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PostPosted: Mon Nov 15, 2004 23:44 
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In most states of Australia (I think Queensland has separate insurance nut I'm not sure), the 3rd party component of everyone's insurance is included in the annual registration fee. This insurance is ONLY for injuries to people and additional insurance is required to cover property.

If you are injured in a road accident in Victoria EVERYTHING related to your injury is covered, including 80% of your wages while out of work. Even the ambulance journey is included in the cover.

I was involved in a crash when I was about 20 and lost the use of my right hand. After being transported to hospital I spent two weeks recovering enough to be discharged. I went back for an operation to attempt to rejoin my severed radial nerve (runs along a groove in the humerus bone), which failed. I was sent to a specialist for further treatment in a private hospital (he only operated from one hospital) and had a multiple tendon transfer, which worked. During physiotherapy I snapped a tendon and had to have the operation again.

I dread to think what the total cost would have been but it cost me nothing because the original injury occurred in a road accident.

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PostPosted: Tue Nov 16, 2004 10:04 
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M3RBMW wrote:
In most states of Australia ... 3rd party ... insurance is included in the annual registration fee. This insurance is ONLY for injuries to people ...


This is fine except that the idea of insurance is that you share risk, and different drivers have different risks. It would mean that good drivers subsidise high risk groups. This is especially true for drunks. I'm not sure I like this idea if I have to pay a registration fee to subsidise insurance for drunks.

On the other hand, I don't like sharing the road with uninsured drivers. I agree with scrapping VED when effective computerised methods of tracking insurance and test details exist. If such systems exist, then can't they be coupled with number plate recognition systems to detect and punish uninsured drivers?

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PostPosted: Tue Nov 16, 2004 10:56 
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basingwerk wrote:
M3RBMW wrote:
In most states of Australia ... 3rd party ... insurance is included in the annual registration fee. This insurance is ONLY for injuries to people ...


This is fine except that the idea of insurance is that you share risk, and different drivers have different risks. It would mean that good drivers subsidise high risk groups. This is especially true for drunks. I'm not sure I like this idea if I have to pay a registration fee to subsidise insurance for drunks.

Actually, I think the Australian system is a better interpretation of the word "insurance" than what we do.

As you say, Insurance is about "sharing risk". If you load the high risk drivers then ultimately you are no longer sharing it, but merely handing the bills to those who cause claims via an intermediary who draws a profit along the way! I'm taking it to extremes I know, but it illustrates the point, and it seems to be the way we're heading.

Someone once suggested a convincing case to me, that Insurance Companies should be registered charities, and disallowed from making a profit. Sounded daft on the face of it, but when you think about it, they are involved in the alleviation of loss and suffering by spreading the financial burden fairly amongst the population. That's a pretty good defninition of charity isn't it? His further belief was that if the Government pass laws making insurance compulsory, then they are under a moral obligation to meet that market need with a non-profit making scheme, otherwise they are effectively running a cartel.

I think a good system would be one where basic 3rd party liability was provided by the state via a "tax disc" type system, run as a non-profit scheme, and with a simple and transparent formula for loading high risk drivers. This would meet the barest provisions of the Road Traffic Act and no more. If you want any additional form of insurance to cover yourself, your car, your legal expenses etc, then you go and make arrangements with a private insurance company, as at present.

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PostPosted: Tue Nov 16, 2004 12:07 
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JT wrote:
I think a good system would be one where basic 3rd party liability was provided by the state via a "tax disc" type system, run as a non-profit scheme, and with a simple and transparent formula for loading high risk drivers. This would meet the barest provisions of the Road Traffic Act and no more. If you want any additional form of insurance to cover yourself, your car, your legal expenses etc, then you go and make arrangements with a private insurance company, as at present.


Would the simple formula used by the non-profit scheme be biased towards making insurance affordable for high-risk cases? If so, could low risk drivers avoid subsidising drunks by instead using a private provider for basic 3rd party liability? Or would they be forced to use the "tax disc" type system?

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PostPosted: Tue Nov 16, 2004 12:21 
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basingwerk wrote:
JT wrote:
I think a good system would be one where basic 3rd party liability was provided by the state via a "tax disc" type system, run as a non-profit scheme, and with a simple and transparent formula for loading high risk drivers. This would meet the barest provisions of the Road Traffic Act and no more. If you want any additional form of insurance to cover yourself, your car, your legal expenses etc, then you go and make arrangements with a private insurance company, as at present.


Would the simple formula used by the non-profit scheme be biased towards making insurance affordable for high-risk cases? If so, could low risk drivers avoid subsidising drunks by instead using a private provider for basic 3rd party liability? Or would they be forced to use the "tax disc" type system?

For it to make any sense it would have to be mandatory, like the current road tax disc. Otherwise it would be like having the option of not paying your NI because you're healthy and don't want to subsidise the sick people!

