Motor insurers cannot dictate how victims of motor vehicular accidents spend their litigation compensation. This is the settled position under both established common law principles and statutory frameworks across the jurisdictions of the United Kingdom and British Commonwealth.

THE NEW TACTIC: WHEN INSURERS ATTEMPT TO CONTROL VICTIM COMPENSATION

Lately, a troubling tactic has begun to creep into courtrooms. Lawyers for insurance companies now urge judges to direct a victim’s compensation — not to the victim — but into the hands of the Public Trustee, known as Amanah Raya Bhd (ARB).¹ GK Ganesan, “Can a Court Order a Road Victim’s Compensation be Paid to the Public Trustee (ARB)?” (2022), available at https://www.gkg.legal/can-the-court-order-a-road-victims-damages-to-be-paid-to-the-public-trustee-arb/

Think about what that means

Someone is already gravely injured — their mobility shattered, their independence stripped away — because of another’s negligence. After months or years of medical procedures, pain, and court battles, they finally win damages meant to help them rebuild their life.

And then, just as they reach for the means to take back some control, they are told: You will not touch it. Someone else will hold it for you. And you will have to ask, explain, and wait before any money is released.

Picture this: you or your loved one lie in bed, a body that once served you now betraying you daily. You have reorganised your life around caring for them — work abandoned, savings drained.

Then one morning, the doctor says a new treatment could help.

Or a vital surgery is needed. Do you simply arrange it?

No. You must write letters, file papers, plead with officials at ARB to unlock money that is already yours. Weeks — maybe months — could pass while illness marches on.

And for what? “Better management,” the insurers say. “More convenience,” they claim.

Convenience for whom?

Certainly not for the man gasping for breath who waits for a bureaucrat’s approval.

Certainly not for the woman in pain who measures her days in doses of medication, each one a reminder that someone else now decides how — and when — she can use what is rightfully hers.

It is hard to see this as anything but a system that, having wrecked a person’s body, now traps them in a web of permissions, approvals, and delays — as though compensation were a privilege to be rationed, not a lifeline that was earned through suffering.

The strategy is cruel: “We have destroyed your life, and now we shall dictate how you spend what remains of it.”

We need to be clear why this conduct is not merely inappropriate. It is outside what the law allows.

THE FOUNDATIONAL PRINCIPLE: RESTITUTIO IN INTEGRUM

The cornerstone principle governing compensation in tort law remains restitutio in integrum, crystallised in Livingstone v Rawyards Coal Co (1880).² Livingstone v Rawyards Coal Co (1880) 5 App Cas 25, 39  Lord Blackburn’s words ring as true today as they did 145 years ago: compensation should “as nearly as possible get at that sum of money which will put the party who has been injured in the same position as he would have been in if he had not sustained the wrong.”

Notice what Lord Blackburn did not say. He did not suggest that the tortfeasor should control how restoration is achieved. The principle is restorative, not controlling.³ Wells v Wells [1999] 1 AC 345

WELLS V WELLS: THE DEATH KNELL FOR INSURER CONTROL

The House of Lords decision in Wells v Wells delivers the fatal blow to any insurer pretensions of control.⁴ Wells v Wells [1999] 1 AC 345 Lord Lloyd of Berwick was unequivocal: courts must “arrive at a lump sum which represents as nearly as possible full compensation for the injury which the plaintiff has suffered.”

But here’s the killer provision that destroys every insurer argument: “How the plaintiffs will in fact invest their damages is, of course, irrelevant. That is a question for them. It cannot affect the calculation”.⁵ Wells v Wells [1999] 1 AC 345, 365

Irrelevant. Lord Lloyd could not have been clearer.

The lump sum principle is fundamental. Once compensation is awarded as a lump sum, it becomes the victim’s property absolutely. The House of Lords explicitly rejected any suggestion that courts could impose spending restrictions or structured settlements without victim consent.

Lord Steyn observed that agreement for structured settlements was “virtually never forthcoming” and such power to order periodic payments was “a dead letter”.⁶ Wells v Wells [1999] 1 AC 345, 384 If victims won’t agree to structured settlements, how can insurers possibly justify forcing spending restrictions?

MALAYSIAN LAW SLAMS THE DOOR SHUT

Now let’s examine what our own Malaysian law says about this insurer overreach.

