Dr Nicholas Bevan

Dr Nicholas Bevan

Sunday, 8 October 2017


I have recently joined the editorial team of the Encyclopedia of Insurance Law.  What follows is an extract from the forthcoming update in the EIL that I prepared in July and which is due to be released in November 2017.

Publisher details


Reproduced here with kind permission of Sweet & Maxwell

Part 9: The Motor Insurers’ Bureau

Section 3: The MIB’s extra-statutory liability

Section 2 considers the MIB’s rights and responsibilities in two areas:  first, within two separate compensatory schemes agreed between it and the Secretary of State for Transport (the MIB Agreements) acting under his executive powers conferred under section 2 European Communities Act 1972 and secondly, pursuant to the Motor Vehicles (Compulsory Insurance) (Information Centre and Compensation Body) Regulations 2003 that implements the fourth EC Directive (2000/26/EC) on motor insurance.

This section is entirely new and it considers the MIB’s potential liability to compensate third party victims independently of the aforementioned domestic rules and regulations, through the application of EU law, as opposed to the UK’s transposition of the same EU law on motor insurance[1]


·         The current orthodoxy as to the role and status of the MIB is that it is independent of government control; that whilst the state has devolved to it its responsibility for ensuring that motor accident victims are compensated either through insurance provision or by an authorised compensating body in accordance with European directives on motor insurance, this of itself is said to confer no special status, rights or responsibilities on the MIB beyond those that apply to any other subcontracting provider of such services.  This account limits the MIB’s compensatory responsibilities to those it has agreed to under the terms negotiated with the Secretary of State, allegedly at arm’s length: no more; no less.  These views were largely endorsed by Flaux J in Byrne v MIB [2007] EWHC 1268 (QB).  However, further analysis suggests that such an outlook is overly simplistic; erroneous even[2].
·         This section will consider the way the MIB’s legal status under EU law is influenced by the compensatory role it has assumed.  It will also assess the effect this has in practical terms on the scope and extent of the MIB’s liability to compensate individual claimants.  There is growing support for the contention that a proper analysis of the MIB’s relationship with the Department for Transport reveals a much closer interdependency between the state on the one hand and the MIB and its membership on the other.  It is becoming increasingly apparent that the UK state has always exerted a very considerable degree of de facto control and influence over the MIB and its membership as well as the various public services it discharges on the state’s behalf in the context of motor insurance and in its capacity of compensator of victims of uninsured and untraced drivers[3].  It is argued here that both these factors[4] have important implications for the MIB’s legal status and its responsibilities under EU law.  It is contended that these factors, independently of one another, are each capable of fixing the MIB with additional liabilities to those it has contracted to meet within its private law agreements with the Secretary of State for Transport.  This derives from the application of well-established EU law principles that appear, hitherto at least, not to have been properly addressed by the UK courts.
·         It follows from the above that an appreciation of the relevant European law is an important prerequisite to any proper understanding of the MIB’s legal status and responsibilities.  Accordingly, this section begins by outlining the relevant European law and principles before attempting to explain the constitutional responsibilities that devolve upon the MIB independently of its contractual responsibilities by virtue of its role as the UK’s authorised body charged with discharging the public service roles prescribed by Articles 10, 23 to 25 of EC Directive 2009/103/EC on motor insurance (the Directive).  
·         This European law analysis produces some interesting hypotheses:
o   The first of which is that the MIB agreements, considered above in Section 2, serve a dual role.  Not only do they define the MIB’s contractual obligations to fund and manage the two compensatory schemes for victims of uninsured and untraced drivers but they also constitute part of the state’s rules and laws implementing the Directive.  It is in this latter capacity that these private agreements appear to fall within the purview of the principle of European law consistent construction: whereby national provisions adjudged to be inconsistent with the rights intended to be conferred on individuals under a Directive are capable of being brought into line with the European requirement through a process of Marleasing-style[5] purposive interpretation.
o   Secondly, the MIB’s legal status and role as the UK state’s authorised body entrusted with discharging the public service role of compensating victims in accordance with the terms of its agreements with the Secretary of State for Transport may expose the MIB itself, to the direct and binding effect of the wording of the relevant provisions of the Directive they are intended to implement; independently of the agreements themselves.  Indeed, it is likely that any organisation entrusted by a member state with the task of discharging its obligations under the Directive to compensate motor accident victims will be considered so closely associated with the state to warrant its provisions having direct effect.  This has important implications for cross border claims within the European Union.  If the European principle of direct effect applies here, it has the potential to enable ordinary individuals adversely affected by a statutory or contractual limitation, restriction or exclusion of civil liability cover that is not permitted by the Directive to invoke the superior authority of the Directive’s legislative aim to ground a civil claim against the relevant authorised compensating body (in the UK, the MIB) and to secure redress.  In practical terms it enables individuals to invoke the wording of the Directive directly against the MIB, as though the directive was a domestic statutory provision.  Ordinarily, EU directives do not have direct effect in this way but EU law has developed certain exceptions to the rule to prevent member states from evading their responsibilities and to ensure the effectiveness of this form of secondary legislation.  This has been extended to embrace bodies that are not obviously part of central government (such as the MIB) in certain specific circumstances[6].  There is a growing body of evidence to suggest that these circumstances apply to the MIB’s role in compensating victims of uninsured and unidentified vehicles.
·         In consequence of the above the MIB faces potential additional liabilities resulting from:
§  The nullification of various provisions within the MIB agreements which purport to confer on the MIB an entitlement to restrict, limit or exclude liability in circumstances that are not permitted by the Directive[7];
§  The direct effect of Articles 10 and 23 to 25 of the Directive itself, independently of the UK legislative framework for compulsory third party motor insurance and / or the MIB agreements themselves.  This could expose the MIB to a new liability to compensate for loss or injury caused by incidents that do not currently fall within the scope of the UK insurance requirement as defined by Part VI of the Road Traffic Act 1988, namely: (i) the use of unusual ‘off-road’ transport and motor vehicles; (ii) the use of vehicles on private land and (iii) claims arising out of a vehicle defect not caused or contributed by the user or owner’s negligence but by virtue of some other third party[8], product or software defect.
·         In practical terms the potential impact of the EU law doctrine of direct effect would be to severely restrict the MIB’s ability to avoid or limit its liabilities under its existing arrangements as well as fixing the MIB with an autonomous liability to compensate victims sustaining loss or injury caused by motor vehicle use on private property or otherwise from motor vehicles which, hitherto, were not thought to be subject to the insurance requirement prescribed by Article 3 of the Directive.

