James Dalton, Chief Services Officer, MIB
DAC Beachcroft Motor Injury Conference
15 June 2023

Our Chief Services Officer, James Dalton was at the Motor Injury Conference to highlight some of the challenges and opportunities of a changing insurance market. The cultural legacy of the pandemic, new ways to get around, and the growing importance of data in the fight against uninsured driving and insurance fraud.

Thank you for the opportunity to be with you today. I’m still relatively new to MIB having joined at the end of last year. But in that time - and from my time at the ABI - I have seen the work that many of you do to help insurers support their customers. And, while we have different offerings, I know we share the same goal of making sure the people we support get the compensation they need.

Firstly, I’m sorry to disappoint some of you. Although I recognise that I’m speaking to a room full of lawyers, in my remarks today, I will not be doing a deep dive into the legal and regularity implications of the many changes happening in the insurance market. More than enough has been said about changes to the Ogden Discount Rate and the FCA’s Consumer Duty, for example.

Instead, I’m going to give you a flavour of some of the challenges – and opportunities – that we’re seeing at MIB and in the motor insurance market, as well as sharing with you some of the things we’re working on to prepare for those changes. I hope that will give you a sense of how the work we do together could evolve in the years ahead.

Every year, MIB pays around £400 million in compensation to support victims of uninsured and hit-and-run drivers. That work, alongside our work to keep these dangerous drivers off our roads, is funded and supported by motor insurers. And so, the challenges that impact the insurance industry also affect MIB.

Lessons from the pandemic

And, in recent times, there’s been no greater challenge than the pandemic, which brought into focus the enormous cultural and technological shifts that have been gathering pace over the last decade. As the world stopped moving, offices shut down, and we adapted to the strange new reality of living so much of our lives online, millions of businesses were suddenly reminded that in a fast-moving, 21^st-century economy, it’s those who remain agile and who are set up to succeed in an environment of constant change that survive.

Preparing for the unexpected became expected – and we were reminded that, in many cases, the long-established rules no longer apply. But with that also came an opportunity – an opportunity to think and do things differently.

One example of that was the way millions of people across the world saw the opportunity to improve their health and well-being and enjoy a better work-life balance by working remotely, something many continue to benefit from post-Covid. And for an industry that was already familiar with the spotlight of 24-hour news and social media, many of the policy, legal and reputational issues thrown up by the pandemic came into sharp focus. The challenges associated with business interruption were the most obvious example. Here the legal disputes over policy wordings continue in the courts and, for obvious reasons, I’m not going to make any further comment on that.

Thinking back on my time at the ABI, the gas explosion near Croydon in August last year threw up a number of issues. The cordon around the house in which a young girl tragically lost her life meant many residents were forced to leave their homes. Many residents were also unable to access their vehicles. On the face of it, losing access to a vehicle where there had been no damage was not an insurable event. Yet insurers took a flexible and pragmatic approach to claims that didn’t fit within their normal claims criteria acting quickly to get their customers into temporary accommodation and providing temporary vehicles for those who had been affected.

At MIB too, there are also those rare cases where we need to look at claims that don’t meet our usual claims criteria. In those instances, we must strike a complex and often difficult balance. Maintaining some flexibility so that, where we can, we help people in very difficult circumstances while also making sure we protect our members from claims that were never intended to be part of MIB’s remit. Mostly we get that balance right. But, of course, there are some claims where, looking back, we would have done things differently.

The point here is this. What the policy wording (or in MIB’s case, agreements) say should happen in a claim may not be what is best for the customer. I’m sure there are also claims you come across that don’t fall neatly into defined parameters, and, with your clients, you need to undertake the same difficult balancing act. But by being agile and flexible, responding to the specific circumstances and not being overly constrained by the historic rule book, the industry’s customers are getting better outcomes.

Motor insurance is changing

One area where the historic rule book is being torn up is in vehicle design and that is having profound implications for the way insurers think, work, and operate. Today, the average vehicle has hundreds of components and sensors which look after everything from automatic breaking in an emergency, through to Advanced Driver Assistance Systems that use sensors and machine learning to interpret the road ahead.

For insurers, that brings massive challenges in terms of how they assess risk. From a claims perspective, damaged radars, lasers, and batteries that power electric vehicles – and the specialist skills required to repair them – mean higher costs.

The rapid development of increasingly automated and connected vehicles is also challenging the established principles on which motor insurance is based and on which MIB was founded. Take a moment to imagine thousands of sophisticated machines driving around on our roads, making decisions that directly impact road safety. Although we are still some way off from seeing fully autonomous vehicles on UK roads, vehicles with some level of automation have become commonplace. With most major vehicle manufacturers committing significant resources to developing vehicles with increasing levels of automation, it’s clear that there are technological, regulatory, and social challenges which need to be addressed.

So, what does that mean for the world of insurance? There are plenty of indicators for the challenges and opportunities that insurers will need to address, but no one can yet claim to have a full set of answers. What we can say is that collaboration between insurers, governments, technology suppliers, vehicle manufactures, road safety experts and organisations like MIB will be essential to allowing highly automated, connected vehicles to be used safely, with the highest possible level of consumer protection.

With ever increasing numbers of connected vehicles on our roads, MIB is particularly concerned about the risk of automated vehicles being exposed to a cyber-attack. To help mitigate that risk, we are working with the Department for Transport, the Centre for Connected and Autonomous Vehicles, and other key players both in and outside government to ensure that the emerging regulatory framework encourages innovation while also making sure there are adequate protections in place.