The Road Transport Act 1987: Crystal Clear Parliamentary Intent

The Road Transport Act 1987 (‘RTA’) represents social legislation designed to protect road users.⁷ Road Transport Act 1987 (Act 333), sections 91(3) and 96(1) These sections create mandatory obligations on insurers that contain no provision whatsoever for insurer control over compensation spending.

Section 91(3) states categorically:⁸ Road Transport Act 1987 (Act 333), section 91(3)

“… notwithstanding anything in any written law, an insurer issuing a policy of insurance shall be liable to indemnify the class of person specified in the policy”.

Section 96(1) is equally unambiguous: ⁹Road Transport Act 1987 (Act 333), section 96(1)

“… the insurer shall pay to the [victim] entitled to the benefit of the judgement”.

The exclusionary words “notwithstanding anything in any written law” include the Public Trustee Corporation Act 1995, making Parliament’s intention crystal clear. The insurer must pay the victim directly.

No conditions.

No strings attached.

No spending restrictions.

Recent Federal Court Authority: The Final Word

The Federal Court has spoken definitively on this issue. In the landmark ruling involving Sa’amran a/l Atan & Ors,¹⁰AmGeneral Insurance Berhad v Sa’amran a/l Atan & Ors and Other Appeals, Federal Court judgment delivered August 2022, as reported in Free Malaysia Today, “Apex court rules crash victims should be automatically compensated” (9 August 2022) the Federal Court held that “victims of road accidents should be automatically compensated by insurance companies”[see also: Pacific & Orient Insurance Co Bhd v Hameed Jagubar Syed Ahmad, [2022] 6 MLRA 85] and that RTA provisions “should be construed to protect all motorists, including victims of road accidents”.¹¹ Paul Tan Automotive News, “Federal court rules that road accident victims should be automatically compensated by insurance firms” (August 9, 2022), available at https://paultan.org/2022/08/09/federal-court-rules-that-road-accident-victims-should-be-automatically-compensated-by-insurance-firms/

The three-person Federal Court bench awarded RM150,000 in costs to each successful party, sending an unmistakable message to insurers who attempt to deny or control victim compensation.¹² The date of the Order was 05 August 2022; AmGeneral Insurance Bhd v Sa’ Amran a/l Atan & Ors and 8 other appeals, [2022] 5 MLJ 825, [2022] 8 CLJ 175

The ARB Gambit: Why It Fails Spectacularly

Some insurers have attempted to circumvent victim autonomy by requesting courts to pay compensation to the Public Trustee (ARB) rather than directly to victims. This strategy fails on every conceivable ground.

The Auditor General’s report concluded that ARB was inefficient as a fund manager.¹³ Auditor General’s Report on the Activities of the Public Trustee Corporation, December 10, 2020. The report was tabled in Parliament on December 10, 2020 (not issued on that date). Auditor General Report (LKAN) 2019 Series 1”. The finding was: “AmanahRaya Bhd’s fund management was found to be inefficient as the fund had experienced a deficit from 2008 to 2019.” Auditor General Report (LKAN) 2019 Series 1, tabled in Parliament 10 December 2020, as reported in The Star, “AG Report: AmanahRaya fund management inefficient” (10 December 2020)  ARB charges fees of 1.0% to 2.0% per annum, which reduce victim compensation over time.¹⁴ Jagathees Nagulan & Others v Suresh Balakrishnan [ 2004] 6 CLJ 258]; First note: 5% for the first RM25,000; 4% for the next remaining balance up to RM225,000; 3% for the next remaining balance up to RM250,000; 2% for the remaining balance up to RM500,000; 1% for any remaining balance above that; as well as For EPF Nominations: ARB charges a flat 2% rate (as of January 2018). Management Fees for Investment Funds: Around 1-1.75% per annum for various Amanah Raya investment products. Note-2:  Also that Current Bank Rakyat rates (as of June 2025): Fixed Deposits (12 months): 2.65% per annum. Personal Financing: 3.42% to 5.22% depending on tenure. Note: The 4% rate mentioned may refer to specific promotional rates or different products, but is not the standard current FD rate.

