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Reform of the Automobile Accident Compensation System

Published online by Cambridge University Press:  12 February 2016

Izhak Englard
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Extract

This paper is based on a study prepared for the National Insurance Institute. Originally a comprehensive field study was envisaged, to include empirical data concerning the compensation of victims of automobile accidents in Israel, with the intention of examining the possibilities of necessary reform. It transpired that the field study needed substantial expansion in connection with a separate and independent study of the National Insurance Institute, relating to the rehabilitation of accident victims. It was therefore decided to deal with those areas which did not depend directly upon the empirical data. The absence of such data, however, restricted the possibility of drawing definite conclusions as to the state of affairs in Israel.

The first public proposals in the matter appeared in the Report of the Ben-Ze'ev Committee, appointed by the Ministers of Justice and of Labour in 1964, which was published in the summer of 1966. The gist of the Report lay in the recommendation to leave the implementation of the proposed scheme to the National Insurance Institute. The insurance companies and others came out in opposition and for that reason apparently the Report was shelved.

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Articles
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Israel Law Review , Volume 9 , Issue 2 , April 1974 , pp. 234 - 273
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Copyright © Cambridge University Press and The Faculty of Law, The Hebrew University of Jerusalem 1974

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References

1 For an English version of the major part of this Report, see (1966) 1 Is.L.R. 636. An unofficial plan preceded the Report: Yadin, , “Outline of an Automobile Compensation Plan for Israel” (1964) 13 A.J.C.L. 276.CrossRefGoogle Scholar

2 At the instance of the Israel insurance companies, a critical examination was made of the Report: Steefel, E.C., A Critical and Comparative Study of the Israel “Inter-Ministerial Report on Questions of Traffic Accidents” (1967).Google Scholar

3 An English summary appears in (1973) 8 Is.L.R. 296.

4 The English translation of the Bill is appended.

5 Some of the best legal minds of the world have dealt with the problem and many reform plans have been produced. See e.g., Calabresi, , The Costs of Accidents: A Legal and Economic Analysis, reviewed by Kretzmer, D., (1974) 9 Is.L.R. 148Google Scholar; and Cf. Tunc, A., “Traffic Accident Compensation: Law and Proposals” in International Encyclopedia of Comparative Law (1971) vol. XI, ch. 14.Google Scholar

6 See secs. 38, 39, 40 of the Civil Wrongs Ordinance; see generally Tedeschi, , Englard, , Barak, , Cheshin, , Law of Torts: The General Part, (Jerusalem, 1970, in Hebrew)Google Scholar §69 per Englard.

7 See Fishman v. A. G. (1963) 17 P.D. 1478; Mizrachi v. Zion Ins. Co. Ltd. (1966) (I) 20 P.D. 414. Englard, , “The Concept of Dangerous Instrumentalities under sec. 51 of the Ordinance and the Automobile” (1967) 23 HaPraklit 434.Google Scholar

8 The courts followed the rule of Phillips v. Britannia Hygienic Laundry Co. [1923] All E.R. 127, despite the wider language of sec. 63(b), recognizing duties which are “for the benefit or protection of persons generally”. See Pritzker v. Friedman (1953) 7 P.D. 674; Buchhandler v. Shefer (1960) 14 P.D. 1296, and Shahda v. Hilo (1966) (I) 20 P.D. 163 and (1966) (IV) 20 P.D. 617 (Rehearing) cf. (1974) 9 Is.L.R. 50 at n. 97.

9 Neumann v. Cohen (1970) (II) 24 P.D. 229.

10 Secs. 64, 65, 68 of the Ordinance. See Tedeschi, op. cit., supra n. 6 at §137 ff.

11 See secs. 14, 15, 16, 20 of the Motor Vehicle Insurance (Third Party Risks) Ordinance [New Version], 1970.

12 See (1973) 8 Is.L.R. 554.

13 Ibid. at pp. 557–8.

14 Ibid. at p. 578.

15 Cf. Fleming, , Law of Torts (4th ed., 1971) 12, 278Google Scholar; but cf. Prosser, Torts § 84.

16 See the interesting comments in Friedman, D., “Some Aspects of the Problem of Alternative Remedies in Relation to Automobile Accidents” (1968) 17 Kansas L.R. 23, 42ff.Google Scholar

17 See sec. 86 of the Civil Wrongs Ordinance, which does not distinguish between personal and property damage. However, with regard to property damage there is specific provision in sec. 17 of the Ottoman Law of Insurance which entitles the insurance company to subrogation. See Hamoudot v. Alexander (1970 (I) 24 P.D. 686; Tedeschi, op. cit., at §394.

