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Insurance Helpline | Twice a victim of insured drivers

Published:Sunday | July 5, 2015 | 7:00 AM

QUESTION:

I have been the victim of uninsured motor vehicles two times in the last six years. On both occasions, I have had to 'hug up' thousands of dollars in losses due to accidents in which I was not at fault. In one case, the third party did not have any insurance. In the other, the driver fled the scene without giving me any details. Checks at the tax office indicated that the vehicle was not registered or insured. Last week, I read in this newspaper that the Court of Appeal said that Government should set up a scheme to protect the victims of uninsured drivers. Would this solve the problem?

- D.B., Kingston

INSURANCE HELPLINE:

Thanks very much. You, like some of our judges, have raised a matter of public importance. There are three reasons for my comments. The first is that Parliament is now in the process of debating a road traffic bill to replace the 77-year-old law that is now in place.

A big increase in the size of the fine for driving without insurance is one of the many changes that is being considered. However, implementing the recommendations of the judges should be part of the broader strategy to solve the problem of uninsured motorists. The usual excuse about resource constraints due to the IMF agreement is not a valid argument for inaction.

The second reason is that I have it on good authority that motor insurers are in the process of introducing a solution that is aimed at reducing the number of vehicles that operate on our roads without insurance. Insurers estimate that number at 90,000, or nearly 30 per cent of the 389,000 vehicles that were inspected by the Island Traffic Authority in 2012. These measures will be implemented in cooperation with the police. This should be another leg of the strategy.

The third reason is timing. This column has been used in the past to draw public attention to cases like yours and those of others who have suffered because some persons disobey the provisions of the Motor Vehicles Insurance (Third-Party Risks) Act.

uninsured drivers

Three articles that I penned over the period March 4 to March 18, 2012 - 'The absurdity of choice for bike insurance', 'Does a monopoly exist in the motor market?' and 'Uninsured motorists: A big, expensive headache' - were written to highlight the problem. They speak to imperfections in the insurance market generally and, specifically, to the suffering that occurs when uninsured drivers cause accidents.

The June 19, 2015, ruling by the Court of Appeal in the case of Mecheck Willis v Globe Insurance Company provides the rationale for why policy action should be taken now to develop a broader strategy to solve the problem of uninsured motorists.

Willis was seriously injured in a traffic accident while driving his Mazda motor car in St Ann in 2001. The other vehicle, a Nissan Sunny, was being driven by a 16-year-old, who was killed in the collision. Willis, who was seriously injured, filed suit against the owners of the vehicle and the estate of the deceased. The court awarded judgment in Willis' favour and awarded him $34 million.

Because of his failure to recover from the owners of the Nissan, a suit was filed against the insurers of that vehicle. The court ruled that the insurers, Globe, were not liable to pay because the person driving the Nissan did not have a licence as required by law.

Willis' attorneys appealed the judgment. The Court of Appeal ruled in favour of Globe. The bottom line: The accident victim will get absolutely nothing after waiting 14 years for compensation because the third party was uninsured even though he was awarded $34 million by a lower court.

United Kingdom motor insurers set up an entity nearly 70 years ago called the Motor Insurers' Bureau (MIB). Its purpose is "to compensate the victims of negligent uninsured and untraced motorists. Every insurer underwriting compulsory motor insurance is obliged, by virtue of the Road Traffic Act 1988, to be a member of MIB and to contribute to its funding."

Two things are noteworthy. The first is that the UK government used its power to make laws to compel motor insurers to contribute to the fund. Ultimately, the financial resources that are used to create the compensation fund are borne by motor insurance buyers. The second is that the Road Traffic Act was the instrument that was used to attain the government's policy objective.

MIB noted in its 2013 report to members that there was another significant reduction in the number of incoming claims in that year. "This has largely been achieved through a combination of direct identification of uninsured drivers through continuous insurance enforcement activity with the police and by engaging key audiences ... overall, there has been a 47 per cent reduction in the number of claims since MIB started working with the police" in 2005, the report said.

Minister Dr Morais Guy, there is still time for you to implement the very thoughtful and well-reasoned recommendation of the Court of Appeal and prevent a recurrence of the misfortune that befell Mr Willis from affecting other citizens.

n Cedric E. Stephens provides independent information and advice about the management of risks and insurance. For free information or counsel, write to: aegis@flowja.com.