How Important are Insurers in Compensating Claims for Personal Injury in the U.K.?
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How Important are Insurers in Compensating Claims for Personal Injury in the U.K.?* Richard Lewis Professor of Law, Cardiff Law School, Cardiff University, Museum Avenue, Cardiff CF10 3XJ Wales, U.K. E-mail: [email protected]
To what extent does the institution of insurance influence a system of compensation for personal injury? On the one hand, some academics have suggested that insurance has been no more than a ‘‘makeweight’’ argument in the development of tort liability. On the other hand, others have claimed that insurance has had a substantial effect, even if this is often hidden or not discussed openly. This article lends support to one side of the debate by describing the enormous importance of insurers to personal injury litigation in the United Kingdom. It argues that all cases, in their wider context, have been affected by the practices of insurance companies. This is the case even though insurance is rarely mentioned by judges and largely ignored by textbooks on tort law. Insurers provide the lifeblood of the system. The article examines statistics relating to the number of tort claims brought each year and it notes the extent of insurer involvement. As the paymasters of the system, insurers not only compensate claimants but also fund the cost of legal representation, often for both sides. Insurers have reduced their use of defence lawyers and the extent that they institute formal legal proceedings. However, it is their bureaucracy which determines whether, when and for how much claims are settled, and it is their offices, rather than courts of law, that are the key places for tort in practice. The scope for compensating those injured very much depends upon the incidence of insurance protection, and the amount of damages paid can only be understood against the insurance background. Finally, the article considers the influence of insurers upon potential changes in the law. The importance of insurers ought not to be underestimated; without insurance, the system of compensation for personal injury would have collapsed long ago. The Geneva Papers (2006) 31, 323–339. doi:10.1057/palgrave.gpp.2510073 Keywords: personal injury; compensation; insurance; tort
Introduction This article summarizes the structural importance of insurers to the system of compensation for personal injury in the U.K. It is part of a much wider study of the relationship between the rules of tort law, on the one hand, and the availability of insurance, on the other.1 It has been argued that judges appear more ready to impose
* This is a revised version of a paper delivered at the Third Annual Liability Regimes Conference held by Munich Re in Munich in October 2005. I am grateful to colleagues at Cardiff and delegates at the conference for their comments on the earlier paper. 1 Lewis (2005b).
The Geneva Papers on Risk and Insurance — Issues and Practice
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liability when insurance enables the cost of compensation to be more widely distributed.2 Tort rules are said to have been developed in favour of claimants, at least in situations w
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