Insurance fund to appeal court ruling limiting its powers

The Automobile Insurance Rating Organization (AIRO), which manages a special fund established to remedy the havoc that can be caused by uninsured motorists, is appealing its first defeat in court.

The Automobile Liability Insurance law came into force in 1996, requiring every motor vehicle owner to have liability coverage. If the insured is at fault in a car accident, liability insurance pays for the damages that they cause to any third party.

Nevertheless, there is still a minority who do not comply with the law and thus the Ministry of Finance set up the special fund three years ago to pay for damages caused by these non-insured motorists.

The fund is financed by 5 percent of the tens of billions of dollars in liability insurance fees the state collects each year, and on average pays out damages to 30 to 40 accident victims a year.

Following payout the organization, by law, can request the non-insured motorists to recover the amount, which may be up to NT$1.6 million if a death has been caused.

In a rare case, the Shihlin District Court last year threw out a claim by AIRO against a van driver whose vehicle was not covered by liability insurance.

Lin Ming-chi (林銘吉) of Taipei County hit a man and caused his death while trying to make a left turn on Kungchien W Road (工建西路) in Keelung City on Nov. 3, 1998.

Two later, AIRO paid NT$1.2 million in damages to the family of the accident victim on behalf of Lin, whose vehicle was not covered by liability insurance.

Lin convicted of causing the accident and the fund subsequently filed suit in the district court requesting Lin pay for the damages he had caused.

However, the insurance organization, which wins almost every court case like this, faced its first defeat in Lin's case. Judge Lee Yu-ching (李玉卿) of the Shihlin District Court overruled AIRO's claim for reasons that it failed to take into consideration "whether Lin could afford the damages."

The judge also said the nature of the special fund is only "complementary," that is, it is given only when the accident victims have no alternative source of compensation and when the offenders could afford such damages.

The Ministry of Finance called the district judge's knowledge of the fund "inadequate," and the insurance organization is appealing the case to the Taiwan High Court.

Chen Hung-ju (陳鴻儒), a legal representative for AIRO, said the formation of the special fund was meant to give speedy remedies to accident victims.

"It's just like liability insurance, which pays for damages without asking if the offender is willing or able to afford them. If that is the case, I don't think we need AIRO in the first place," he said.