The bias thing is difficult, as whatever formula you use by it will bias one way or another - nothing is perfect. I'd suggest a system where there was a ratio of say 20:1 between the highest and lowest risk, eg the absolute range was from £50 - £1000 for the basic cover, depending on how you score in the formula.

Habitual drink drivers shouldn't be on the road anyway, so they aren't a valid part of the equation.

And I see the way that insurance is loaded to extremes for young drivers as being part of the problem this would be trying to address. As it is, the massive cost of insurance is a strong incentive for young drivers not to bother at all. A curb on that would probably be a good thing for society overall, especially if combined with a more obvious system of detecting uninsured vehicles. An "insurance disc" would work in the interests of the community at large, whereas the current "tax disc" works solely in the interests of the treasury!

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PostPosted: Tue Nov 16, 2004 12:43 
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JT wrote:
For it to make any sense it would have to be mandatory, like the current road tax disc. Otherwise it would be like having the option of not paying your NI because you're healthy and don't want to subsidise the sick people!


So it would work a little like the NHS, where low risk persons let the government dip into my pocket to help out the high risk ones. It seems morally acceptable for communal health care, yet daylight robbery when placed in a "communal car care for Chavs" context, yet I can't quite figure out why. Perhaps it is the fact that we are all destined to get sick sometimes, yet bad driving is a voluntary act to some extent. Perhaps the best way to get affordable insurance is to drive well, in a low power vehicle.

I’m becoming conservative as I get older, but I'm not sure about this. Can't it be tied into a national number plate recognition /insurance database system, with stiff "boot camp" penalties for offenders? Or are those policies discredited after the failure of ‘short, sharp, shock’ treatments? I thought they were a rather good way of treating yobbos.

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PostPosted: Tue Nov 16, 2004 12:50 
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basingwerk wrote:
JT wrote:
For it to make any sense it would have to be mandatory, like the current road tax disc. Otherwise it would be like having the option of not paying your NI because you're healthy and don't want to subsidise the sick people!


So it would work a little like the NHS, where low risk persons let the government dip into my pocket to help out the high risk ones. It seems morally acceptable for communal health care, yet daylight robbery when placed in a "communal car care for Chavs" context, yet I can't quite figure out why. Perhaps it is the fact that we are all destined to get sick sometimes, yet bad driving is a voluntary act to some extent. Perhaps the best way to get affordable insurance is to drive well, in a low power vehicle.

I’m becoming conservative as I get older, but I'm not sure about this. Can't it be tied into a national number plate recognition /insurance database system, with stiff "boot camp" penalties for offenders? Or are those policies discredited after the failure of ‘short, sharp, shock’ treatments? I thought they were a rather good way of treating yobbos.

The whole hypothesis is built upon the belief that it goes hand in hand with an effective policing system, one that removes "chavs", drunks and the like from our roads. At the same time it allows the well responsible drivers to continue, whilst still providing a suitable financial incentive for them to improve their record.

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PostPosted: Tue Nov 16, 2004 13:10 
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There are three key issues we need to consider.

1) What on earth are we going to do about 1 million uninsured drivers? The authorities seem to believe that we'll get them with ANPR, but it seems to me that we'll be pushing them out of sight and losing control of the registration process instead. The number of stolen number plates and fake registrations will skyrocket and ANPR will start to score hits on every other vehicle. Not to mention that vehicles aren't insured AT ALL. Only drivers are insured.

2) Do we really need to allocate massive resources (Motor insurance database, uninsured loss thingy, masses of police time, masses of court time and so on) when overnight we could completely do away with all the problems?

3) Let's be sure to consider the rights of citizens who suffer losses at the hands of an uninsured driver. As I understand it, the uninsured loss compensation thing does not cover property. (correct me if I'm wrong).

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PostPosted: Tue Nov 16, 2004 13:24 
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As far as ANPR goes, my belief is that the "uninsured drivers" thing is merely the sugar to sweeten the pill so that we'll swallow it. ANPR is there to catch tax-dodgers, nothing more. It is the enforcement tool of a Government Revenue collection service, and any claimed benefits to road safety are just window dressing. In a nutshell, ANPR is there to turn a profit.

As Paul says, it is fundamental to the whole thing that drivers are insured, whereas vehicles are taxed!

Incidentally, a 4th key issue we must not lose sight of is that driving without insurance isn't actually a direct road safety issue. If I am driving along and my insurance expires it won't increase my risk of crashing! Whilst it may be associated with other things that do increase crash risk, in itself it is a purely financial issue.

