Interview: Dominic Clayden, Motor Insurers’ Bureau

When it comes to the major issues facing the insurance industry at the moment, all roads seem to lead back to the Motor Insurers’ Bureau.

Whether it is driving in Europe after the UK splits from it, changes to the small claims track from whiplash reform, or court battles with far-reaching implications, the MIB is at the centre of it all.

To cap it all, the body’s new CEO, Dominic Clayden has embarked on an ambitious reform programme at the organisation.

“I thought I knew what I was getting in for, but the biggest challenge is just the breadth and scale of what we impact,” he said.

“When you think about the MIB it’s normally uninsured driving that comes to mind. Only half of the people who work here are involved in that.”

Modernisation

Clayden joined the body in May last year. Prior to that he was group claims boss at QBE, and before that he spent more than a decade at Aviva.

In January the body announced it had placed a number of jobs under review as it began a modernisation programme.

The goal isn’t cost savings per se, Clayden said, but rather bringing the body into line with how insurers in the digital age are currently working.

Clayden said reform had been on the cards when he was approached for the role by former CEO Ashton West.

He added: “Ashton did superb things for the MIB but also he recognised the organisation has got to change. He said ‘I’ve done 14 years, I’m just not the right guy to do it, someone else has got to come in and do it’.

“So the mandate was there coming in.”

Clayden said he spent a few months when he joined getting to know the organisation and discussing the strategic direction with its board – the UK’s major motor insurers.

He said: “It was about sitting down with the board and getting real clarity in terms of what was the strategic direction we wanted to go.

“Some of our services were quite paper-based, quite telephone-based, so the core aspects of the change programme are how we digitise, how we make it accessible to consumers in a way which they want to deal with us. A lot of them want to deal with us on an app, website-based solution.”

The body is currently migrating to a cloud solution. It is also looking at real-time updates for its insurance database, so police can better check motorists.

Clayden said one of the areas of the body that is likely to disappear is that which surrounds the administration of paper claims.

“We have a scanning unit at the moment in terms of when stuff comes in, it gets scanned and it goes on to systems,” he said. “Actually if you’re dealing with people electronically, that kind of process doesn’t exist.”

The body is currently consulting over 60 roles. However, it will also create 30 new roles in other areas of the business.

The consultation is the second part of the change programme. The first part involved looking at HR and communications. There were a number of cuts there, Clayden said, but the job losses were minimal.

The programme will likely roll through the business, section by section, until it wraps up at the end of 2021.

Lewis vs Tindale

However, any potential savings through the modernisation programme are threatened to be erased by a court verdict that could have far-reaching ramifications.

Early last month, the MIB lost an appeal in the Lewis v Tindale case, which would hold the motor body liable for accidents by uninsured drivers on private land.

The case could see the MIB faced with thousands of additional retrospective claims which could hit insurers in the form of higher levies. That in turn would likely be passed on to motorists in the form of higher premiums.

The MIB has applied for leave to appeal the judgement. In addition it has filed contribution proceedings against the Department for Transport.

If both of those are thrown out, the MIB will have to raise additional funds through the levy. The issue is compounded because no one knows how many claims there potentially are, nor the value of the claims.
In the past few weeks since the judgement, the body has already received several claims, including one larger claim.

Clayden said: “We’ve had a few and they kind of sit there. Everyone’s waiting. I don’t think they’re representative. They’re either an initial hit, or there will be more coming through.”

Brexit

The MIB was established in 1946 and helped form what later became the post-war green card system for cross-border insurance. The MIB issued the first ever green card.

The organisation has had a close working relationship with its counterparts across the Channel under the European Union’s Fourth Directive on Motor Insurance. However, that could change in the case of a no-deal Brexit.

At the root of the laws, is the idea that claimants involved in accidents abroad, can pursue claims in their own country of residence.

The directive requires European Economic Area insurers to appoint claims representatives in each member state. So for example, where a UK motorist has been involved in a non-fault accident with a French vehicle in France, the UK motorist has to date been able to make a claim against the French insurer’s claims representative in the UK.