The legal impossibility is even more damning. The Public Trustee Corporation Act 1995 (‘PTC Act’) provides no power for courts to order road accident victim compensation to be held by ARB.¹⁵ Public Trustee Corporation Act 1995 (Act 532) The PTC Act caters only for estates of deceased persons, not living accident victims.

As demonstrated in a detailed analysis, “the ARB Act gives no express powers to courts to order investment of the road accident victims’ compensation”.¹⁶ GK Ganesan, “Can a Court Order a Road Victim’s Compensation be Paid to the Public Trustee (ARB)?” (2022)

THE STATUTORY FRAMEWORK: MULTIPLE SHIELDS PROTECTING VICTIMS

Trustee Act 1949: No Authority for Insurer-Requested Trusts

The Trustee Act 1949 (Revised 1978) requires that trust powers arise from “an instrument creating a trust”.¹⁷ Trustee Act 1949 (Revised 1978), section 2(2)  No such instrument exists in motor accident cases. Insurers cannot create trusts to control victim spending.

Mental Health Act 2001: Narrow Application

The Mental Health Act 2001 applies only to persons with “mental disorder”, defined as “mental illness” or “psychiatric disorder”.¹⁸ Mental Health Act 2001 (Act 615), section 2  Physical injuries from motor accidents do not automatically create mental disorders requiring trustee appointment.

Where accident victims require litigation representatives, the Rules of Court 2012 provide adequate protection through the “litigation representative” system, formerly known as “next friend”.¹⁹ Rules of Court 2012, Order 76 Rule 3  No court order is necessary for such appointments.²⁰ Ziko Abbo & Another v Ketua Polis Daerah Bau [2004] 3 CLJ 76

COMMONWEALTH JURISPRUDENCE: A UNITED FRONT AGAINST INSURER CONTROL

United Kingdom: The Mother Ship Speaks

Beyond Wells v Wells, UK courts have consistently protected victim autonomy. In Rees v Darlington Memorial Hospital NHS Trust, the House of Lords awarded £15,000 for being “denied, through the negligence of another, the opportunity to live her life in the way that she wished and planned”.²¹ Rees v Darlington Memorial Hospital NHS Trust [2004] 1 AC 309

If courts protect your right to plan your life, insurers certainly cannot control how you spend the compensation meant to restore that autonomy.

Australia: Victim Property Rights Paramount

The High Court of Australia in Kars v Kars established that compensation belongs to the plaintiff absolutely.²² Kars v Kars (1996) 141 ALR 37  Australian courts recognise that “when lump sum compensation runs out,” the focus should be on “personal responsibility” of the victim to manage their own affairs, not external control by tortfeasors or insurers.²³ Sydney Law Review, “Damages for Personal Injury: Striking the Balance Between Sufficient Compensation and Reasonable Cost” (2017) 39 Sydney L Rev 233

Canada: Respecting Victim Choice

Canadian jurisprudence consistently emphasises that “compensating crime victims” requires respect for victim autonomy and choice.²⁴ Government of Canada, Office of Federal Ombudsperson for Victims of Crime, “Compensation for Victims of Crime” (2024), available at https://www.canada.ca/en/office-federal-ombudsperson-victims-crime/publications/research-recherche/ccv-ccv.html No Canadian province imposes spending restrictions on victim compensation, recognising such limitations as fundamentally incompatible with compensation principles.

New Zealand: Even No-Fault Systems Respect Autonomy

New Zealand’s comprehensive Accident Compensation Corporation operates on no-fault principles but maintains victim autonomy in spending decisions.²⁵ Accident Rehabilitation and Compensation Insurance Act 1992 (NZ) If a no-fault system can respect victim choice, fault-based systems have no excuse for control.

THE VACUUM OF LEGAL AUTHORITY: INSURERS HAVE NO LEGAL STANDING

Insurers possess no legal authority to impose spending restrictions on victim compensation. Their obligation is strictly indemnificatory – to compensate for proven losses, nothing more.²⁶ British India General Insurance v Capt Itbar Singh, AIR 1959 SC 1331 The contractual relationship exists between insurer and insured, not insurer and victim.²⁷ Chen Boon Kwee v Berjaya Sompo Insurance Berhad [2025] 1 MLJ 158

Victims are third-party beneficiaries with independent rights that cannot be circumscribed by insurer preferences.