The way we buy insurance and make claims is changing too

It’s not only vehicles that are changing. Consumer demand is also evolving in ways we never would have imagined a decade ago. Car sharing services and bike rental schemes are offering a viable alternative to vehicle ownership. Those who do own a vehicle expect greater flexibility from their insurer. While the 12-month policy has served the industry well, many drivers now want to buy insurance for a few days or even hours.

Policies that allow you to pay for insurance by the mile or based on how you drive are likely to increase in popularity, alongside products that make it easy to insure all your different forms of mobility under one policy.

The role of artificial intelligence has recently become a subject on which everyone seems to have an opinion. Of course, AI have been used in insurance for some time, especially in assessing vehicle damage claims. But the role that AI might play in the future of insurance distribution, underwriting and claims could be the topic of a whole conference so, I think I will leave it there.

Micro-mobility

New ways to get around, especially the growing popularity of micro-mobility solutions, including e-scooters, is also challenging the long-established definition of what a “vehicle” is. E-scooters offer a convenient, environmentally friendly, and cost-effective way to travel. But the regulatory frameworks which apply to them are not keeping pace with technological change. Here in the UK, there is currently no legal framework (or even a market to buy insurance) for privately owned e-scooters. As they become ever more widely available, we are seeing increasing numbers of e-scooters on the roads, and none of them can be covered by third-party liability insurance.

With that in mind, we’ve been working to support the government in its efforts to regulate privately owned e-scooters by creating a new category for micro-mobility solutions within the Road Traffic Act (RTA). We believe the measures contained in the proposed Transport Bill represented a comprehensive and well-thought-out change in the law that could not only deal with unresolved questions around e-scooters, but also future-proofed the Act to include other forms of mobility that are certain to emerge.

We don’t yet know whether the government will introduce a compulsory insurance requirement. That issue, and other aspects of regulation, will be dealt with in secondary legislation that can only be passed once the new vehicle category has been created in the RTA. In the meantime, MIB will continue to encourage the government to allocate the parliamentary time needed to pass the necessary primary legislation. And until that happens, MIB will continue to make sure people who are injured in collisions involving e-scooters have access to compensation.

Data

The role of data has never been more important to the insurance industry and the work we do at MIB. Last year alone, MIB received more than a billion enquiries across its data services. Many of you will know the Motor Insurance Database (MID), which provides a central record of all UK motor insurance policies. MIB also manage the Motor Insurers Anti-Fraud and Theft Register (MIAFTR), which makes it harder for criminals to put dangerous vehicles back on the roads and the Claims and Underwriting Exchange (CUE), which plays a vital role in verifying a customer’s claims history.

As valuable as they are, these services are showing their age. First designed in the 1980s, the MID was never intended to serve an insurance market where drivers want to take out a policy for a day and be on the road in minutes. They also lack the flexibility we need to remain agile and adapt to some of the challenges I’ve spoken about today.

So, starting with MID and MIAFTR, we’re working closely with insurers to create Navigate – a single, modern, and flexible platform that will provide the capabilities we need to protect even more people from uninsured driving. We’re now working with insurers to prepare for the MID moving to Navigate in November followed by MIAFTR in February 2024. To make that possible, insurers are working to update the technologies, rules, and processes they use to upload new data to our services and they may be coming to you for help with that.

Insurance fraud

As I’m sure you know, fraudsters also know a thing or two about the need to adapt and be agile. Every day, the team at the Insurance Fraud Bureau (IFB) sees well-organised criminal groups finding ever more creative ways to reinvent their scams. Whether that’s selling fake or fraudulently obtained policies on social media, deliberately causing collisions to make an insurance claim, or using online channels to impersonate motor insurers and steal their customers’ data.

Ultimately, it’s the honest majority who pay the price of these scams. And so, at a time when millions are already struggling with the cost of living, we must continue developing innovative solutions that help our members stay two steps ahead. Once again, faster, more efficient ways to share information are at the core of that fight.

As part of the IFB’s three-year strategy, we’re building the modern tools insurers and our enforcement partners need to find and shut down organised insurance fraud. We’re also working to make sure the quality of the information our members and partners rely on is the best it can be.

Working to protect people from the latest scams by raising awareness is also a major focus for insurers and the team at the IFB. In fact, early next week, we will be launching a national campaign to warn the public about a new type of crash for cash scam involving delivery drivers.

Operation Tutelage

In terms of uninsured driving, we’re hugely proud of our work to support victims of both uninsured and hit-and-run drivers. But ultimately, our goal is to end to the injustice of uninsured driving.

The insurance industry and MIB must remain agile in our approach - finding new ways to become even more efficient in getting uninsured drivers off the roads. With the help of our police helpline and the MID, the police already take an uninsured vehicle off the roads every three and a half minutes – 123,000 last year alone.

In 2020, MIB worked with insurers and the police to create Operation Tutelage, a nationwide police effort to reduce the number of uninsured vehicles on our roads. As part of that effort, we’ve contacted thousands of drivers suspected of driving without insurance – and almost 80% are now insured. In recent weeks, we’ve announced further funding for the police and a new national enforcement strategy designed to take our work to tackle uninsured driving to the next level.

We’re also looking into what else we can do to complement that, including various options designed to make it much harder to continue driving without insurance.

Conclusion

In conclusion, I hope my remarks today have demonstrated that we are heading into one of the biggest periods of change the motor insurance market has seen, which presents both challenges and opportunities.

The cultural legacy of the pandemic, new regulations, new ways to get around, and the growing importance of data in the fight against uninsured driving and insurance fraud are things we are all grappling with.

None of us know how these changes will play out – but what we can say is that the need for businesses to adapt and be agile has never been greater.

Thank you.