INTRODUCTION

This chapter analyses some of the core problems afflicting the classification and analysis of compensation funds generally, and no-fault comprehensive compensation funds specifically. The inconsistent legal philosophical and technical definitions and usage of compensation funds across different jurisdictions illustrate a number of key problems that require proper framing and analysis.

THE DISTINCTION BETWEEN SOCIAL SECURITY SCHEMES AND NO-FAULT COMPREHENSIVE COMPENSATION FUNDS

The design of social security systems globally varies widely depending upon legal tradition and other political and economic influences. European systems in states like Belgium, the Netherlands and France generally have a ‘Bismarck-ian’ contributions-based social insurance structure. The United Kingdom, New Zealand and Scandinavian countries generally follow a ‘demogrant’ system, which guarantees universal entitlement to social security benefits if citizenship or residency requirements are met. Other countries, including Canada, Australia and the United States take a blended approach involving social insurance, universal social security and private insurance/out-of-pocket principles depending on the particular social security purpose.

There are differing theories from legal scholars about the social security overlap with compensation funds generally and no-fault comprehensive compensation funds in particular. A no-fault comprehensive compensation fund has been described by Cane and Goudkamp as a ‘social welfare solution’ to the problem of compensation. Some tort law scholars have classified no-fault comprehensive compensation funds as a complete social insurance system that follows from the logical extension of loss distribution to all accidental losses.

Knetsch classified compensation funds generally as being distinct from social security because they provide compensation without means-testing, evidence of prior contributions or affiliation and operate in a narrow field related to the circumstances of damage. Macleod and Hodges have most recently described an international trend towards compensating personal injury on a no-fault basis as a shift to compensating on a ‘wider social basis’ that may also (depending on the jurisdiction) be infused with concepts of social solidarity.