On behalf of the committee I welcome the Tánaiste and Minister for Enterprise, Trade and Employment to the sixth day of our inquiry into the Irish insurance market. This topic is at the forefront of all our minds, as was the case with the previous committee, which lapsed on the dissolution of the last Dáil. In the interim the situation has become more urgent, particularly in the area of insurance for drivers and with reference to the recommendations in the report of the Motor Insurance Advisory Board of April 2002. There is also the cost of employers and public liability insurance, particularly for small and medium-sized businesses. As a society we are all affected by these issues and that is why the joint committee decided to embark on this investigation. I express my appreciation and that of the committee to all who have made submissions or assisted us in any way, including the Tánaiste and her officials. We also express our gratitude to the Minister for Justice, Equality and Law Reform and the Minister for Transport and their officials. The Ministers concerned have promised us every assistance and in that context I am pleased to welcome the Tánaiste. Members have echoed her determination inside and outside the Oireachtas to address the issues behind the high cost of public, employer liability and motor insurance. I ask Members to keep their contributions succinct, as the Minister for Transport is due before the committee at 1.30 p.m. Arrangements are in train for the Minister for Justice, Equality and Law Reform to come before the committee next Tuesday. Members who wish to make declarations about any matter being discussed may do so now or at the beginning of their contributions. I have already put on the record that I am a member of the Irish Hotels Federation. I welcome the Tánaiste again.
Reform of the Irish Insurance Market: Ministerial Presentations.
I am pleased to be back before the committee. I welcome the fact that the committee is looking at the Irish insurance industry. As legislators, regardless of whether we are Ministers, we should look at the issues affecting society.
The cost of insurance is a very serious issue for all sectors of society - householders, motorists and businesspeople. The cost of both employers liability and public liability insurance is putting jobs at risk. I am not going to reiterate the causes of the disease today, as those are well known, but to concentrate on the cure for the disease. I will comment on the compensation culture which has developed in this country over many years. It is deep-rooted and is different from many other European countries, leading to a large volume of claims and expensive litigation. It has brought us to the intolerable situation we are now in, where many people after an accident are more likely to call a lawyer first than a doctor. I have said on many occasions in the past year that reforming the insurance market is my number one political priority. I said at the start of that period that we would give ourselves a 12-to 18 - month timeframe and we have made considerable progress in relation to insurance reform in Ireland. I will deal with the specific issues under my remit.
First, we have put in place an alternative to the expensive court mechanism to deal with claims. It takes six times longer in Ireland for genuine claimants to receive what they are entitled to than in the UK. The court system is expensive, slow and leads to many difficulties. Litigation costs add about 40% to the cost of compensation. This has been debated for some time - I remember a suggestion in the late 1970s that we should have an alternative arrangement along the lines of the Personal Injuries Assessment Board. The legislation to put that into effect will be published in the autumn and I hope, with the support of all Deputies, to have it passed by Christmas so the PIAB will be up and running by the start of next year. In advance of the PIAB being established on a statutory basis we have established it on an interim basis. It has been doing an enormous amount of work and was involved in drafting the heads of the Bill we published some time ago. Second, the PIAB was involved in drawing up a book of quantum, which is another first, and we can see the awards that have been made and will have comparative figures on which to base settlements.
The PIAB recently advertised for medical staff and assessors. The board will operate very differently from the norm for State agencies: it will operate from 8 a.m. to 8 p.m. and on Saturdays. It will have a very comprehensive information and customer service line so people will understand what the board does and how it goes about its business. It will make its work very intelligible so that ordinary citizens can avail of its services without having to hire lawyers. Legal fees will not be allowed for and those who use the service will pay for the service. It will be a paper-based system and there will be no question of having to perform an advocacy role, so there is no need for lawyers. The independent assessors will assess the details put forward by the claimant and they will make a determination. The board will have staff at its disposal with actuarial experience, accounting experience and, obviously, medical experience. It will provide a simple, inexpensive, quick way of settling claims for genuine claimants. It will also be the case that the board will establish early on the credibility to encourage people to accept the determination of the PIAB. It will be mandatory in all cases, having gone to trial, that people go before the PIAB. For constitutional reasons, people do not have to accept what the PIAB recommends. People have their constitutional and legal rights, which cannot be interfered with. However, I believe the credibility will be such that the awards being made will be on a par with what might be given in a court of law. There is no question of giving genuine claimants less than they are entitled to. The whole purpose is to provide a less expensive, more informal and quicker way of settling claims.
Second, I want to deal with the recommendations of the Motor Insurance Advisory Board in so far as they apply to my Department. What we have sought to do with the MIAB is not to engage in a box-ticking exercise but to concentrate initially on matters that can drive down costs. There are a number of recommendations in the MIAB report relating to the blue book, for example, which are now the responsibility of IFSRA, the new financial services regulatory authority. These are things that should happen and are happening in my Department in advance of the new changes. I have done an enormous amount of work to prepare for this and it will be included in next year's blue book. These will not be cost-reducing mechanisms, however; rather they will provide more transparent information to the public and to those who use insurance services. We have concentrated on cost reducers. PIAB, which is one, requires insurance companies to give details 15 days in advance of the renewal notice and the no-claims bonus. This is having a fairly dramatic effect. When people get their details in many cases it provides them with an opportunity to seek quotes from other companies.
