§ EARL RUSSELL rose to call attention to the desirability of the compulsory insurance of motor vehicles against third-party risk, and to present a Bill. The noble Lord said: My Lords, the subject of the compulsory insurance of motor vehicles using the public roads against third-party risk is one which has been considered for some time by motorists and, to a less extent, by the general public. The reason for the suggestion, of course, is that an irresponsible person who is driving one of these vehicles may inflict damage for which he is not able to pay when he is sued. He may be a man of straw. The general situation has been summed up by a very well-known motor writer in a recent article in the Autocar, and I do not think I can do better than read to your Lordships one or two sentences from that article to show what the contentions are.77
The writer says:—
Well, nothing matters so long as things go well, but accidents will happen, and when they do it is not inconceivable that they may inflict damage and often irreparable loss on other folk, for which there is absolutely no possible chance of obtaining any redress or getting any return whatever. The majority of us have enough common sense to insure our cars and ourselves against all eventualities, but some risk the chance in order to save their pockets, often knowing full well that they are but men of straw and perfectly incapable of being made to pay for any damage they may do…
Innumerable instances are already on record, and this is why I am of opinion that the State ought to insist on compulsory third-party insurance, at any rate on the part of everyone owning a motor vehicle. …
The whole matter amounts to this, that it is now possible for any ordinary law-abiding citizen engaged on his or her lawful occasions oil the road to receive injuries with no possibility of any redress. I was never one to demand impossibilities, but this case does not answer to that description, for by a compulsory scheme of third-party insurance the mischief can be obviated, and a certain amount of redress for even the worst of cases obtained.
There is one difficulty which, I think, might be dealt with at once, and that is the suggestion that there are some people whose records are so well known, and so bad, that no insurance company can be found to insure them and, therefore, if they could not drive unless insured they would be unable to drive at all. I can only say that if that were the result I do not think that the House need regret it. If the record of any driver is so bad that no person will be found to take the risk, the public will be better off if such a person is kept off the road.
§ Then there is the very difficult question as to the possible machinery by which this kind of thing can be done. I have drawn a Bill—no doubt very badly because I have drawn it myself—which I propose to present to your Lordships. Fortunately, it is not in your Lordships' hands, and therefore you will not be able to criticise its defects, but I have proceeded upon the principle that a licence should not be issued in respect to a motor vehicle unless at the same time a receipt for insurance is produced for that vehicle, showing that it is insured against third-party risks to the extent of £5,000. £5,000 may seem a very large sum to insure, but, in fact, the cost of £5,000 is very little. It is a good deal lower than the insurance against damage to your vehicle 78 and things of that kind and it would not cost very much. I would suggest to your Lordships that it is not altogether an unreasonable sum because cases might happen, and have happened, in which a man earning, say, £1,000 a year is run down by a motor vehicle and killed and his widow and family lose the benefit of that income. There is a case where £5,000 might hardly compensate them. There have been cases, I think, in which even larger damages have been given. So long as motor vehicles are and can be driven by irresponsible people who have no means to fall back upon and no means of paying severe damages when inflicted, so long will you run the risk of perfectly innocent people being without a remedy. This is a risk which, I think, they ought not to run any longer.
§ I will tell your Lordships in a few words what the Bill does. Clause 1 provides that no licence shall be issued under Section 13 of the Finance Act, as amended by the Roads Act, unless at the time there is produced to the issuing officer a policy of insurance or a receipt for insurance against third-party risks in the sum of not less than £5,000 in respect of any damage caused by the use of such vehicles. That is really the operative clause. Clause 2 provides that a declaration of particulars in this matter may be prescribed under Section 5 of the Roads Act in addition to the particulars there prescribed.
§ Clause 3 provides for a practical difficulty which might, and must, arise where the period of the insurance policy is not co-terminous with the period of the licence, and I have provided that if the insurance policy expires before the licence expires then the date of the expiry of the insurance policy shall be written upon the licence and no such licence shall be valid beyond that date unless a fresh insurance is effected. It seems to me that is a fairly simple way of getting the insurance carried on. I have very little doubt that if, in practice, any scheme of insurance is adopted, you will very seen get these insurances issued exactly coterminous with the licence, because in my opinion all insurance companies carrying on business will adapt themselves to it. Clause 4 provides that the provisions contained in Section 3 of the Motor Car Act, 1903, relative to the production of a licence to drive, shall have effect also as regards 79 the production of a receipt for insurance under the Bill, so that a motorist might be required to satisfy any police constable that his vehicle was, in fact, insured. If he produced his vehicle licence with the receipt upon it that would be enough to show it.
