In addressing this subject, it is important to state that the broader economic issue of the effect of liability insurance premium costs on the competitiveness of Irish industry cannot be assessed in isolation from the totality of costs borne by manufacturing enterprises located in Ireland and the trend in these costs relative to costs in competing economies.
That said, the Deloitte & Touche report in 1996 on an economic evaluation of insurance costs in Ireland found that premium rates in Ireland were higher than in other EU countries surveyed. It also found, in a survey of small and medium enterprises, that insurance premiums ranged from 1.4% of payroll costs in larger firms to 8% in smaller firms.
The report found that the two major factors driving up the cost of personal injury settlements in Ireland were medical inflation and the high transaction cost of claims, particularly legal costs, including the cost of expert witnesses. In response to these findings, a special working group was established under the aegis of the Department. This group has recently completed a research based study of personal injury compensation systems in operation in other countries with a view to establishing if these provide a more cost effective basis for delivering personal injury compensation. The report by the group will be submitted to us shortly.
The Deloitte & Touche report also identified improved health and safety measures in the workplace as a way of reducing costs. I regard the initiatives on the establishment of affinity schemes for small businesses, the development of a voluntary code of practice in safe working and accident prevention as significant and positive measures being taken by Irish business, through a social partnership approach, to reduce the cost burden of accidents in the workplace.