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PostPosted: Tue Nov 16, 2004 14:30 
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JT wrote:
Incidentally, a 4th key issue we must not lose sight of is that driving without insurance isn't actually a direct road safety issue. If I am driving along and my insurance expires it won't increase my risk of crashing! Whilst it may be associated with other things that do increase crash risk, in itself it is a purely financial issue.


Uninsured driving is very much a "safety issue" to me. I know you said it isn't a "direct" safety issue, and I know that driving uninsured wouldn't significantly alter our crash risk. But:

  • Insurance protects property in a way that's fairly similar to not crashing.
  • Insurance provides a financial safety net for post crash care. The quality of life for those with long term injuries can be transformed with proper insurance.


If anyone has a better argument for including motor insurance within road safety, I'm all ears. I'm absolutely certain it needs to be included, but in truth I'm not altogether sure why.

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PostPosted: Tue Nov 16, 2004 14:43 
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SafeSpeed wrote:
JT wrote:
Incidentally, a 4th key issue we must not lose sight of is that driving without insurance isn't actually a direct road safety issue. If I am driving along and my insurance expires it won't increase my risk of crashing! Whilst it may be associated with other things that do increase crash risk, in itself it is a purely financial issue.


Uninsured driving is very much a "safety issue" to me. I know you said it isn't a "direct" safety issue, and I know that driving uninsured wouldn't significantly alter our crash risk. But:

  • Insurance protects property in a way that's fairly similar to not crashing.
  • Insurance provides a financial safety net for post crash care. The quality of life for those with long term injuries can be transformed with proper insurance.

If anyone has a better argument for including motor insurance within road safety, I'm all ears. I'm absolutely certain it needs to be included, but in truth I'm not altogether sure why.

I think I put my point badly. What I meant was that it is purely a secondary issue, not a primary road safety one. To put it another way, if there were some other financial "pot" available to provide for victims of road accidents, then whether we drove with or without insurance would become a complete irrelevance.

And to draw the whole thing to it's logical end, insurance isn't actually to protect the victim, it's to protect the perpetrator! If I knock your garden wall down with my car then you have a valid claim against me for damages whether I am insured or not. The only difference insurance makes is to whether or not I bear that cost personally. As far as the legal principle is concerned it has no bearing on you, the victim, as your wall gets repaired in either case.

Practicalities clearly intervene in this theoretical situation, as modern compensation awards are likely to be well beyond the pocket of the average uninsured individual so in practical terms the existence of insurance does affect the outcome for the victim, but the relationship between the legal prinicples of liability and indemnity still exists.

The reason I raise this is that it is easy to get blinkered into thinking that the familiar solution is the only one. If we are to properly cover the topic we need to go right back to first principles and consider who we are indemnifying and why.

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PostPosted: Tue Nov 16, 2004 14:44 
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There's another possible benefit in having government provided 3rd party insurance. The government would have a vested financial motive to have fewer crashes and injuries, so just maybe they'd stop buggering about with things that look good on the front pages and start doing things that are proven to be effective.

Or maybe the tax disc would just cost 3 times as much as it does now. :(

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PostPosted: Tue Nov 16, 2004 15:07 
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Another issue that we maybe should consider is the damage we might do to the insurance industry.

I've envisaged that we pay the government through fuel tax and the government pays the insurance insustry through "block contacts" probably based on ranges of the number part of vehicle registrations. The insurance companies save on the costs of marketing and sales (one customer, not several million) The government saves on the cost of enforcing uninsured driving.

Everyone wins, except the lowest risk drivers. I think average drivers would gain quite a bit as whole tiers of administration are thrown away. The gain for the lowest risk drivers is the certainty of insurance protection if they are crash involved. At present there's a 1 in 20 dice roll (or thereabouts).

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PostPosted: Tue Nov 16, 2004 15:14 
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yet another spin-off would be the eradication of a lot of the legal wrangling over claims. If they all got paid out of the same pot then there would be no point whatsoever in going to court for a civil case to establish which company pays, which would surely save millions a year in legal fees.

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PostPosted: Tue Nov 16, 2004 15:30 
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JT wrote:
yet another spin-off would be the eradication of a lot of the legal wrangling over claims. If they all got paid out of the same pot then there would be no point whatsoever in going to court for a civil case to establish which company pays, which would surely save millions a year in legal fees.


On a related note, insurance companies are under pressure from thier shareholders to avoid expensive costs to establish which company pays and to find the cheapest resolution to a case. With the matter in the hands of a regulated QUANGO or some such thing, there might be little market pressure. In the past, such Crown Corporations have had massive cost control problems, e.g. the Coal Board, the Post Office, British Steel, the NHS etc.

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PostPosted: Tue Nov 16, 2004 15:37 
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basingwerk wrote:
JT wrote:
yet another spin-off would be the eradication of a lot of the legal wrangling over claims. If they all got paid out of the same pot then there would be no point whatsoever in going to court for a civil case to establish which company pays, which would surely save millions a year in legal fees.