§ I am not at all insensible to the difficulties involved and it is for that reason that I have taken the occasion to put down a notice for the First Reading of this Bill, not with the intention of carrying the matter any further this Session, but simply that the text should get into the hands of your Lordships so that you may be able to consider the matter and, if the principle is approved by you, make suggestions as to how an application of it may be made. That there is a grievance is undoubted. That there is an injustice is also undoubted. That injustice is done to perfectly innocent people and you are not, in fact, inflicting any real hardship upon the motorist, because I do not suppose that the number uninsured exceeds one per cent.; it is probably not so much. But you are simply compelling that small and reckless minority, and possibly a minority who could not pay, and taking steps to prevent what I have mentioned happening when innocent people are injured. I shall ask your Lordships to read this Bill a first time and to consider the matter. I shall be very grateful for any assistance from any quarter of the House at a later stage. I beg now to move that the Bill be now read a first time.
§ Moved, That the Bill be now read 1a.—(Earl Russell.)
§ THE FIRST COMMISSIONER OF WORKS (VISCOUNT PEEL)
My Lords, the noble Earl who introduced this Bill has told us that he does not wish to proceed with the Second Reading this Session and therefore, for a moment or two, I should like to indicate the sort of view that is taken by authorities and by the Government upon this subject. Your Lordships are, of course, extremely well aware of the very large increase of motors upon the road in the last few years and therefore the question of compulsory insurance against third-party risk has really become of some importance. In some countries on the 80 Continent these matters have already been dealt with. I understand that in Denmark there is a system of compulsory insurance already in existence and in Switzerland a projet de loi has been under discussion in the National Council. In Belgium the principle of the system of compulsory insurance has been already approved but has not taken any form yet as an Act or as a Bill. I understand that that country is waiting for other countries to pass similar systems.
There was a special committee of inquiry on road driving set up by the League of Nations with reference to the circulation of motor vehicles and they recommended that the possibility of the establishment in all the contracting States—that is to say, those who signed the International Convention of 1909—should consider the possibility of a system of compulsory insurance against all damage caused by motor traffic. On the whole, the view of the Ministry is that the difficulties of setting up a satisfactory system are at present very great and they do not see their way, as yet, to establish a regular system. But there are one or two points on which I shall say a few words. One is, what should be insured? Should it be the driver or should it be the vehicle? From what was said by the noble Earl I thought at first that he was going to insure the driver. Then he spoke some words later on in his speech which made me think he was going to insure the vehicle.
§ VISCOUNT PEEL
The view of the Ministry is that the insurance of the driver is in many ways rather a simpler process, because when he goes to get his licence or to renew the licence he will not get the renewal, if this system be established, unless he is able to produce a satisfactory insurance policy. That, no doubt, would be in some ways not very difficult to administer. On the other hand, I understand there are a good number of working men and men of the quite poor class who would find it rather difficult to pay the insurance and whose insurance would not be paid for them by owners. Another difficulty is that the amount of insurance would differ very much with the type of vehicle and also 81 with the purposes for which the vehicle was used. In that case, as a man would shift from one vehicle to another, it would be very difficult to have a sort of shifting policy which suited itself to the varieties of vehicle and to the different purposes for which that vehicle was used. Where the man was definitely employed by a fixed employer there would be no difficulty, or very little difficulty. This system would, of course, upset for the time, as the noble Earl realises, the existing system of insurance, under which a great many people have insured their vehicles and drivers and under which the companies are able pretty well to estimate the risk, while competition, perhaps, hinders the cost of the insurance from being placed too high.