Similarly, when a UK motorist was involved in an accident in the EEA caused by an unidentified vehicle, they have claimed compensation through the MIB in the UK.

Under a multilateral agreement, the MIB was then able to claim the money through its equivalent body in the EEA member state where the accident occurred.

The MIB estimates that 5000 UK road traffic victims make claims under these arrangements each year. Of those, 4300 claims are made against insurers, while 700 claims are made against the MIB.

However, a no-deal Brexit – or a partial deal, like the one that out-going Prime Minister Theresa May had negotiated – would mean the exit of the UK from the Protection of Visitors scheme, established by the Fourth Directive.

That would mean that if a motorist was involved in an accident with an untraced driver in Europe, they would no longer be able to claim compensation from the MIB – as the MIB would no longer have agreements with its equivalent bodies.

Moreover, that motorist would also not be able to claim compensation from the MIB equivalent in that country. Meaning someone involved in a major accident abroad with an untraced driver would not be able to claim any compensation at all.

Bilateral deals

To get around that, the MIB has agreed bilateral deals with most of its counterparts in Europe. That would mean that the affected motorist could claim directly against the MIB equivalent in the country where the accident happened.

Clayden said: “There are three exceptions: France, Poland and Romania. If people are on holiday or driving there in a hard Brexit and if you’re hit by an uninsured motorist you’re not going to get any compensation at all from the funds.

“We can’t change that at the moment. We’re lobbying them hard, we’re trying to persuade them. We’re trying to do everything we can but that’s the position.”

Proof of insurance

He said it was more problematic with France: “It makes it challenging because that’s where the port of entry is for most of the travellers.

“From a UK holidaymaker point of view this could be material. If you’re hit by an uninsured or an untraced driver if you’re in France, I don’t think you’re going to get anything.”

UK motorists who are caught driving in Europe without proof of insurance – printed on green paper – will likely face fines. In France that will be €500.

Clayden said there is a concern that UK motorists could be pulled over multiple times while in France.

A major concern was likely to be that British motorists in France get targeted by French authorities over the green card requirement.

Clayden said: “I’m really worried that you’re going to get off the ferry, you’re going to drive inland and it’s going to be, ‘Have you got your high visibility jacket? Have you got your breathalyser? Have you got the triangles? Have you got the little stickers that you need for your lights?’ They are just going to – they want to cut up rough. They have done in the past.”

To get around that, the MIB will establish green card issuing booths at four ports across the country. All that will be required is a copy of your driving license.

In addition, the body is working with the Department for Transport, which is working with its counterparts in Ireland, over waiving the green card requirement for motorists travelling between Northern Ireland and Ireland.

Clayden said: “I have had a lot of conversations and contact with my opposite number in Dublin. We’re also in debate with the DFT and the equivalent in Ireland to say, ‘look, in a non-political way, irrespective of the outcome, how could we smooth the processes across the border?’

He said the final decision rested with the government. “That’s not my call. That’s a political decision, that’s a decision from the DFT. I don’t want to see people fined just for the sake of it. I don’t want to see people not getting claims paid. That’s not going to do any of us any favours. It’s not fair on consumers.”

Whiplash portal

Another area that the MIB is involved in is the establishment of a small claims portal. The body was drafted in to handle the creation of the portal, which would handle personal injury claims under £5000, as per the Civil Liability Act.

The portal will sit alongside the existing personal injury portal, operating as a dual system. The fact has drawn criticism from lawyers, as it raises challenges for vulnerable claimants, or those who are ‘digitally disenfranchised’.

The Motor Accident Solicitors Society has raised concerns that development of the portal is being rushed to meet a “politically motivated” deadline of April 2020.

Clayden said those fears were largely insubstantial. But he said the system currently hangs on a Ministry of Justice consultation over medical reporting.

Clayden said: “Will the system be ready? Yes, providing we get the answers to these critical bits.”

However, he is clear he won’t be pushed into rolling out something that isn’t ready: “I won’t deliver something that doesn’t work properly. I will be the first person who says, ‘if this isn’t going to work I’ll call it’.

“I won’t be driven by politicians in that space because ultimately we’re the people who’ve got to deliver the service day in, day out.”