INTERNATIONAL HUMAN RIGHTS: THE GLOBAL CONSENSUS

The European Court of Human Rights recognises that compensation awards must respect individual autonomy and dignity.²⁸ European Convention on Human Rights, Article 8  The UN Basic Principles emphasise that “adequate, effective and prompt reparation” includes respect for victim choice in remedy utilisation.²⁹ UN Basic Principles and Guidelines on the Right to a Remedy and Reparation for Victims of Gross Violations of International Human Rights Law and Serious Violations of International Humanitarian Law, GA Res 60/147 (2005)

PUBLIC POLICY: WHY INSURER CONTROL VIOLATES SOCIAL JUSTICE

Permitting insurer control over victim spending would create perverse incentives contrary to public policy. It would transform insurance from victim protection into victim control. It would undermine the deterrent effect of tort liability and create moral hazard problems.

The compensatory principle demands that victims receive full restoration without additional burdens.³⁰ Haines v Bendall (1991) 172 CLR 60 Imposing spending restrictions constitutes an additional burden, effectively reducing compensation value.

THE QUESTION ON COERCION: WHEN DOES INSURER CONDUCT CROSS THE LINE?

The recent Malaysian trend of insurers requesting ARB orders raises serious questions about institutional coercion. When insurers, having caused injury through their insured’s negligence, then attempt to dictate victim spending, this behaviour crosses ethical and legal boundaries.

Consider the power dynamics: Victims are injured, vulnerable, and dependent on compensation for survival. Insurers are well-resourced corporations with teams of lawyers.

When insurers leverage their resources to impose spending restrictions on vulnerable victims, this conduct constitutes systemic bullying. It represents an abuse of the legal process and a violation of victim dignity.

LEGISLATIVE INTENT: PARLIAMENT NEVER INTENDED INSURER CONTROL

When Parliament enacted the Road Transport Act 1987, it created social legislation to protect road users. The legislative intent was victim protection, not victim control.

Parliament’s use of mandatory language (“shall pay”) and exclusionary clauses (“notwithstanding anything in any written law”) demonstrates clear intent: Insurers must pay victims directly without conditions.

If Parliament intended spending restrictions, it would have included such provisions explicitly. Their absence is deliberate and definitive.

THE BOTTOM LINE: YOUR COMPENSATION, YOUR ABSOLUTE RIGHT

The compensation belongs to you absolutely. How you choose to utilise it – whether for medical care, lifestyle adaptation, investment, family support, or personal preferences – remains your sovereign right.

This protection comes from centuries of common law development from Livingstone v Rawyards Coal Co through Wells v Wells. Malaysian statutory frameworks, including the Road Transport Act 1987, support it. Constitutional protections for property rights and personal autonomy reinforce it. International human rights principles endorse it. Commonwealth jurisprudential consensus confirms it.

Insurers, having discharged their mandatory indemnification obligation, possess neither legal standing nor moral authority to impose further restrictions on those they have wronged.

THE CONSTITUTIONAL CONCLUSION: PROTECTING THE RAKYAT’S RIGHTS

This issue ultimately concerns the protection of the rakyat (people) from institutional overreach. When we permit insurers to control victim compensation spending, we surrender fundamental principles of justice and autonomy that define our legal system.

Your constitutional rights are not negotiable. This includes your right to spend your own compensation as you determine. They hang in the balance every time we allow external parties to dictate victim choices after wronging them.

The Rule of Law demands nothing less than complete victim autonomy in compensation spending. Motor insurance serves as social protection for road users, not as a vehicle for ongoing tortfeasor control.

THE ANSWER REMAINS WHAT IT HAS ALWAYS BEEN: A RESOUNDING ‘NO’.

Insurers cannot dictate how victims spend their compensation. Our law will not permit it. Malaysian law, Commonwealth law, and the principles of justice themselves will not permit it.

And that, my fellow citizens, is how we protect the rakyat from those who would control them even after wronging them. Because in Malaysia, when you win your compensation through our courts, that money is yours absolutely. And absolutely no one can tell you how to spend what is rightfully, legally, and morally yours.

∞§∞

Gratitude:

The author thanks Mr Gana Naidu, Miss KN Geetha, Miss Lydia Jaynthi, Miss TP Vaani, and Miss JN Lheela.

We thank Getty Images from Unsplash for the image.

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