in Finland regarding motocross and road racing bike insurances have been huge within last few years. The ongoing/implemented legistlational changes and the interpretation of local authorities and insurance companies have been very infavourable towards bikes and very close to disaster to be honest (if you are not riding normal road bikes with 60mph on a high way from fuel station to a fuel station). Few years a go for example you were able to get your MX and road racing bike required road insurance for 300-500€/year which is pretty ok price as it gave you very good health and living compensation in a case of injury (road insurance always mandatory also in mx and rr tracks). In top of that you still had to take a separate license insurance if you wanted to race in official series (which was a paraller insurance as you always had to have the road insurance and it always is the primary compensation if you get injured)
Situation nowadays is completely different with same insurance prices starting from thousands of euros for first time insured bikes with the worst prices reportedly nearing 20000-30000€/year for certain insurance companies. And now I'm talking about young kids and hobby racers who are riding MX, enduro or road racing once in a while for their own fun, not Jorge Lorenzo who is doing a track day in Finland. Still on top of that you have to get that license if you are racing but the road insurance is not necessarily covering anything if you get injured in race weekend.
Insurance companies have been short term winners in the short term. they were able to lobby their normal and required road insurance prices sky high with statements that insurance costs for them has skyrocketed due to mx and rr event accidents. On top of that they were also able to lobby that their insurances won't cover accidents in race events (which is very contradictory as they were using that excuse to skyrocket the prices in the first place).
Situation in Finland is a complete disaster and a good example that what can happen when other byrocratic idiots in other countries start to carry out similar changes under massibe insurance company lobbying. What is likely to happen here is that allready very low hobby activity in mx and rr among children will fade even more as the hobby becomes economically impossible. Most likely the aption remaining open for only for very high income parent kids. It will also kill the small service and bike companies out of the industry, slowly but shurely as the bike sector will rely more heavily on "+50 year street hawks" doing sunday riding on highways.
It is extremely absurd situation when you have basically mandatory double insurance and your yearly insurance prices are higher than the bikes that you are riding (with he only exeption being old insurances where companies are able to raise fees 15%/year so some are able to carry on with a decent price for few years before you have to change your bike)