18 Sec. 150(a) of the National Insurance Law [Consolidated Version] 1968. See Shoshan v. The Foreign Work and Port Company, Ltd., (1969) (II) 23 P.D. 357.

19 Sec. 82(c) of the Civil Wrongs Ordinance excludes the employer from the term “third party” within the meaning of sec. 150 of the National Insurance Law.

20 The problem arises because of the wording of sec. 82 of the Civil Wrongs Ordinance which excludes benefits in specie. See the District Court decision reported in(1970) 75 P.M. 407.

21 See especially the definition of “person conferring benefit” in sec. 4 of the Law.

22 The reference is to the Sick Funds which are corporate bodies insuring their members only. The provision in their by-laws which obliges members receiving assistance to make reimbursement if there is tort liability in a third party throws doubt upon the right of the Fund under the said Law, in view of the rule in Lankari v. State of Israel (1969) (II) 23 P.D. 113, under which “repair” which must be returned is not “repair of damage” under the Law.

23 Rubin v. Dir. Israel Rly. (1958) 12 P.D. 1836, 1842–43; but see the doubt raised by Berinson, J. in Bidah v. Rubin (1971) (II) 25 P.D. 43, 51: “the Civil Wrongs Ordinance uses…‘under a contract of insurance’, both in sec. 81, dealing with the claim of the dependents, and in sec. 86, dealing with the victim's own claim. It is therefore possible to argue that the interpretation in both places is the same. In that case…even when a victim sues for damages—as in the case of dependents—he will have to waive in favour of the tortfeasor any monetary benefits accruing to him not under an insurance contract”.

24 Ibid., Bidah v. Rubin.

25 Compare sec. 17 of the Ottoman Law of Insurance.

26 Conard, , Morgan, , Pratt, , Voltz, , Bombaugh, , Automobile Accidents Costs and Payments (1964) 296Google Scholaret seq., tables 8:17, 8:18.

27 The authors summarize the results thus: “In summary, the Michigan survey shows that the defendant is best characterized by his lack of involvement in the litigation process, evidenced by both his lack of knowledge about the outcome of the case and by the small amounts of time and money he is required to invest to reach settlement” (Conard et al., op. cit. at p. 309).

28 Clasen, G., Teilungs—und Regressverzichtsabkommen mit Haftpflichtversicherern (Karlsruhe, 1958) 20et seq.Google Scholar; Fleming, “Collateral Benefits” in International Encyclopedia of Comparative Law vol. XI, ch. 11, sec. 72.Google Scholar

29 The intention was that the agreements apply when the Institute has a cause of action, assuming that the driver was liable in tort, but not when a company has a good defence under the policy, which does not concern the actual liability of the driver.

30 See Englard, , “The Hospital's Right to Indemnity for the Treatment of Traffic Casualties” (1973) 28 HaPraklit 344.Google Scholar

31 Sec. 64.

32 O'Connell, J., The Injury Industry (1971) 9–12Google Scholar; Keeton, R.E. & O'Connell, J., Basic Protection for the Traffic Victim (1964) 3, 22.Google Scholar

33 Conard, op. cit. at p. 197.

34 Ibid., at p. 159 et seq.; American Bar Association, Report of the Special Committee on Automobile Accident Reparations (1969) 103–104.

35 Whether the court may take into consideration the decrease in value of money, see Tedeschi, op. cit. at §376(b) and the cases there cited.

36 Cf. Automobile Insurance… for Whose Benefit?, A Report to Governor Nelson A. Rockefeller (1970) 28, 29: “The seriously injured receive a sort of negative ‘pain and suffering’”.

37 On this point the Rockefeller report is open to criticism. Despite its high quality it seems to be too optimistic with regard to the possibility of having one plan attain all the goals mentioned.

38 Weyers, H. L., Unfallschaden, Praxis und Ziele von Haftpflicht und Vorsorgesystemen (Frankfurt, 1971) 346.Google Scholar

39 Tedeschi, op. cit. at §97.

40 For a brief summary of the situation in other countries, see Conard, op. cit. at p. 445 et seq.

41 Ibid., at pp. 451, 471; McGregor, , “Personal Injury and Death” International Encyclopedia of Comparative Law, vol. XI, ch. 9, sec. 48 et seq.Google Scholar; but cf. Law Commission Report on Personal Injury Litigation—Assessment of Damages, 1973 (Law, Cmd. No. 56) paras. 26–30.

