MIB: national treasure or pariah?

Date: 21 November 2008
Issue: Vol 158, Issue 7346
Categories: Features, Personal injury, Damages

Part one: Nicholas Bevan explains why the Motor Insurers Bureau is ripe for reform

It is often said that familiarity breeds contempt. The Motor Insurers Bureau (MIB) has been around for approximately 63 years and in that time it has provided a crucial compensatory lifeline to countless thousands of victims of negligent uninsured motorists. It plays a vital role in the framework of different protective measures that are designed to ensure that road accident victims recover their full compensatory entitlement. While its public profile may be eclipsed by road user membership groups such as the Automobile Association (founded in 1897), the service it provides is potentially far more crucial—particularly for those who are unfortunate enough to be victims of one of the approximately 1.5 million uninsured drivers who plague our roads.

And yet for all this, the MIB does not enjoy the universal esteem of claimant representatives; indeed it is coming under increasing pressure for radical reform to the way in which it compensates these victims.

A decade of change

During the past 10 years, the MIB has been a powerhouse of innovation across an impressively wide range of activities. These demonstrate a vigorous dynamism. Some of these achievements are presented below in roughly chronological order:

The Motor Insurance Database of insured vehicles is set up to tackle fraud, long in advance of The Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003 (SI 2003/37);

Instigation of a five year plan to centralise and reform MIB claimshandling processes, to deliver a more efficient and consistent approach;

By 2003 and well within the five year programme all new claims are handled centrally in new offices at Milton Keynes, except for claims from Northern Ireland ;

The Motor Insurers Bureau Legal Expenses Scheme is launched. This after the event insurance scheme is managed independently of the MIB and is free of charge;

The MIB / MASS Fast Track Understanding which streamlines and expedites low to moderate value accident claims, later extended to all claimants;

Formulation of an MIB Customer Charter;

Institution of an MIB Training Academy;

Lobbing for police powers to search and seize uninsured vehicles, resulting in the Serious Organised Crime and Police Act 2005;

Creation of dedicated phone line link for the police to access the Motor Insurers Information Centre;

Accreditation with the Chartered Institute of Insurers;

Accreditation with the Institute of Legal Management Academy;

These reforms have been overseen by Mr Ashton West, the MIB’s charismatic and influential chief executive officer. He is an enthusiastic proponent of rehabilitation and was an early proponent of the benefits of periodical payments as a more accurate means of compensating high value personal injury claims, when many had written this reform off as something of a “dead letter”. He has also demonstrated the MIB’s good faith in forbearing to raise legal costs challenges on the back of the MIB’s legal expenses scheme.

All this rather begs the question: why is the MIB not universally applauded? The answer lies in both the Uninsured Drivers Agreement 1999 and the Untraced Drivers Agreement 2003 which the MIB is constitutionally bound to “comply with” under Art 3(B)(i) of its Memorandum of Association. This series of articles is primarily concerned with the former agreement.

The Uninsured Drivers Agreement 1999

The chief failings of what is now commonly perceived by most claimant representatives to be a notoriously unjust compensatory regime are:

the unjustified exclusions of liability under clause 6;

the excessive and heavy handed procedural requirements and the harsh strike out clauses 7 to 12;

a bizarre penalty imposed on the innocent victim if he fails to request the other driver’s insurance details or to pursue a formal complaint to the police under clause 13;

the imposition of a requirement, as a condition precedent of any liability, that claimants should complete the MIB’s claim form, which has been recently altered to require applicants to supply unwarranted and wide ranging access to highly personal and privileged information.

Their combined effect is to deny to many deserving claimants their entitlement to recover any compensation from the MIB. Their predicament is so acute that it echoes the deficiencies highlighted originally within the Cassel Report, approximately 71 years ago.

Even at its inception, the 1999 agreement was something of an anachronism, for two reasons.

First, in the way that it blithely ignored the tectonic shift in the pre and post action litigation landscape introduced by the Civil Procedure Rules 1998 by imposing a plethora of draconian and excessive notice requirements; all, needless to say, set as conditions precedent of any liability. They go far beyond what is reasonably necessary to protect the interests of the MIB and their effect is to transfer liability from the MIB central fund to professional indemnity insurers; which rarely results in claimants recovering their full compensatory entitlement.

It also failed to implement the Second EU Motor Insurance Directive (84/5/ EEC), this will be considered in a future article.

Although the 1999 agreement is in many aspects an appalling document, it can only be altered with the agreement of the secretary of state and experience shows that securing a minister’s fiat can prove to be a very time consuming exercise. Emergency patchwork repairs have been undertaken within the MIB’s Notes for Guidance but their legal standing is dubious. This particular agreement languished for approximately two years on various Ministers’ desks before being signed off by a new incumbent in what must have been a very perfunctory manner.

The courts have adopted a robust attitude to technical infringements of the notice provisions under ss 9 to 12 of the 1999 agreement. Technical breaches often prove fatal.

The intricacies of the procedural requirements within the 1999 agreement seem to occupy something of a blind spot in many practitioners’ competence. Ideally, they should be handled by dedicated specialists and, where not, practitioners will need to appreciate how these claims differ from a typical RTA claim; case management systems and protocols should distinguish MIB claims as a separate category of claim. Many practitioners fall into the trap of treating an MIB claim as though it were an ordinary RTA claim.

There has also been the difficulty that the 1999 agreement, is of course highly beneficial to the insurance industry members who constitute the MIB board. Because the agreement is replete with exceptions, conditions precedents and arbitrary procedural strike out clauses, it puts the bureau in a most advantageous tactical position, even when it does extinguish the MIB’s liability entirely. The cynical view is that this unjust agreement serves the interests of the insurance industry, since it is ultimately liable for contributing to the MIB levy. It is therefore to the MIB’s credit that it has acknowledged the shortcomings and has already invited interested parties to contribute to its reform. The MIB will be discussing the reform with interested stakeholders at a round table meeting next month.

An insurer’s perspective

While it is easy to criticise the 1999 agreement it should be remembered that when the 1999 agreement was being formulated the motor insurance industry was facing an unprecedented number of uninsured and untraced driver claims. A significant proportion of these claims were being made late in the day, probably as a result of the late presentation of claims in response to television and radio advertisement by compensation claims agents and referrers, giving the MIB little opportunity to trace the drivers responsible or to investigate the accident circumstances and the claim. The bureau also faced reluctance by some practitioners and claimants to co-operate with the provision of information.

Arguably, the 1999 agreement reflects the bureau’s harsh experience in dealing with these claims. These difficulties appear to have resulted in the steady accretion of additional conditions and controls in an attempt to address these problems.

While the MIB’s open handed and pragmatic approach to the reform of the 1999 agreement is welcomed, it has to be appreciated that the MIB is not in a position to act as an impartial arbitrator in these discussions. There will inevitably be differences of opinion between the MIB’s insurer perspective and the various claimant representative bodies whose clients will depend on the outcome. It is to be hoped that this time the secretary of state will take an active interest and mediate an agreement that will deliver a just outcome for all concerned.