Another matter which is worth considering is that the possibility of evasion is rather greater when you insure a driver, because when you insure the vehicle under the system that now obtains anybody can see, when that vehicle is being driven along the road, whether it has a proper paper which carries with it the insurance. The system, therefore, of insuring motor vehicles does not appear to be so difficult in some respects as the system of insuring the motor driver. On the other hand, in cases of an unauthorised use it would be difficult to say whether the insurance money would duly be paid. Those occasions of an unauthorised use involve a certain number of motors that are used on the rather convivial occasions when this sort of accident unfortunately, occurs, or is rather likely to occur. If the investigation of the insurance policy or certificate at the time of the issue of a vehicle licence involved the withdrawal of the existing alternative of renewing licences at the principal post offices there might be some difficulty with the public, because you can hardly expect the officials of the post office to have sufficient technical knowledge to be able to judge of the value of these insurance policies.
Those are some of the pros and cons of the question of insuring either the vehicle or the driver, but whatever system you adopt it would appear to involve a good deal of cost in officials. You would have to throw new duties upon the licensing officials. Moreover, the number of licensing authorities is something like 184, and therefore you would have to lay down 82 some general standard of approved policy which might guide all these authorities in the system of issuing their licences. Further than that, you would probably have to issue also a list of approved insurance companies; otherwise, it would be no use establishing a system of compulsory insurance. If the insurance money was not to be paid the whole of the Bill would be defeated. It has been suggested—I do not think the noble Earl suggested it—that if you had this system of compulsory insurance introduced it would involve, almost, a licence to drivers to drive carelessly, because as they were insured they would not care very much what damage they inflicted.
I should like to say that, as the noble Earl knows, there are penalties for dangerous driving under the Act of 1903, and it is hoped shortly to introduce a Bill dealing with the questions, when it is very likely that the penalties for reckless and careless driving may be increased. For my part, I trust that they will be increased. Then there would have to be exceptions for the case of those companies which were of such financial stability that they were able to meet their own insurance. There also might be involved, possibly, the question of establishing some regular tariff, because if this system was established and came into force it might very easily happen that rather high standards of insurance would be set up by the insurance companies, who would not he able to calculate the risks over so large a field of insurance. I only indicate some of the difficulties that there are in the way of establishing this system at this preliminary stage. I do so because, as the noble Earl wished the subject to be open for discussion and suggestion, I thought it might be useful to him and the House to see the general way, without committing myself absolutely to details, in Which the Ministry of Transport regarded this question.
§ VISCOUNT ULLSWATER
My Lords, the noble Viscount has indicated some of the numerous difficulties which are raised by the question that the noble Earl has raised this afternoon. May I be allowed to add one or two more? The noble Viscount has not gone into great detail. It occurs to me that one of the chief difficulties which will very soon arise if 83 you compel insurance and force it upon insurance companies, is that you will also involve in that the necessity of the State fixing the rates. If you limit the number of insurance companies to a certain select few, which is what I understood the noble Viscount to indicate, you may be perfectly sure that those companies will get together, and that they will fix their own rate, which may be extremely high. In order to counteract that it will be absolutely necessary for the State to step in, and to fix what the rates are to be. That seems to me, as an old-fashioned person, to be very undesirable. The trend of modern legislation seems to be to drag the State into everything. That, I think, is a very undesirable line to pursue. If the State is called upon to fix all these insurance premiums it would mean, as the noble Viscount suggested, a special department for the purpose, involving a great deal more expense and a considerable number more officials.
As matters stand al present about £10,000,000 are paid in this country for premiums for motor insurance, and nearly every insurance policy covers third-party risks. The number of exceptions is, I think, extremely small. Most sensible people do insure and the only case which has to be met is the case of the man whom the noble Earl described as "a man of straw" who, having a motor car runs someone down and inflicts serious damage. The noble Earl said that such cases were innumerable. I am a fairly constant student of the papers and I must confess that I seldom see cases in which the defendant is unable to pay. That there may be such cases do not deny, but I do not think they occur very often and they are not present to my mind in considering this matter.
