This article critically examines the view that insurance has lacked influence and been no more than a 'makeweight' argument in the development of tort liability. Looking at the wider context, the article describes the overwhelming importance of insurers to the litigation system and argues that all cases are affected by insurance practice. It distinguishes the effect of insurance upon judicial fact finding, on the one hand, and the development of common law rules, on the other. It examines the ability of insurers to influence legislation relevant to the tort system. It concludes that, if account is taken of all these areas, insurance has been of vital importance to the law of tort. Without it, the system of personal injury compensation would not have survived. This conclusion is reached even though insurance is largely ignored by the great majority of tort texts.

Lobbying and the Damages Act 1996: ‘whispering in appropriate ears’

Insurance and the Tort System

This article examines Stapleton's view that insurance has lacked influence and been no more than a ‘makeweight’ argument in the development of tort liability. Looking at the wider context, the article describes the overwhelming importance of insurers to the litigation system and argues that all cases are affected by insurance practice. It distinguishes the effect of insurance upon judicial fact finding, on the one hand, and the development of common law rules, on the other. It examines the ability of insurers to influence legislation relevant to the tort system. It concludes that, if account is taken of all these areas, insurance has been of vital importance to the law of tort. Without it, the system of personal injury compensation would not have survived. This conclusion is reached even though insurance is largely ignored by the great majority of tort texts.

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Insurance and the tort system

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.

background

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How Important are Insurers in Compensating Claims for Personal Injury in the U.K.

Lump sum damages for personal injury are again under attack. Almost twenty years ago the concept of a structured settlement was imported into this country from the USA in order to provide continuing lifetime payments for seriously injured claimants.' However, the idea was slow to develop. Proposals for a structure were easily defeated if either of the parties objected. Now, after lengthy consultation,2 that veto has been removed by amendment of the Damages Act 1996.3 Taking into account the needs of the claimant, ajudge can make a periodical payments order (PPO) even if it is against the wishes of both parties. The increasing judicial direction of the course of litigation has thus been accentuated. The tradition in tort damages is for there to be a clean break, with the defendant giving the claimant a once-and-for-all payment to end matters. In contrast, a PPO will produce an uncertain continuing relationship that may vary over time. This is because the periodical payments must be indexed against inflation no

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The politics and economics of tort law: Judicially imposed periodical payments of damages

Insurance has had a profound effect upon tort and in particular upon the system of personal injury litigation. The influence of insurers upon the everyday practical operation of that system is readily apparent. In addition, insurers regularly influence the development of legislation affecting liability.

Much more difficult to assess is the potential for insurance to affect the outcome of individual claims. Proving that the facts of cases have been moulded to fit the deeper pocket of insurers cannot be done by resort to the law reports alone, but it remains the suspicion of many a practitioner. Although it is easier to assess the influence of insurance upon the rules of tort, rather than the facts found in individual cases, the picture is by no means clear. On the one hand certain rules clearly reflect the distributional consequences of insurance especially if we focus upon how damages are assessed. On the other hand, there remain large areas of tort law where the rules appear unaffected by insurance. 

The conclusion reached is that, at best, the influence of insurance upon the common law rules is only partial. Instead, it is with regard to the system as a whole whether involving statutory or common law rules, fact finding, or everyday operation that insurance can be seen as of vital importance. It is the lifeblood of the system.

An extract from a lecture related to this publication is available on You Tube at - https://www.youtube.com/watch?v=twriX4lp7V4

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Lobbying and the Damages Act 1996: ‘whispering in appropriate ears’

Citations

Insurance and the Tort System

Insurance and the tort system

How Important are Insurers in Compensating Claims for Personal Injury in the U.K.

The politics and economics of tort law: Judicially imposed periodical payments of damages

The relationship between tort law and insurance in England and Wales

Related Papers (1)

Annotations to the Damages Act 1996