We all need to be aware of possible Brexit blackspot for vehicle cover

LAST week the Central Bank published research on car insurance consumers.

It found that fewer than half of policyholders said it mattered to them whether their insurance company was domiciled in Ireland.

Furthermore, only 51pc of policyholders knew the identity of their insurer.

A quarter (25pc) who thought they knew had actually replied to the question by quoting the name of their broker.

Some of those consumers could find themselves hitting a blackspot if the currently projected no-deal exit from the EU by the UK comes to pass.

In fairness to consumers, who are left to educate themselves about such matters, it seems that insurers are worse.

Last April the Deputy Governor of the Central Bank said that the insurance sector was “astonishingly” unprepared for Brexit.

In a survey of the sector, 75pc of respondents were of the view that Brexit would have little or no impact on them.

The fact is that we do not know what the future will hold.

What we do know is the plans that have been announced by the British government.

In the current context of car insurance claims, there have been suggestions of them repealing most of the existing judicial co-operation rules.

That could include regulations on enforcement of judgments in civil and commercial matters.

The relevant 2012 EU regulation is often referred to as Brussels 1a.

This risk has at least two dimensions.

If you currently have your insurance from a UK-based company, it is far from clear how you will be able to enforce your rights against them post-Brexit.

That lack of clarity does not just apply to car insurance.

It equally applies to long-term products such as investments and pensions.

In the motor market, about 30pc of gross premium paid by Irish policyholders goes to insurers who are prudentially regulated in the UK.

On the other side of the equation, if you are an injured victim of a vehicle insured by a UK company, the claiming process could get very complicated.

The EU motor insurance directives mean that you can sue the vehicle insurer direct either in your local court or in the jurisdiction in which they were domiciled or in the member state where the accident occurred.

Predictably, most claimants choose whichever jurisdiction is more convenient and/or favourable to them.

There had been no need to worry about the recognition and enforcement of an award made anywhere in the EU.

Currently, there is no guarantee that this will hold true if you are trying to get your compensation from a UK-domiciled insurer in the future.

Hopefully, it will all be worked out smoothly in the long run, even if that is after March 2019. But the devil is in the details. Some people suggest that there is one potential upside.

Maybe UK-based insurers who wish to continue marketing to the EU single market might take up domicile in Ireland and bring a bit of competition to our dysfunctional market for motor insurance.