Is this proposal made in the interests of the Public? I presume it is? I can understand a proposal that no motor should be insured against third-party risk. That, I think, is an arguable case, because then every person driving would take special care not to inflict damage to life or limb of any of His Majesty's lieges, but I can also understand the frame of mind of a man who has been lunching not wisely but too well and who says: "Well, I am insured against all risks, it does not matter," and he will go ahead for all he is worth and, as likely as not, will cause an accident. But the way to insure the 84 greater safety of the public is not on the lines suggested by this Bill, but on entirely different lines—namely, by imposing severer penalties upon those who inflict these injuries, compelling bicycles at night to carry a red light—that seems to me essential—more care at cross-roads than is taken now by means of signs and otherwise, and, if necessary, impounding the motor which has caused the damage until the owner is able to produce an insurance policy which shows that he is fully insured against, any claim which may be made against him or deposit a sufficient sum of money to cover all such cases as may arise.
The noble Viscount, in his reply, cited the cases of Denmark and Belgium. May I cite the case of Greece? We learned a great deal from Greece in old times and I am not sure that we may not learn something from Greece to-day. In Greece there is a law that in cases where an accident has occurred the motor is impounded and kept until the owner is able to satisfy the authorities that he is in a position to meet all claims which may be made against him. These, my Lords, are one or two of the objections which occur to me and I trust your Lordships will scrutinise very carefully this measure when it is produced, bearing in mind also what seems to me to be the most important consideration of all, that it may eventually lead to the State not only fixing the rates but having to guarantee payment in a case where the insurance money is insufficient to meet the claim made upon the defaulting motorist.
§ VISCOUNT HALDANE
My Lords, not-withstanding the doubts which have fallen from the noble Viscount who has just spoken, my sympathies are with the noble Earl who moved the Second Reading of this Bill and with the attitude taken up by the noble Viscount opposite.
§ VISCOUNT HALDANE
No, it was an attitude of sympathy. It is quite true that if there were only few insurance companies they could combine on the question of rates, but that is not the case. There are hundreds of insurance companies, and, of course, they will compete if this Bill passes just as much as they do now. The main principle of the Bill is that no one 85 should tend out to, drive a motor car any one who is not properly insured, and that is a condition which you can attach just as well as you attach other conditions. I was a little dismayed when I heard the suggestion that you should insure the vehicle as an alternative to insuring the driver. I do not know what is meant by "insuring the vehicle," but I do know that by the jurisprudence of this Empire we can make an Indian deity liable in the Courts, although he is a wooden idol, but, then we take care always to insist on this fact, that he shall have a friend who shall be responsible for the costs if the case goes against him.
The suggestion to make the vehicle responsible is, I think, a little dubious in this case. It is far better to make the driver responsible, and I will tell you why. Whose is the vehicle? The vehicle may belong to some one who has nothing to do with the transaction. It may have been borrowed for the day's outing and driven by the borrower himself, or by a chauffeur whom he gets at the shortest notice. It may be a vehicle which has been annexed by some of these light-fingered gentry who annex motor cars on the smallest provocation; and in that condition of things you want to have some one against whom you can proceed with the certainty of being able to recover something. The noble Viscount said that although he reads the papers he had not noticed that people were not able to recover damages against the driver but the reports in the papers would not, tell him anything. He would have to read what takes place afterwards when an execution is put in or bankruptcy proceedings are taken, and it is obvious that it is very speculative whether you recover anything from the ordinary driver or not. The simplest thing is to say that a driver is not to be employed unless he is properly insured. It may be that the owner of the vehicle will pay, or he may not, but it seems to me that the simplest thing to do is to see that the driver of the motor is properly insured.
You may, of course, protect the public by penalties. You do that now and you may make the penalties more severe, but what we are concerned with is the case, say, of a woman whose husband is run over and then she finds that she can get nothing, although she is entitled to it by legal process. I am quite aware that 86 there may be difficulties in this Bill and the noble Viscount opposite was wise not to commit himself even to approval of the measure as it is at present drafted. It wants looking into, but I think the problem is very far from insoluble, and I hope the Department will take it up with a desire to effect a reform which I think is in the interests of the public.
