I welcome the opportunity to speak on the Personal Injuries Assessment Board Bill 2003. In recent years, the cost of insurance has become a major issue of concern. It was realised that something had to be done, especially about the cost of motor insurance for young drivers and the rising cost of employers' liability and public liability insurance. The cost of insurance was one of the main issues raised during the last general election campaign. The Bill before the House is an attempt to deal with the matter.
In October 2002, the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, announced a programme of fundamental insurance reform which reflected commitments given in An Agreed Programme for Government. The programme contained a comprehensive set of measures designed to reduce insurance costs and improve the functioning of the insurance market. A key measure of this reform was the establishment of the Personal Injuries Assessment Board on an interim basis, pending the preparation of the necessary legislation to put the PIAB on a statutory footing. I am delighted that the legislation is before the House today.
Our compensation culture, which encourages litigation for personal injury damages, has led to spiralling insurance costs. The system for delivering damages is too expensive. Both businesses and consumers are overburdened when insuring against potential claims.
Many issues have been raised in regard to insurance costs in the course of the debatel. Fraudulent claims have been mentioned frequently. I accept that many claims going before the courts are genuine. However, fraudulent claims have been a contributory factor to the high cost of insurance.
Rising premiums have had a negative effect on businesses and jobs. The cost of insurance tops the Small Firms Association's list of obstacles to business. Some 19% of respondents ranked it as their main problem and 83% considered it a business problem. Insurance costs increased by an average 52% to May 2003, but many companies have had increases in the region of 70%. Commercial liability insurance now costs an estimated €2 billion annually. Insurance fraud is estimated to cost over €100 million a year.
Litigation costs are estimated to increase insurance costs by more than one third. A newspaper report yesterday indicated that there had been a striking decline in the number of personal injuries cases initiated in the High Court and the Circuit Court. This was attributed to the effectiveness of the advertisement campaign focused on fraudulent claims. The campaign by the Irish Insurance Federation to root out fraudulent claims has been successful. The abolition of no foal, no fee advertising by solicitors has also been a contributory factor.
In 2001 just over 19,000 High Court writs were issued, of which 80% related to personal injuries cases. In 2002, this fell to 16,400. The number of High Court writs issued to date in 2003 is down to 12,253. A similar decline in new proceedings was also evident in the Circuit Court. Judges have also adopted a more balanced approach to the concept of duty of care. This involves the acts and omissions that are to be considered negligent, and who is liable to pay compensation.
Increased awareness on the part of employers in regard to health and safety has resulted in fewer employer liability claims. Since the introduction of the penalty points system fewer motor accidents have occurred and this has also contributed to a decrease in personal injuries claims.
The Personal Injuries Assessment Board is expected to have a strong consumer focus and also to bring a balance of expertise to bear on what has been a difficult aspect of the insurance market. Its primary focus will be on the development of a pragmatic and workable system for handling insurance claims for the benefit of claimants and policy holders in general. The interim board concentrated on building relationships with the industry and other proprietary work to enable the statutory board to begin its operations immediately the legislation was passed. The PIAB is not designed to reduce levels of compensation. Its function is to reduce the cost of delivering it.
The chairman of the Personal Injuries Assessment Board has estimated the board will operate under an annual budget of around €8 million. Once it has begun hearing cases, it will employ approximately 100 staff and will deal with 227,000 cases annually. The chairman of the PIAB told the Joint Committee on Enterprise and Small Business that 300 doctors had applied to act as independent medical assessors on behalf of the board. The Personal Injuries Assessment Board Bill will place the board on a statutory footing. The board's objective will be to assess compensation at current levels more expediently while eliminating the excessive litigation overhead.
This Bill is before the House because of the high cost of insurance over the years. In my own area I have heard many cases of people receiving €60,000, €80,000 or a couple of hundred thousand in compensation. When major awards are made, there is always a question of whether they are fraudulent. It is not before time to introduce this legislation. All the research which has been done since 1998 when the report on motor insurance was published has shown the legal profession in a particularly bad light. There are many questions to be asked about the contribution of medical professionals to the cost of claims. It behoves claimants and professionals acting on their behalf to ensure that the best possible standards apply.
The Personal Injuries Assessment Board will offer speedier assessment which will benefit genuine claimants. Research shows that Irish claimants wait six times longer than their UK counterparts for negotiations on claims to commence. One of the major provisions of this Bill relates to the book of quantum. A book outlining the average awards for specific personal injuries will be compiled and published as a guideline to general damages. It should help parties to reach reasonable negotiated settlements without recourse to either the board or the courts. If parties do not accept the outcome of the PIAB assessment, they may reject the award. The claimant will be issued with a release certificate to enable him or her to commence proceedings within six months if it is decided to pursue a case further.
Previous settlements in the form of insurance payments or any other form of compensation, will be taken into account when awards are made. The costs of the board will be covered by fees levied on respondents on a case-by-case basis reflective of the actual complexity and work involved. Claimants will pay a small, refundable fee which must accompany their application for assessment if they have not been able to secure a satisfactory settlement directly. Claims will initially be made in the usual way against the respondent.
A great deal of work has been done by various parties. We must commend the work which has been done by the Joint Committee on Enterprise and Small Business. It has made a notable contribution to the insurance debate. Under the chairmanship of Deputy Cassidy, the committee has published an interim report outlining the significant work it has performed in a very short space of time.
Sections 39 to 43 of the Bill make provisions in respect of the legal status of the PIAB's order to pay. An order to pay will have the same status as a court decree. Some of the people who have contacted me to discuss the Bill have asked if we are moving the issue of insurance compensation away from the courts. They have asked about the legal status of this Bill's provisions. The order to pay will have the same status as a court order. That payments will be made to a claimant on foot of the order to cover costs is very important.
To sell the legislation to the wider world, we must ensure that we are not merely establishing another body. We must ensure that when the board commences its operations we see a gradual reduction in insurance costs. The cost of insurance to young drivers, employers, etc., must be reflective of the cost of claims. Right up to 2003, many stories have been told about the excessive cost of insurance, particularly for young drivers whose premia were three times more expensive than the purchase price of their vehicles. The example of a sub-contractor in the building trade was outlined to me. In 2001, his insurance cost was £1,400 but in 2002 the least expensive quote he could find was €10,000. Today, the contractor's premium is in the region of €16,000 to €17,000. Many health and safety regulations have been introduced to deal with the building industry. There is less likelihood of an accident on any building site now than there was three or four years ago, but that has not been reflected in the levels of premia.
I commend the Bill to the House. It is my hope that through the Personal Injuries Assessment Board we will see a massive improvement in cover for every motorist, employer and self-employed business person. I commend the Minister for Enterprise, Trade and Employment for the work she has done on this issue. She has shown a great deal of commitment.