Date: Tue, 25 Nov 2003 09:44:58

From: Steve Hedley

Subject: Insurance in the law

I am sure Paul is right that reference to insurance is unwelcome to insurers (or at least to some of them), but I'm not convinced that it should bother the rest of us.

It's very hard to accept that the right to subrogate puts the liability "home to the person best able to take precautions" - on the contrary, the main reason to take out liability insurance is precisely to avoid that outcome. That is not "another argument" entirely, as Paul suggests; it is the whole point. If we really believed in making bringing the liability "home", we would ban liability insurance, as in the 18th century.

Again, Paul says (rightly) that insurers are "repeat players" and so can usually carry through litigation efficiently - but which way does that cut? In every common law country that I know of (NZ always excepted) the general public are firmly of the view that it is much too easy to sue in tort. That being so, it is perfectly proper for judges to say in marginal cases "this is not something you can look to the legal system to deal with, it is for insurance". I agree that, in reality, insurance is involved either say; but reducing the scope of liability where no ordinary person expects to be able to sue seems to me a perfectly proper objective. It's not the only consideration, but then nobody said that it was.

I'm not sure it's legitimate for the courts to act in marginal cases for the good of the insurance market - not so much because the insurers don't deserve it (though as presumed responsible and competent market actors, they probably don't), but because the courts will almost certainly get it wrong if they try. And the solution to "an already stretched insurance market" presumably isn't to stretch it further - or at least not from the courtroom.

Steve Hedley
University College Cork

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