42 We question the argument that because of court congestion we must abolish tort liability and transfer automobile accidents to the National Insurance Institute. The latter was not created to solve the problem of court congestion. The courts' task is to decide cases. It is quite legitimate to endeavour to prevent unnecessary litigation by unambiguous legislation and to alleviate congestion by simplifying procedure but not to ease the burden of the courts by denying a person his rights.

43 See the Ben-Ze'ev Report, op. cit. at p. 639 and Hippel, E.v., Schadensausgleich bei Verkehrsunfällen, (Tübingen, 1968) § 22.CrossRefGoogle Scholar

44 Known in Anglo-American literature as the “bathtub (accident) argument”; cf. Keeton & O'Connell, op. cit. at pp. 3–4.

45 It is problematical whether compensation is for loss of earning potential or loss of future earnings, see Tedeschi, op. cit. at § 360.

46 See Salzburger, and Shnitt, , “Social Welfare Legislation in Israel” (1973) 8 Is.L.R. 577–9.Google Scholar

47 See E.v. Hippel, op. cit. at pp. 52, 78; contra Weyers, op. cit. at p. 544; cf. Keeton and O'Connell, op. cit at p. 358 et seq.

48 As distinguished from rights against the tortfeasor.

49 Amounts intended to complement National Insurance rights should not be deducted. The principle of deduction will lead to quasi-social insurance being drafted so as not to overlap with National Insurance, as is the case in medical insurance.

50 Secs. 68 and 65 of the Civil Wrongs Ordinance.

51 For Swiss rule, see K. Oftinger, Schweizerisches Haftpflichtrecht (2.Aufl. 1960–62) § §9, 23, IV, E. On the problem in general, see Honoré, A.M., “Causation and Remoteness of Damage” International Encyclopedia of Comparative Law vol. XI, ch. 7, secs. 178–180.Google Scholar

52 Cf. generally, the report of the American Bar Association supra n. 34.

53 We agree with the basic approach of Kahan J. in Bidah v. Rubin (1971) (II) 25 P.D. 43, 52; cf. Atiyah, P.S., “Collateral Benefits Again” (1969) 32 M.L.R. 397CrossRefGoogle Scholar, and cf. supra p. 253.

54 On the problem generally see Fleming, “Collateral Benefits” International Encyclopedia, op. cit. secs 50–53, 54–57; Cf. Weyers, op. cit. at pp. 412–413 et passim (Quotenvorrecht).

55 For a discussion on the nature of that body of law see Ginossar, , “Autonomy of Corrective Law” (1974) 9 Is.L.R. 24.Google Scholar

56 See Maoz, , “The Rule Excluding Evidence of Similar Facts with Special Reference to Non-Jury Trials” (1973) 8 Is.L.R. 506 at 527.Google Scholar

57 At present, comprehensive insurance does not cover indirect damage. Thus, abolition of tort liability in this area requires cooperation of the insurers. If private insurance is not possible, these losses should be subject to strict liability.

58 The matter depends upon the number of victims not receiving any compensation or less than their entitlement under National Insurance.

59 See Ginossar op. cit. supra n. 55 at n. 137.

60 E.g., the definition of “traffic accident” in sec. 1 (does a pedestrian who bumps into a parked vehicle and is hurt suffer injury under the Law?); the meaning of “driver” in sec. 2 in relation to a parked vehicle; the precise import of sec. 2(c) in relation to sec. 2(d); the absence of express negation of liability for passengers in the other vehicles in sec. 3(a).

61 In the Knesset the Minister expressed his readiness to raise the ceiling to IL50,000 for non-pecuniary damage.

62 Stenographic protocols for July 17, 1973.

63 The Minister relied upon an unnamed “person who knows more than I do”: Stenographic protocols for July 17, 1973, p. 152.

64 The Ben-Ze'ev Report contains interesting data on the large difference in expenses as between the insurance companies and the National Insurance Institute: op. cit., supra n. 1 at pp. 639–40.

65 For non-pecuniary damage, sec. 4(b) of the Bill empowers the making of regulations.

66 McGregor, , “Personal Injury and Death” International Encyclopedia of Comparative Law, Vol. XI, ch. 9, paras. 48 et seq.Google Scholar

67 It is known that the Treasury is considering amending the Insurance Business (Superintendence) Law, 1951, inter alia by increasing the authority of the Superintendent to control unfair practices.

68 (1973) H.H. no. 1079.