Compulsory Liability Insurance for Pain and Suffering Damages in Russia: Bringing Justice to Accident Victims

This thesis critically examines the current tort system of compensation for pain and suffering caused by accidents in Russia. The central argument is that this system does not secure justice for victims due to the extremely low level of damages, inconsistency of awards, complicated claims procedure, and difficulties with the enforcement of awards. Liability insurance would mitigate these problems and benefit potential victims. However, insurance for pain and suffering damages is not widely used in Russia. This thesis argues that the legacy of the Soviet tort culture largely contributed to this situation. The research demonstrates that monetary compensation for pain and suffering was considered a bourgeois legal institution incompatible with socialist values. This is because the right to such compensation was conceived as a form of individualism and unjustified enrichment. This remedy, therefore, was not available throughout the entire Soviet history. It was only recognised by Russian law in 1992. Furthermore, liability insurance was prohibited in the Soviet Union as an inappropriate way to shift personal liability. It was believed that tort law has a disciplining and preventive effect which liability insurance would erode. As a result, it became available only after the collapse of the Soviet regime. Compulsory motor vehicle liability insurance was implemented even later, in 2003.

The remnants of this restrictive approach are still evident today in the Russian legal system. Compulsory liability insurance for road traffic accidents and social insurance for workplace accidents, for example, do not cover damages for pain and suffering. Indeed, Russian insurance

law expressly precludes inclusion of these damages in these insurance schemes. Moreover, while voluntary liability insurance for pain and suffering is available in principle, demand is low. There is, however, one exception. Railroad accidents are the only category of cases where such liability insurance is utilised ubiquitously in Russia. Nevertheless, as this research demonstrates, presence of liability insurance does not bring justice to victims of railroad accidents, largely due to its voluntary form. In addition, the railroad state corporation (Russian Railways) and insurance companies tend to put their business interests ahead of the victims’ needs. Consequently, the limits of insurance pay-outs are low and not standardised. The claims procedure remains complex, and settlements are rare in these cases.

A comparative analysis of the British and continental jurisdictions shows that compulsory liability insurance covering pain and suffering damages is more beneficial to the accident victims. Liability insurance can also stimulate an increase in award sums, making them more consistent and

simplifying claiming and enforcement. This thesis proposes, as a result, the implementation of a compulsory liability insurance scheme for pain and suffering caused by road traffic, railway and workplace accidents in Russia. To succeed, this reform must be accompanied by further steps

aiming to change judicial attitudes towards pain and suffering damages, promote settlements, and provide access to justice for accident victims. The latter can be achieved by enabling direct claims against insurers and enhancing contingent and conditional fee agreements. Potential social costs such as moral hazard, insurance fraud, and development of compensation culture should be taken into account but not exaggerated. There are no substantial grounds to believe that these social costs would increase considerably if the proposed reforms take place.