Cedric Stephens | Time for action on fund for motor accident victims

Mecheck Willis was seriously injured in a motor vehicle accident in 2001. The driver of the other vehicle was 16-year-old Devar McFarlane. The latter reportedly lost control of his vehicle and crashed into the car that Willis was driving. McFarlane died as a result.

Willis, a 40-year-old higgler, suffered injuries to his legs and has been unable to work.

Eleven years later, thanks to the glacial pace of the local justice system, a Supreme Court Judge found that the company that supposedly insured the vehicle McFarlane was driving, was not legally responsible to pay Willis’ claim for $34 million.

McFarlane did not hold a driver’s licence. As a result, the car owners’ insurance offered no protection. Willis’ claim would be not recoverable.

This outcome was not expected. When the motor vehicle accident compensation system was set up over six decades ago it was anticipated that all victims of road accidents would get compensation as set out by law.

Willis’ attorneys filed an appeal. The Court of Appeal upheld the judgment of the Supreme Court. The insurance company did not have to pay a dime the three judges decided. 

McFarlane was not legally permitted to drive a motor vehicle. There was no valid insurance policy in place at the time of “the accident that has had such catastrophic consequences of the life of Willis,” the judges said. “It would be wrong to impose on an insurer a liability the insurance policy did not purport to cover.”

The judges were very sympathetic to the plight of Mr Willis. He was seriously injured. Also, he had to wait 11 years to have his case heard only to learn that he would not get any compensation.

The then head of the Appeal Court, Justice Panton, said situations like these “require the intervention of the state in the creation of a fund that would provide for innocent, unfortunate victims “ and that it was “most unfortunate that no facility exists … to satisfy the judgment of this claim.”

Justice Hillary Philips agreed with Justice Panton. “The Jamaican legislature ought to take the crucial step … to implement a scheme in order to cure the social evil created when unlicensed drivers cause personal injury, property damage or death to innocent third parties for which there is no compensation,” she said.

Great Britain enacted legislation “to protect innocent third parties from the actions of uninsured drivers”. An entity that is funded ultimately by all motorists was established in 1946 for this purpose.

Nearly five years have passed since two of Jamaica’s eminent judges suggested in 2015 the setting up a similar scheme. Why has nothing happened to prevent this social evil?

From my vantage point as a non-lawyer, the legal framework already exists. The usual argument about IMF funding constraints also does not apply.

The Architects of The Insurance Act 2001 included a provision in Part VIII, Clause 122 that speaks directly to issues like the establishment of a compensation scheme. It reads: “The Commission may establish a scheme or may require registered insurers to contribute to a scheme approved by the Commission, for the collection, allocation and application, in accordance with regulations made under this Act, of monetary contributions from registered insurers and registered insurance intermediaries, for the purpose of covering prescribed risks, if the Minister, on the recommendation of the Commission, determines that: (a) it is in the public interest, and (b) a particular insurance cover is not available.”

Commission in this context refers to the Financial Services Commission, FSC, the body that regulates institutions like insurance companies.

Clause 122 quite intentionally – by my reading – assigns the responsibility for the establishment of a scheme to the FSC. Further, it places the primary duty on that body to justify the rationale for such a scheme to the Minister of Finance using the two criteria laid down in the act. This ought not to be a very difficult task given the opinions expressed by the two Appeal Court Judges.

Additionally, the FSC has at least one professional actuary among its staff, attorneys and accountants. It should not be too difficult for them determine what funding will be required over a 10-year period, estimate the pay-outs to victims, calculate the level of contributions that will be required to fund the scheme, etc.

In my column “Time is ripe to overhaul motor accident compensation system” published January 6, 2019, I cited the case of Linford Jackson.  He is one of scores of persons whose lives were disrupted by dysfunctions in the system 10 years ago in one accident. Mecheck Willis should be added to the list which grows by hundreds each year.

Today’s article is intended to outline the parameters of a solution that can be implemented before the end of the current calendar year. Over to the FSC and the Insurance Association of Jamaica. You have the skills, experience and staff to solve this problem.

- 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