News from the Hungarian market

The Hungarian State has acquired a 45% stake both in Aegon and Union insurers. The news was recently announced by the minister of finance Mihály Varga.

In November 2020, Aegon Insurance and Vienna Insurance Group (VIG) announced they’d signed an agreement for the interests of Aegon’s Hungarian, Polish, Romanian and Turkish branches.  The takeover of Aegon Hungary by VIG Austria should’ve ended as early as 2021. But on Wednesday 7 April 2021, the Hungarian Ministry of the Interior vetoed the transaction. The Ministry didn’t provide a specific explanation for the decision, but only referred to a relatively recent piece of legislation. The legislation meant that Aegon Insurance couldn’t become foreign property.

Then in December 2021, the “Gordian knot” was finally cut announcing that the Hungarian state would eventually acquire ownership of Aegon Insurance and Union. VIG’s existing interest in Union Insurance was confirmed and a total of 350 million was paid for the 45% shareholding of the two insurers.

The minister of finance stated the goal is to increase public wealth and return strategic assets to state ownership, as a result of the contract. Although this can be considered a relatively overpriced transaction, where the State paid a significant sum for the minority stake, purchasing the share can be considered a success.

It’s not yet clear whether the State intends to be present in the insurance market primarily as a financial or rather a strategic investor.

The government emphasises their strategic goal, but it doesn’t seem to be related to insurance activity, but by expanding assets. If we look at the transaction from the direction of the insurance sector, the Hungarian state seems to be a financial investor. But it should pay for itself relatively quickly.

Before this acquisition, the Hungarian state hasn’t had a share of the Hungarian insurance market. So the 45% share acquired by Aegon and Union Hungary is to be considered as a novelty.

The Hungarian state has made expansions in the banking sector in the past, but hasn’t expressed its intention to do the same in the insurance sector yet.

Remote Medical Examinations

Prior to the COVID pandemic, remote medical examinations were prohibited because of fraud or the risk of an incorrect diagnosis. It was particularly focussed on examinations for whiplash injuries following a road traffic accident. The ban was lifted during the COVID pandemic and virtual examinations allowed claimants to progress their claims safely.

The ban was put in place by MedCo, a body which represents both the claimant and defendant sectors. They also represent the British Medical Association and the Law Society.

Following the lifting of COVID restrictions in England, this ban will be reinstated from Friday 1 July 2022  but there will be a few exceptions.

New Road Signage in France

Following a change to the French Highway code in 2018 to increase safety on the roads, a new series of signs have appeared across French motorways.

If there’s a vehicle parked or going slowly on the hard shoulder, you must slow down. Then, when it’s safe to do so, you must move across from the inside lane to give that vehicle extra space. There are three signs in a row to remind you to make this manoeuvre.

The rule (Article R. 413-17) was introduced following a number of accidents where motorway traffic hit other vehicles or workers on the hard shoulder.

Failure by drivers to follow this rule could end with a fine of up to €135.

The Motor Vehicles (Compulsory Insurance) Bill and Vnuk

In April 2022 the Motor Vehicles Bill was agreed by Parliament and is now in force. This will remove the Vnuk ruling from UK Law.

The Vnuk ruling made it an obligation for any motorised vehicle on private land to have insurance. This included vehicles such as golf carts and some lawnmowers. The new rules will restore the scope of motor insurance to ‘road or other public space’, as it was prior to 2014.

E-Scooter Update in the UK 

As we’ve previously reported it’s illegal for electric scooters to be used on public roads in the UK. But you can use them on private land or rent from an approved supplier in certain towns and cities. 

The rules haven’t been followed by the public who are able to privately buy e-scooters and use them on public roads. This is due to a lack of enforcement by the police. 

This is unlike many countries in Europe who’ve benefitted from legalised use of electric scooters for some years. 

At the end of April, Grant Shapps, the transport secretary, hinted that legislation concerning e-scooters would be included in the Queen’s Speech. This took place on Tuesday 10 May 2022 and there was an indication that the legalisation of e-scooters will form part of a Transport Bill with some strict regulations around usage to include speed limits and possible indicators and obligatory use of helmets. 

The Government doesn’t seem to be against micro mobility but wants to make sure that e-scooters are used responsibly and safely, with high standards enforced. 

The announcement follows increased pressure over recent years from those who see e-scooters as a low cost, convenient and environmentally sound method of transport. 

Legal Costs in Scotland 

We’ve highlighted the major reforms in England and Wales with respect to whiplash claims and the associated Civil Liability Act which came into force on 31 May 2021 as well as the domestic official claims portal of 2013 for low value claims. These not only controlled the levels of damages but significantly reduced legal costs for defendant insurers. 

As many will know there are three different jurisdictions in the United Kingdom:

  • England and Wales
  • Northern Ireland
  • Scotland

The Scottish and Northern Irish jurisdictions didn’t benefit from these reforms.

A recent study of personal injury claims in Scotland by Forum of Scottish Claims Managers (FSCM) on whiplash and other low value claims had interesting findings. The findings of their Forum of Insurance Lawyers (FOIL) showed that for every £1 spent on damages (in claims below £10,000), there was between £1.61 and £1.63 spent on legal costs.

Given the high numbers of low value claims, this is a significant sum for insurers to pay. This was reflected in England and Wales before the reforms in 2021.

The report has highlighted the issues in Scotland. But it seems like there aren’t any planned reforms at the current time.

Brexit News: Social Security Agreement between Switzerland and the UK formalised

An agreement to ensure the coordination between the social security departments of both the UK and Switzerland following Brexit was agreed on September 9th 2021 and provisionally applied from 1st November 2021.

This year the agreement was approved by the Parliaments of the two states and has now come into force.

The new agreement provides reciprocity for visitors to both States and they have coordinated and adapted existing EU legislation to align the two social security systems post-Brexit.

Coris Association – Network Assistance Meeting

In March this year our colleagues from Coris Hungary hosted the first face to face network assistance meeting since the start of the Covid pandemic.

Colleagues from across Europe gathered in Budapest to hear presentations from Hungary, Turkey and Poland looking at the present position of the assistance industry, the new products available to the network as well as opportunities to secure new clients.

The participants also made the most of the occasion to arrange a meeting with a key client.

There was also time to profit from the beautiful surroundings of Budapest with visits and a network dinner.

The next Association event is expected to take place in Bucharest in October.