Figuring out who the “relevant insurer” is under the Motor Accident Injuries Act in NSW
A new concept under the Motor Accident Injuries Act (MAI Act) that requires notice being given to the “relevant insurer” when making a claim for statutory benefits in NSW raises questions about how to determine which insurer that is.
Making a claim following a car accident
If you are involved in a car accident, under the Motor Accidents Compensation Act, or with a common law claim under the MAI Act, the claims process begins with a notice issued to all of the potential defendants. These defendants are the compulsory third party (CTP) insurers of any of the vehicles involved that may have been negligent in causing the accident.
Under previous schemes, as well as in common law claims made under the MAI Act, the usual process was for claims to be made against all vehicles involved. The owners and/or drivers of these vehicles would then be defendants in any court proceedings, unless the insurers managed to reach agreement among themselves on how to share and manage the claims.
The “relevant insurer” concept
Making a claim for statutory benefits has been complicated by the introduction of a new concept under the MAI Act, where Section 6.12(1) provides that a claim for statutory benefits is made by giving notice to the “relevant insurer”.
Under section 3.2(1) the “relevant insurer” pays those benefits. As a claimant only gets one set of benefits, there is only ever one such insurer.
So who is the relevant insurer?
The MAI Act provides an explanation who of the relevant insurer is, with Section 3.2 defining it as follows.
- In an accident where there is only one vehicle with motor accident cover, the relevant insurer is the insurer of that vehicle.
- In an accident involving more than one vehicle, the relevant insurer is the insurer of the at-fault vehicle, which under section 3.2(4) is the insurer providing motor accident insurance cover to the owner or driver of the vehicle whose fault caused the death or injury, or if there is more than one such vehicle, the owner or driver of the most at fault vehicle.
- In any other case, the relevant insurer is the Nominal Defendant.
Problems arising from the definition of relevant insurer
The definition raises a number of questions for claimants and defendants, including who the relevant insurer is in situations in which one vehicle is insured and another is not; how is “most at fault” defined; and what happens in accidents in which no one is fault, due to, for example, a driver suffering a medical episode and his or her vehicle consequently colliding with another vehicle.
There is a strong likelihood in particular that self-represented claimants may encounter trouble identifying the relevant insurer. This may be because they are not aware of the provisions of the Act, or they may not understand the concept of fault or the availability of the Nominal Defendant. Self-represented claimants often make claims against their own vehicle or the other vehicle to prevent their driver “getting in trouble”.
Who should a claim be made against?
With the introduction of the concept of a relevant insurer, when claiming for statutory benefits under the MAI Act, a claimant should lodge only one claim form with one insurer. It then becomes a matter for that insurer either to accept that it is the correct insurer for the purpose of managing the claim and paying the benefits, or to dispute it.
When an insurer receives a statutory benefits claim, the insurer needs to ask first whether it is the relevant insurer in accordance with section 3.2. Insurers will need to consider the factual circumstances of the accident and confirm with the claimant if any other vehicles were involved in the accident or contributed to it.
What if there is a dispute about who the relevant insurer is?
Should there be a dispute about who the relevant insurer is, or if there is a delay in determining this, the matter can be referred to the Dispute Resolution Service (DRS) under section 3.3(2). It then becomes a miscellaneous claims assessment matter, with the outcome binding upon the insurers.
Clause 4.28 of the Motor Accident Guidelines excuses a claimant who has given notice of a claim to the incorrect insurer, as well as encouraging the presumably correct and incorrect insurers to cooperate, so that “the claimant’s recovery and benefits are not adversely affected”.
How things could be improved
The difficulty in establishing who the relevant insurer is has the potential to affect the flow of the statutory benefits claim process. The State Insurance Regulatory Authority (SIRA) could assist by publishing arrangements for determining who the relevant insurer is, in order to prevent disputes and assist in keeping the management of claims open and transparent.
Although insurers may enter into arrangements, approved by SIRA, for the determination of which is the relevant insurer, to date no document evidencing such an arrangement has been published.
Such arrangements would be beneficial for all parties, aiding insurers in determining who is going to pay or share the payment of the statutory benefit and assisting the injured persons. They would also help to guide SIRA’s Claims Advisory Service in helping self-represented claimants identify the relevant insurer and aiding the DRS to resolve disputes.
For more information, please see my articles The NSW CTP scheme in practice – two years on and Paying for funeral expenses following a road accident death.
The original version of this article was published by the Journal of the Law Society of NSW in 2019.