Not for courts to impose on insurers liabilities which they are not required to bear

Five UK Supreme Court Justices, in the guise of the Judicial Committee of the Privy Council (JCPC), handed down a judgment in December about the scope of compulsory motor insurance – in the context of the applicable legislation on the Bahamas. The relevant insurance legislation is not, in terms of exclusions and the protection of injured people, as robust as the UK Road Traffic Act 1998 and permits insurers to reject third party claims if, for example, the vehicle involved was not being used by a named driver.

In this recent case, Insurance Company of the Bahamas v Antonio, [2015] UKPC 47 the JCPC upheld an exclusion to this effect. What may be of wider interest are the following remarks of Lord Mance, who gave the only opinion in the case, about the approach to the interpretation of insurance policies:

“[It] is not for courts to impose on insurers liabilities which they are not required to bear either under the insurance cover which they have properly issued or under current legislation. Insurance is based on an assessment of the risks undertaken and of the premiums appropriate to cover such risks. Named driver policies are a means by which insureds and insurers identify the cover required and define and limit the premiums payable … To impose on insurers liability for accidents caused by other drivers not named on the relevant policy is to expand the risks and to undermine the purpose of named driver cover. If such liability is imposed in respect of insurances already issued, insurers will have received no premiums for such risks. In relation to future insurances, higher premiums would have to be charged across the board, and individual motorists will be unable to obtain the benefits of reduced premiums.”

Despite his decision leading to Mr Antonio failing to recover damages (valued at over $500,000) for the injuries he sustained in the accident, Lord Mance recognised this as a problem which could be addressed by a change in the applicable legislation. He specifically endorsed a passage of the appeal judgment, in which Mrs Justice Allen sought “to commend to the relevant authorities the establishment of a fund similar to the Motor Insurance [sic] Bureau in the United Kingdom to which injured and non-compensated victims, not covered by the reach of this judgment, can look to for relief.”


About the Author

akAlistair Kinley is BLM’s Director of Policy & Government Affairs.

Alistair is responsible for BLM’s engagement with government departments and regulators on policy and public affairs issues and consultations affecting the firm and its customers. He coordinated BLM’s market-facing activities in connection with the Insurance Act 2015 and the consultations which preceded its publication and introduction in Parliament.

He is a member of the Civil Justice Council (CJC), a regular speaker and experienced commentator on legal and procedural reforms and was a contributing editor to the Law Society’s Litigation Funding Handbook (September 2014).

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