No-fault Compensation

HC Deb 14 July 1989 vol 156 cc675-6W

Mr. Hind

To ask the Attorney-General what progress has been made with Recommendation 62 of the Review Body on Civil Justice that consideration should be given to the feasibility of a no-fault scheme for less serious road accidents.

The Solicitor-General

The Government have accepted the recommendation of the report of the review body on civil justice that the Lord Chancellor should consider the feasibility of a no-fault compensation scheme, restricted to less serious road accidents and financed by private insurance.

The review body pointed out that a number of advantages might flow from the introduction of such a scheme. It suggested that it would reduce uncertainty for claimants, avoid the delays and costs associated with litigation and, by removing disputes from the courts, reduce pressure on the court system.

On the other hand, as the review body made clear, one disadavantage of such a scheme is that motor insurance premiums could rise. Such a proposal gives rise to a number of other difficult issues, including the threshold of seriousness that will determine whether an accident falls outside the scheme; whether it should cover accidents where the highway authority is held to have been at fault; and whether certain categories of driver, for example, drinking drivers, should be excluded from the scheme. There is also the danger that such a scheme could undermine efforts of insurance companies to make drivers who cause accidents bear some of the costs through higher premiums. These difficult issues will need to be carefully studied and weighed alongside the possible advantages before any such scheme can be taken forward.

As the review body proposed, consideration of the feasibility of introducing such a scheme will be the subject of consultation with the insurance industry. Other interested parties, including the motoring organisations, will also be invited to submit their views. Since no-fault insurance schemes are already in operation in various other countries, including New Zealand and a number of states in the United States, the study will need to take account of the experience of these countries.

It must be emphasised that this is a feasibility study, and it would therefore be wrong to assume at this stage that it will necessarily result in a change in existing arrangements.