Prior to the introduction of compulsory third party (CTP) insurance, there was no obligation on the part of owners of motor vehicles to insure themselves against liability in respect of injury or death to another person brought about by the use of their motor vehicle.

The usual practice was for an owner, when insuring their motor vehicle under a comprehensive policy, to arrange for additional cover which indemnified them from liability or injury to third parties caused by the negligent use of their motor vehicle.

As there was no compulsion for persons to do so, it was perceived that injustice was suffered by innocent people as a result of the failure of motor vehicle owners to insure their vehicles against claims for injury or death to third parties.

To address this deficiency in the Law, the Traffic Act 1925 was amended, consequently providing adequate protection to injured third parties. This form of insurance was purely based on common law, where compensation for damages for personal injury was paid only after negligence had been proven or conceded. It was widely recognised that this system of third party insurance had many deficiencies.

A committee headed by Justice Neasey was appointed to investigate alternatives to the existing scheme. The select committee settled on a variation of the Canadian “No Fault” scheme. Their recommendation of a dual “Common Law/No Fault” system was accepted by both Houses of Parliament and the Motor Accidents (Liabilities and Compensation) Act was passed. The MAIB commenced operation on 1 December 1974.