FINANCE
COMPULSORY MOTOR INSURANCE
MEMBERS of Parliament during the present recess will have plenty to occupy their attention in the Reports of Depart- mental Committees on matters of considerable importance to the general public. Within the next week or two the Report is expected to be issued of the Departmental Com- mittee which has been considering the problem of what is commonly known as " Share-Pushing," and, needless to say, it is a Report which the City is awaiting with keen interest. Meanwhile, immediately before Parliament rose there was issued the Report of a Departmental Committee on the sub- ject of Compulsory Insurance. The Committee was appointed by the Board of Trade in February of last year under the Chairmanship of Sir Felix Cassel to consider what changes in the law relating to compulsory insurance against third- party risks and by employers against liabilities to their work- men might be desirable. It will also be recalled that the appointment of the Committee arose, primarily, from the failure of certain companies transacting motor-vehicle insurance ; these failures occasioned hardship to injured third parties who were deprived of compensation, and also to insured persons who failed to receive the indemnities which they have been compelled to pay.
PROTECTING THE INSURED.
It is well to remember the circumstances which led to the appointment of the Committee, because throughout the Report it is evident that attention has been very specially concentrated upon the best means of protecting the insured against any possible risk of failing to obtain the fulfilment of the undertaking in his contract. And indeed the very fact of insurance against third-party risks being made compulsory by the Government necessarily calls for the interests of the insured being protected in every possible way.
First and foremost, therefore, the Committee recommend that no Insurer should be permitted to undertake any branch of compulsory insurance business unless licensed to do so by the Board of Trade. At the same time the business of insurance is in so many respects a technical and indeed almost a scientific business that for the purpose of advising the Board of Trade about the licensing of insurers the Committee recommend that there should be set up three Advisory Com- mittees to be concerned with the licensing of the three categories of insurers who would come under review : viz., Insurance Companies, Lloyd's Underwriters and Mutual Indemnity associations. Each of the Committees is to consist of five members appointed by the Board of Trade from persons drawn from the respective categories of insurers.
A GUARANTEE FUND. - - The second and almost equally important recommendation of the Committee is that there should be a Central Guarantee Fund to be contributed to by all the InSurance Companies in proportion to their compulsory insurance premiums, this Fund to be drawn upon in cases where for sufficient reason an Insurance Company might be unable of unwilling to meet a claim. Apart from this Fund, however, the Com- mittee recommend that there should be no special deposit for compulsory insurance as such. The Committee also recommend that all licensed insurers should render to the Board of Trade revenue accounts, and, where necessary, returns in respect of outstanding claims for the three classes of business—viz., Motor Vehicle insurance business in the United Kingdom ; Employers' Liability business in the United Kingdom ; and Aircraft insurance business.
POLICY " CONDITIONS."
Another important feature of the Committee's recom- mendations is concerned with the matter of Defences by insurers and failure to insure. Among other things the Committee point out that while the basis of voluntary insurance is the protection of the insured by means of a contract between himself and the person whom he selects as his insurer, the person for whose benefit compulsory insurance is being introduced is not a party to the contract and has no voice in the framing of its terms. It is further pointed out that, so far as motor-vehicle insurance is con- cerned, the injured third party may, notwithstanding various enactments, still lack the protection of an enforceable policy of insurance where the motorist has failed to comply with the conditions of the policy other than those rendered ineffective by the Road Traffic Acts, or where a declaration by the Court avoiding the policy on the ground of material misrepresentation or nondisclosure may have been obtained by the insurer, or where the motorist may have failed alto- gether to comply with the obligation of insurance. '
In consideration of this matter of Defences the Committee recommend that " conditions " permissible in policies should be reduced to a minimum and they specify the conditions which should be recognised as permissible in policies. The Committee further recommend, as in the case of material misrepresentation or nondisclosure, no insurer should be permitted to repudiate liability as against the -third party on the ground of a breach even of those permitted conditions (set out in the Appendix of the Report) without first obtaining a declaration by the Court that such breach has been established.
It would seem therefore that a policy is not to -be rendered inoperative by the insured person's failure to observe certain conditions now commonly inserted in policies. " For example," writes the Insurance Editor of the Morning Post, " in most standard policies a condition of the insurance is that the vehicle is maintained in an efficient condition and liability is specifically excepted if the vehicle is drawn in an unsafe condition. These exceptions find no place in the list of permitted conditions."
Although in some quarters there has been a disposition to consider that the Committee ins their concern for the interest of the public have made recommendations involving some hardship to insurance companies, it is felt that on the whole the recommendations are fair and reasonable. It is, of course, after all for the licensed insurers to determine the premiums covering the various risks, while insurance itself having been made compulsory it would seem that the gross revenues from the premiums should enable the Committee's recommendations to be carried out without loss or hardship to the companies. Indeed such must be the end desired by the Committee, for though its considera- tions may. have been said to have been concentrated upon the due .performance of the contracts affecting third-party risks, it is obvious that unless the insurer were also to be adequately protected the system of insurance itself would break down to the loss of the public quite as much as to the companies, _ . ARTittat W. KIDDY.
(Financial Notes en page 258)
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