Motor premiums in the UK are likely to rise after a court decision adds liabilities to the Motor Insurers’ Bureau (MIB) which is ultimately financed by all insured motorists.
In the Lewis v Tindale case the claimant, a pedestrian, sustained serious injuries when struck by an uninsured vehicle driven by Mr Tindale who had left the road, went through a barbed wire fence and into private land where the accident occurred.
The Court of Appeal on June 5 held the MIB liable to compensate the victim of the accident arising on private land even though this was outside the scope of the “Uninsured Drivers Agreement,” and the Road Traffic Act (RTA), upholding a previous decision by the Birmingham High Court.
The MIB’s main responsibilities lie in the paying of compensation to victims of uninsured drivers. The organisation is financed by its members, the insurance companies, and ultimately by the insurance premiums of all motorists in the UK.
Previously in September 2018, the Birmingham High Court had to decide whether the judgement against Tindale was one to be covered under the RTA 1988. In addition, it needed to decide whether the MIB was liable to satisfy the Judgement under the 2009 Motor Insurance Directive (MID). Furthermore, it needed to clarify if the provisions of the MID have direct effect against the MIB.
The High Court found that as the accident occurred on private land, liability for the accident did not have to be insured under the Road Traffic Act and thus did not need to be compensated by the MIB. However, following prior case law and EU law, the High Court decided that the MID has direct effect against the MIB as an emanation of the state. It then followed that cover is required anywhere in each member state, including on private land and thus the Judgement can be enforced against the MIB.
“The High Court decision opens the MIB and therefore motor insurers to claims for incidents on private land,” says Tom Maughan, Claims Executive/Vice President at Lockton.
“The decision also brings into scope claims against the MIB for liabilities arising out of the use of any motor vehicles, not only those used on roads. Such claims have not previously been factored into the MIB’s ‘fund of last resort’ for Road Traffic Act liabilities,” Maughan explains.
“It is hoped the case will focus the government’s mind on a clear UK compulsory motor insurance regime,” he adds.
By dismissing the MIB’s appeal against the High Court decision, the Court of Appeal argued that as the UK is non-compliant with the Motor Insurance Directive requiring compulsory insurance on private land (as interpreted by the Court of Justice of the EU), the failure to properly implement can be enforced against the MIB as an emanation of the state, effectively remedying the shortfall in the RTA. The Judgement is expected to add impetus to the review/reform of the RTA and the position to be taken post Brexit.
The MIB has applied to the Supreme Court for permission to appeal the decision on the scope of its obligations.
Meanwhile, the MIB has sought a contribution from the UK government to help cover the additional financial and administrative burdens emanating from the court decision.