§ LORD BANBURY OF SOUTHAM
My Lords, I thoroughly agree with what was said by the noble Viscount, Lord Ullswater. From the point of view of the interests of the public this Bill is about as had a Bill as could have been introduced. What will happen? Your Lordships, no doubt, have known of many cases where a man has had an accident with a motor car. He will say that it does not matter because he is insured. Only the other day a large motor lorry drove into a cart of mine, threw my bailiff and coachman out, and broke a shaft. I wrote to the owners of the motor lorry and they took no notice whatever. I wrote to them again, and again they took no notice. I wrote a third letter and they replied that they were insured in such and such a company and did not care what happened or what I did. I then wrote to the insurance company, who replied that they would pay for the broken shaft, but as to taking any liability in case any injury was done to either of the two men they did not care and would fight it to the utmost of their power. Fortunately, no serious injury was done to the men, though in the case of one of them the doctor said that at first he could not tell whether or not an injury might result. I should have been in the position of fighting a big insurance company, going to law and employing lawyers, with a very doubtful result. If the owners of the lorry had been personally liable they would have told their driver to be careful in the future. As a matter of fact, they did not care, because they were insured.
It seems to me that the only result of compulsory insurance would be that nobody would care and accidents would increase. The noble Viscount, Lord Ullswater, is, if I may say so, perfectly right when he says that if there were compulsory insurance the insurance companies would combine together to fix the rate. The noble and learned Viscount 87 says that there are hundreds of insurance companies. That is a large estimate and I should say that a good many of them are not very strong in their financial position. You may be quite sure that if the directors of those insurance companies that are sound in their financial position know their business and regard the interests of their shareholders, they will come to an arrangement and the motor owner will have to accept whatever rates they choose to impose unless, as the noble Viscount, Lord Ullswater, pointed out, the Government step in and we have more officials and more expense—a development which I have always endeavoured, I am afraid with very little success, to defeat.
My Lords, I am very much obliged to the noble Viscount opposite for his sympathetic attitude. The considerations which he indicated have been fully present to my mind. I did consider the question of whether you should insure the driver instead of the vehicle, but the noble Viscount knows quite well that the usual practice at present is to issue a policy in respect of the vehicle and the third-party risk—I think this is some answer to the noble Viscount's objection—is generally unlimited, instead of being limited to £5,000. As regards a vehicle which the owner would not be able to insure there are certainly great difficulties, and I should be only too glad if the Department which the noble Viscount represents would consider them, but I do think that some protection to the public is desirable. It does not involve such a very great upset of insurances as is suggested, because something like 99 per cent. of the vehicles on the road at present are fully covered now by comprehensive policies.
I cannot say that either of the two speeches from the other side of the House has been equally helpful. The noble Viscount, Lord Ullswater, seemed to think that there would be a combination among these companies. But not only are there a great many of them, but this third-party risk which you are insuring is a very small part of the premium of £15, £20 or £25 which the motorist pays. He insures against other risks—risks of damage to his own vehicle, loss by theft, personal damage to the driver, and damage to himself—so that the third-party risk is only a small part of the total premium 88 that he pays, and you may be quite sure that competition between these companies will continue. The companies are not limited to this country. There are also quite strong companies abroad who would be capable of taking the risk. For this reason I do not think that the proposal need or ought to lead to State insurance.
I agree, if I may respectfully say so, with the comment of the noble and learned Viscount below me on the question of those who are unable to pay. You do not generally see these cases in the newspaper, not only because you do not see the results of execution but also because, when it is seen that a person is unable to pay and is a man of straw, it is not usually thought worth while proceeding. Therefore, you do not see reference to such cases. There is one suggestion, and one only among those that have been made, to which I should personally take no objection, and that is the impounding of the offending vehicle. That is certainly some security, though very often the vehicles would not be worth anything like the amount of the damage. I do not think that your Lordships need be afraid that a measure of this sort will increase reckless driving. It is precisely those who now drive recklessly that I want to prevent doing so, but it is no satisfaction to those who have suffered from a reckless driver to know that he has been sent to prison for three months for reckless driving, for that would not put anything in his pocket. I hope that when your Lordships consider the text of the Bill you will make suggestions of some sort or another to meet what is undoubtedly at the present time a very real need. I recognise the difficulties of this matter and am very much obliged to the House for having discussed it.
§ On Question, Bill read 1a; and to be printed.