On a related note, insurance companies are under pressure from thier shareholders to avoid expensive costs to establish which company pays and to find the cheapest resolution to a case. With the matter in the hands of a regulated QUANGO or some such thing, there might be little market pressure. In the past, such Crown Corporations have had massive cost control problems, e.g. the Coal Board, the Post Office, British Steel, the NHS etc.

Cost control is clearly a major issue - you only need to look at the empire-building going on in the SCPs to see what happens in QUANGOs!

So under state control you have problems with internal efficiency and accountability, but in the private sector you have problems with fat-cat directors creaming off huge profits, and being accountable to the shareholders rather than the customers.

Somtimes it seems like there's no hope either way! :cry:

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PostPosted: Tue Nov 16, 2004 15:58 
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It's a big subject isn't it? It just goes to show how inadequately scoped Greenaway's report really was:

http://www.dft.gov.uk/stellent/groups/d ... 030393.pdf

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PostPosted: Tue Nov 16, 2004 17:16 
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There's been a few articles in newspapers in recent years along the lines of insurance companies don't make as much as we think, personal injury claims are hacking great lumps off their margin, perhaps even to the point of loss. Okay, I admit being a cynical bastard I took that with a large grain of salt - I doubt the directors are poverty stricken, and they have the easiest solution in the world. Put the premiums up!

Still, if there's some truth in that then maybe the insurance compaines would actually welcome the 3rd party bit being taken off them. I'm only guessing here, but if you could divvy a premium up into £x being the third party bit, £y being fire and theft and £z being everything else covvered by a fully comp policy, I'd have thought the profitable areas are likely to be y and z. Like I say, that's a guess on my part and I'm prepared to be shot down in flames by someone who knows better. :) But if my guess is right then the insurance compaines might welcome the idea of being able to concentrate on the most profitable areas, and let the government supply the basic 3rd party insurance as a public service.

As a public service the government should aim to run it as more or less non-profit, but would obviously retain any money that doesn't go out on claims. As I said before, that's their motivation for genuine safety improvements in the road network, though I would hope that they'd reinvest any surplus in the roads or the policing of the roads, rather than chuck it at the next hare-brained project that gets dreamed up over expensive brandy in the House of Commons bar. Not sure how the nuts and bolts might work. For instance, what do we do about rewarding safe drivers who don't cost the fund money? At the moment we have NCD, so could this go over to an insurance "tax" disc? At the moment VED is cheaper on cars that the government has decided are green enough (bag of bollocks if you ask me, but that's another argument altogether), so it wouldn't be unprecedented. But if driven by someone else or sold, what then? I think it would probably have to be either a flat fee for a given type of vehicle, or the disc would have to relate to the driver instead of the car. That might not be such a bad idea, but then would we have to faff about swapping discs when changing drivers? Flat fee for all vehicles wouldn't be fair eactly, but it would be simple.

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PostPosted: Tue Nov 16, 2004 19:50 
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I've only just thought of this, but I think it holds water.

One of the concerns levelled above about the driver-independence of insurance is that young/inexperienced drivers represent a higher risk and should pay more. Further, drivers of more powerful cars should pay more.

Let's assume cost of insurance is car-dependent, but driver-independent.

Over the lifetime of most drivers, they drive when young, not so young and old. The driver experience/age dependence bit therefore in a closed shop and as such - remember we're talking TPO here - is almost irrelevant. What we're actually doing is decoupling the bathtub curve (dear when young, dear when old, cheap when neither) to a straight line.

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PostPosted: Tue Nov 16, 2004 22:21 
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As a public service the government should aim to run it as more or less non-profit, but would obviously retain any money that doesn't go out on claims.

Why not run it as a PLC, your premium is a share in the company for 3rd party liability and it is openly calculated by the power to weight ratio of the car (the damage it is capable of causing). Profit is given back to no fault share holders.
A second optional premium is for fire and theft openly calculated as a %of the value of the car with similar profit rules.
A third optional premium will cover replacement of vehicle, again calculated against vehicle value.

ie individuals still get to choose the level of cover but they pay to insure the car which anyone can drive with permission. If the vehicle is involved in an at fault accident the policy expires and must be renewed plus X% for 5 years reducing at X/5 each year.
SO! IF you choose to allow young son/daughter to drive it, watch out. 2 accidents in a year will cost 3 premiums for starters plus 2X% loading.

Any car driven on the road which has no insurance and is not reported as stolen becomes PLC property.

No fault policy/share holders stand to get some of their money back. At fault policy/share holders are penalised. Road safety is drastically improved in the first year of implementation so ALL premiums are reduced.

OH! And stuff the effects this has on insurance companies, they have failed to be open, made massive profits and fleece every one of us.


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