Paying out claims on an indemnity policy can only be legitimate if the payment can be shown to indemnify. Other payments are gratuitous. Should the cost of gratuitous payments be borne by the general motorist who has no say in it?
Well, for good or ill, the insurance is compulsory, so the answer is yes. If the insurer pays, then he passes the bill on to the motorist.
But has this happened? Is there gratuity when there should be indemnity? Consider whiplash.
Science has, even by medical standards, emphatically shown that physiotherapy provides no foreseeable effect on indemnity. Why should the motorist pay for this? Answer – because insurers do.
The bigger problem though is that medical opinion about causation, diagnosis and prognosis has been accepted as legal fact. For whiplash, this is demonstrably unsound. The medical approach is not consistent with legal fact finding. Legal fact finding is based on the balance of probability and based on the principle of probable loss. Medical fact finding is based on precaution and advocacy. For broken bones, the two approaches are equivalent but for symptoms of soft tissue injury which are not so very different from everyday symptoms the two approaches are incompatible.
On reviewing the research evidence, this incongruence leads to inflated diagnosis rates, causal fiction and most expensively, legally unjustifiable estimates of prognosis. Medics don’t know how to inform on legal fact finding in whiplash and those who process whiplash medical reports don’t know what is wrong with them. There is a huge gulf in knowledge.
The effect is that payments are being made but their relationship with legal indemnity is probably unsound. If this new way of looking at the research evidence is accepted, the payments in the current system are, in effect, gratuitous. Is the motorist due some reimbursement?
Insurers might consider how to avoid a demand for reimbursement.
- One way would be to show that the current practice is in fact an indemnity – the status quo is perpetuated and, medical fact = legal fact.
- Another is to show that until the view was officially changed, insurers had no way of knowing that current practice wasn’t providing indemnity. The legacy of mis-pricing can be avoided on the basis of a date of knowledge argument. Reimbursement would be from the date of knowledge onwards.
Is it in anyone’s interests to prosecute the idea that the indemnity principle is being mis-sold to the motorist?
Some politicians have argued that the bar should be raised on whiplash claims. Restoring the indemnity principle would have that effect, motor insurance would get cheaper.
As the creators of compulsory motor insurance, politicians have a moral duty to look after the interests of the motorist. In addition to resolving some soft governance issues, they might just decide to prosecute this idea. But would they also seek to prevent the result being retrospective in nature? A bonanza for motorists might even appeal to politicians.
A whiplash backlash could be very expensive. If insurers took the case forward then they might be able to steer the result away from a retrospective date of knowledge.