[1] The analysis in this section of Part 9 are the views of Dr Nicholas Bevan, its author.  His views are explained in greater depth in the following articles: Nicholas Bevan, ‘Mind The Gap’, British Insurance Law Association Journal, January 2016 and Nicholas Bevan, ‘Bridging The Gap’, British Insurance Law Association Journal, March 2016
[2] See Nicholas Bevan, Putting wrongs to rights, Part I: New Law Journal, 27 May 2016 and Part II of 3 June 2016
[3] See Nicholas Bevan, ‘Bridging The Gap’, British Insurance Law Association Journal, March 2016.  Note also the fact that the MIB owes its existence to the principal agreement dated 31 December 1945 between the Minister for War Transport and every motor insurer authorised to conduct sell motor insurance in the UK whereby the state required the formation of a compensating body, funded by the industry and subject to such terms as the minister might from time to time impose on it.   Although the parties have changed many times, the agreement was never terminated and, it is reasonable to suppose that its essential nature is preserved at the very least as an informal understanding and modus operandi that informs the present relationship between the Secretary of State for Transport and the MIB.
[4] i.e. (i) the state’s influence over and control of the MIB as well as (ii) the state’s control over the public services it discharges
[5] (Case C-106/89) Marleasing SA v La Comercial Internacional de Alimentacion SA [1990] ECR I-4135 as developed by (Case C-397/01) Bernhard Pfeiffer et al v Deutsches Rotes Kreuz, Kreisverband Walshut eV [2004] ECR I-8835
[6] See the references to (Case C-188/89) Foster v British Gas below.
[7] Take for example the unlawful exclusions of liability for loss or injury caused by acts of terrorism or damage to uninsured vehicles; both removed for this reason with effect from 1 March 2017 but not retrospectively, and the purported exclusions of liability under the Untraced Drivers Agreement 2003 for failing to report the incident giving rise to the claim in clause 4 (3) that the MIB wrongly seek to apply to any incident predating 1 March 2017.
[8] E.g. garage mechanic or software manufacturer or ICT technician

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