MIB gears up for new untraced drivers agreement

The Motor Insurers’ Bureau Untraced Drivers’ Agreement 2017 is now in force and effective for all accidents involving untraced drivers from 1 March 2017. The agreement follows a consultation process by the Department for Transport and replaces the previous 2003 agreement and its five subsequent amendments. As per previous updates, the agreement does not have retrospective effect and any accidents preceding the implementation date will continue under the 2003 scheme (as amended).

The Uninsured Drivers’ Agreement 2015 also received a supplementary agreement to bring it in line with the new Untraced Drivers’ Agreement.

Revoked agreement

The MIB and the secretary of state for transport originally signed a draft of the 2017 Untraced Drivers’ Agreement on 10 January 2017; however, that agreement was revoked and replaced by the current version, dated 28 February 2017, before it was ever effective.

The revoked agreement would have allowed the MIB to reject any claims submitted by legal representatives, as opposed to by the claimant direct, due to an apparently unintentional consequence of the drafting of clause 10(1), which stated that the claimant ‘and no other person’ could submit the claim form and comply with the various obligations conferred upon them by the agreement.

The issue was highlighted to the MIB by Bikelawyer following the publication of the now revoked agreement, as clearly the consequence of denying claimants legal representation would have been both illegal and in contravention of the Second Motor Insurance Directive.

The new implemented version is identical to the revoked agreement save that it omits the wording ‘and no other person’ from clause 10(1), thereby allowing legal representatives to take steps on the claimant’s behalf pursuant to clause 1(2).

Reporting requirement

The 2003 agreement made it a requirement that applicants (now referred to as ‘claimants’) reported the accident to the police within either five or 14 days, depending on whether the claim was for property damage or for injury. Further, applicants were required to evidence this by providing a police reference number. Though this requirement was often waived in practice by the MIB, technically any failure to comply was sufficient grounds for the MIB and/or an arbitrator to dismiss a claim.

The reporting requirement was particularly problematic because knowledge among the general public of the MIB (let alone its agreements and their requirements) is poor and even where an accident was reported police assistance could often prove less than forthcoming, particularly in accidents involving motorcyclists losing control due to diesel spills and accidents caused by shed loads and the like as opposed to the more typical ‘hit and run’.

The consultation concluded that the reporting requirement was too restrictive and the new agreement consequently simply provides that claimants need to report the accident to the police once required to do so by the MIB, and that they have to comply with any subsequent police investigations.

Property damage and ‘significant’ personal injury

Property damage was excluded entirely from the 2003 agreement but was subsequently introduced in the 2015 amendment for accidents involving ‘significant injury’.

The requirement for a significant injury remains in the new agreement; however, the definition has been reduced, apparently based on advice from medical professionals, from any person requiring four consecutive days of inpatient care to any person requiring two or more nights of in-patient treatment or three or more sessions of out-patient treatment. The excess for property damages has also increased from £300 to £400.

Despite objections from the MIB, the new agreement omits the exclusion that previously allowed the MIB to avoid paying for vehicle damage where a claimant was uninsured. In practice this means that, subject to the significant injury requirement being satisfied, the MIB will be required to pay for vehicle damage to an uninsured vehicle. This change will also apply to the Uninsured Drivers’ Agreement 2015 from 1 March 2017.

Terrorism

The 2003 agreement contained an exclusion that allowed the MIB to avoid compensating the victims of terrorism. This exclusion has been removed from both the new agreement and the Uninsured Drivers’ Agreement.

Interest

Under the 2003 agreement, the MIB was required to pay interest on awards from the date one month after receipt of the police report, or the date the police report would have been received had it been requested promptly.

The new agreement dispenses with this arbitrary connection and requires the MIB to pay interest on general damages from the date of the formal award and for special damages from the date of the accident.

Children and protected parties

The new agreement introduces a mandatory framework to allow awards involving minors and protected parties to be approved by an appointed arbitrator.

The arbitrators will be appointed from the same panel which hears other appeals under the agreement following rejected suggestions during the consultation process to extend the panel of arbitrators to solicitors and barristers with over 10 years of experience. The rotating panel consequently remains restricted to Queen’s Counsel on the basis that some claims dealt with by the MIB can be particularly complex and of substantial value.

Legal costs

The MIB’s contribution to costs has been modified.

The 2003 agreement made provision for the MIB to calculate the cost contribution based purely on the amount of the award. For any claims up to a value of £150,000 (including claims that would have been allocated to the small track) the costs payable would be calculated as 15% of the settlement award, subject to a minimum payment of £500 and a maximum of £3,000. For any claim with an award over £150,000, the costs payable were calculated as 2% of the amount of the award.

Under the new agreement, there is no costs entitlement for any claim which would have been allocated to the small track. Provided the government’s announced whiplash reforms are implemented as announced, from October 2018 this will include any claim for soft-tissue injuries under 24 months in duration and any injuries attracting an award below £5,000 in any event.

Claims which would have proceeded under the rapid claims portal had they proceeded against an identified tortfeasor are £450+VAT for claims up to £10,000, and £700+VAT for claims up to £25,000. These costs have deliberately been kept lower than the costs payable in the rapid claims portal on the basis that the MIB is obliged to investigate cases, gather evidence and set out the reason(s) for its decisions.

Costs for cases above £25,000 are calculated on a sliding scale up to a maximum of £250,000.

The effect of the changes is that the MIB’s contribution to legal costs will generally be less in claims of modest value but is significantly more generous in higher value claims. The new agreement also introduces provision for the claimant to request additional costs in the case of ‘exceptionally complex’ cases.

Appeals

The new agreement maintains the time limit of six weeks for appealing a decision made by the MIB but makes provision for the claimant to request an extension of time where necessary from the MIB or the arbitrator.

The MIB now has to stand by any award, and is no longer permitted to request that the arbitrator makes a lower award; a practice which disincentivised claimants from appealing unreasonable awards for fear of receiving less still.

Oral hearings will now take place in private, and the range of decisions open to the arbitrator has been extended to more closely resemble the range of decisions that could be made by a court.

The claimant’s costs reasonable costs of appeal are payable by the MIB, subject to caps of £250+VAT for written observations and £500+VAT which would have been allocated to the fast track had they been brought against an identified person in court proceedings.

The arbitrator can also order the claimant to pay the MIB’s costs of the arbitration in circumstances where he determines that the appeal or grounds for dispute was frivolous; vexatious; otherwise unmeritorious or involved fraud or fundamentally dishonesty. The agreement also allows the arbitrator to order that any sum payable to MIB in this respect can be deducted from any amount remaining payable to the claimant or from any sum payable in respect of legal costs.

The future

Notwithstanding the decision in Damijan Vnuk v Zavarovalnica Triglav, which determined that the compulsory third party motor insurance imposed under the Motor Insurance Directives extended to mechanically propelled vehicles anywhere on land (provided that use on such land was a normal function of the vehicle), the new Untraced Drivers’ Agreement follows the significantly narrower definition in the Road Traffic Act 1988 and is consequently limited to claims arising from the use of a motor vehicle on a road or public place.

The Department for Transport has opened a consultation to address the implications of the Court of Justice of the European Union’s decision in Vnuk, and no doubt there will be further amendments to the agreement in due course, pending the outcome.

Ian Dexter is a solicitor with Bikelawyer