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How Will the New Motor Insurers Bureau Agreements Affect Motor Claims in the UK? - Michelle Reilly, Hill Dickinson LLP

07/05/17. The Motor Insurers Bureau has released a new Untraced Drivers Agreement 2017 and a Supplementary Agreement to the Uninsured Drivers Agreement 2015. Both apply to accidents that occurred on or after 1st March 2017. Michelle Reilly takes a look at the new agreements and considers how they will affect motor claims in the UK.

The changes:

Claim form

The 2017 Agreement specifies that all claims must be made on an MIB claim form. The 2003 Agreement merely required the claimant to apply to the MIB in writing.

Reporting to police

The 2003 Agreement excluded claims where a claimant had not reported the accident to the police within a set time frame. However, the 2017 Agreement only requires the claimant to report the accident to the police if the MIB reasonably requests them to do so and the claimant will have a right of appeal if they think the request to report was unreasonable.

The terrorism exclusion

The 2003 Agreement excluded compensation for death, injury or damage caused by or in the course of terrorism. Both the 2017 Agreement and the Supplementary Agreement to the Uninsured Drivers Agreement 2015 remove this exclusion on the basis that it is not permitted by European law to exclude it.

Property damage exclusion for uninsured claimants

The 2003 Agreement excluded compensation for property damage for victims of accidents caused by untraced and uninsured drivers when the claimant’s vehicle was also uninsured. Both the 2017 Agreement and the Supplementary Agreement to the Uninsured Drivers Agreement 2015 remove this exclusion, so that even when the claimant is uninsured, they will be entitled to compensation if they also suffer significant personal injury.

This amendment means that a claimant will have the same rights to compensation for property damage as for ordinary claims, irrespective of their own insurance position. However, this particular amendment has been criticised in some circles for going too far for allowing people who have not paid for insurance themselves the right to compensation for property damage from a fund subsidised by insurers.

Property damage

The 2003 Agreement excluded liability for property damage in untraced vehicle claims unless the claimant also brought a claim for death or bodily injury. This was amended in 2015 to the effect that property damage would only be compensated if the claimant

was also awarded a sum for ‘significant personal injury’ and as long as the property damage exceeded the specified excess of £300. The 2017 Agreement retains this exclusion but amends the definition of significant personal injury to lower the level of injury required and increases the specified excess to £400.

Significant personal injury

Under the 2015 amendment, ‘significant personal injury’ (for the purposes of claiming property damage in untraced vehicle claims) was defined as requiring four days or more of consecutive in-patient treatment within 30 days of the accident. The 2017 Agreement significantly lowers the threshold for ‘significant personal injury’ to two or more nights of hospital in-patient treatment, or three or more sessions of hospital out-patient treatment.

The 2017 Agreement does not specify whether qualifying out-patient treatment will include rehabilitation sessions and if it does, whether those sessions would need to be provided by a hospital or whether they could be sought privately.

Costs

While claims under the Uninsured Drivers Agreement are subject to CPR45 in respect of fixed costs, claimants who pursue claims under the Untraced Drivers Agreement are not entitled to costs under CPR45. The Untraced Drivers Agreement does however provide for the MIB to make a contribution towards their costs. The 2017 Agreement sets out a new fee scale and gives claimants the opportunity to seek a higher contribution in exceptionally complex cases.

Appeals

The 2017 Agreement relaxes the procedure for appeals, allowing the possibility of more time and expanding the range of decisions available to an arbitrator to coincide with what a court may order. However, the MIB will no longer be able to request a lower award should the claimant appeal, and oral hearings will now be held in private.

The 2017 Agreement grants the arbitrator the power to award the claimant the costs of the appeal and arbitration proceedings. It also allows the MIB to seek recovery of those costs where the claim is deemed to be of no merit or fundamentally dishonest.

The 2017 Agreement also requires the MIB to seek approval of all settlements in cases involving a minor or protected person.

Vnuk

The recent European case of Vnuk has extended the scope of compulsory motor insurance to the extent that all mechanically propelled vehicles used on public or private land should be insured, rendering the Road Traffic Act 1988 non-compliant with EU law. While the European Commission and the UK Government are considering how best to approach the issues raised by Vnuk with an on-going consultation, the 2017 Agreement reiterates that it will only apply to claims arising from the use of a motor vehicle on a road or public place. Interestingly however, the 2017 Agreement clarifies that this will now include claims arising from the use of a trailer as a vehicle. It seems inevitable that further amendments to the agreements will follow when the Government concludes its deliberations.

Conclusion

The 2017 Agreement makes significant changes to the framework for dealing with untraced driver claims against the MIB.

The new agreement will make it considerably easier for claimants to pursue compensation, removing many of the complex and procedural hurdles. However, some of the changes arguably remove necessary checks and balances that the MIB rely on to filter out and defend spurious or fraudulent claims.

We may see an increase in property damage claims and, coupled with an anticipated higher volume of claims arising from the Vnuk decision, the MIB as the fund of last resort is likely to experience an increase in claims and claims cost.

These are interesting times for the MIB. In addition to the issues arising from Vnuk, the case of Cameron -v- Hussain & Ors was heard in the Court of Appeal in December 2016 with judgment expected soon. The claimant in this case has sought to pursue compensation through the motor insurers of the vehicle involved in the accident, notwithstanding that the driver of the vehicle was unidentified. If the claimant is successful, this would result in a significant change in the way these cases are dealt with. Judgment in favour of the claimant could see these cases being heard in the courts, which would involve not only further amendment to the latest agreement, but the potential for significant further costs exposure for the MIB and insurers.

Michelle Reilly
Legal Director, Hill Dickinson LLP
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