Third, we have asked the Competition Authority, in conjunction with my Department, to do a study of the market here, which I believe is dysfunctional. We want to see if cartels are in operation and we want to see more players in the Irish market. There are far too few players in some product areas; therefore, consumers do not have adequate choice. Competition and choice drive down costs faster and create more innovative products.
Other Ministers have responsibility for some key recommendations in the report. The Minister for Justice, Equality and Law Reform published the heads of a Bill last week which will have a fairly dramatic effect, in particular, the requirement that people should sign an affidavit if they exaggerate or make false claims. If they do so, all the claim will fall. This will have a dramatic impact on this compensation culture. It will make it much more difficult for people to be able to take chances. Since the Minister for Justice, Equality and Law Reform is coming before the committee, and the Minister for Transport will follow me this afternoon, I will not go into their areas of responsibility.
The PIAB will not be a panacea for all the problems. The MIAB said it would reduce costs by approximately 7.6%. Road safety measures are estimated to reduce costs by approximately 10%. Together, they are significant players in driving down insurance costs.
Recommendation 64 - promotion of competition - in the MIAB report was introduced just over a year ago when we brought the Competition Act 2002 through the Oireachtas. In relation to issues that have not gone to IFSRA, Nos. 59 and 60 - the achievement of the Single Market - have widespread implications within the EU. Effectively what we are being asked to do here is to underwrite anyone who comes into the Irish market. If that was not a Europe-wide measure, there is no way Irish taxpayers could possibly sustain the situation where everyone who operates in the IFSC and offers insurance in Ireland could be covered under a protection fund. That has EU-wide implications. I have been lobbying for some time within the EU to ensure there is greater consumer protection where a company is licensed elsewhere and is free to carry on business here, but the domestic regulator has no influence over that company. European consumers are not protected in that case; therefore, we need Europe-wide protection mechanisms for consumers of insurance products. Certainly no small country, and no one country, could carry the cost of underwriting for everyone in a European country who might decide to carry on business here. The IFSRA Ireland discussions in relation to these two matters at European level will require European approval before proceeding.
There was also a recommendation to establish a forum. We decided not to establish the forum but instead to put together a group of Ministers and officials who would have responsibility for actions rather than having another debating body or a body that would simply talk about the problem. It was felt it would be better to bring together senior officials and Ministers. I chair that group which meets regularly. We are meeting again in the morning. We have met many interested parties. Tomorrow we will meet the Bar Council, for example. Ms Dorothy Dowling attends all the meetings, as do all the officials with responsibility for the implementation of the Government's reform programme.
I will finish there because I know members of the committee are always happier to ask questions than to have long speeches from Ministers. I will be delighted to answer whatever questions are posed. My Department and officials are always available to the committee in relation to the important task it is doing in this area. I look forward to the recommendations of the committee after the discussions and consultations have concluded.
I thank the Tánaiste for all the help she has given the committee. It is a big vote of confidence in relation to the determination with which the committee will have an interim report available for her consideration in early August. Can I ask the Tánaiste if she believes there is a cartel in operation at the moment?
I do not know, which is why we have the independent study. However, I know that the situation is unsatisfactory. There are too few players and clearly more players will come on board if they believe they can make money in the Irish market. I have been talking to colleagues throughout the EU and in the United States in the aftermath of 11 September and insurance costs have increased everywhere. The problem in Ireland is that the costs of insurance have risen from a very high base, which is why the figures here are so intolerable. If one compares like with like, insurance is significantly cheaper in mainland European countries than it is in Ireland. We need to know why this is the case. A number of the issues here will have a dramatic effect.
To be fair to insurance companies, they were operating in a very dysfunctional market where there was a high level of claims, the compensation culture to which I referred and an expensive litigation process. Some 40% of compensation costs are accounted for as a result of expert witnesses, lawyers and so on and companies, not consumers, pay for that kind of environment. What we want to see are more players in the market. I hope the studies of the authority, together with the reforms, will encourage more players and products into the Irish insurance sector.
Some of the statistics from various witnesses are, to say the least, most disturbing. IBEC said that various employers had gone out of business, with a consequent loss of 2,760 jobs, because of the escalating costs of insurance. The establishment of the PIAB has been a very welcome development. When the State was threatened by subversive organisations it set up the special criminal courts. Would it not be possible to go the full way because the PIAB will possibly result in claimants challenging the awards in the courts? I hope I do not sound simplistic. I am aware that establishing a new court is a difficult procedure but I do not think it is beyond the political imagination of the Government to do that. The survival of many businesses is being threatened in the same way the safety of the State was being threatened by subversive organisations. Would it be possible to set up an insurance court system where judges would be trained so that inconsistency in awards and delay in getting into court would be eliminated?
Another statistic indicated that some of the awards in Ireland were four times greater than an award for a similar type of injury in Great Britain, for example. This is something about which I have been wondering.
The PIAB is going to be a speedy system but it is completely new. The Special Criminal Court has no jury because of the risk of intimidation. The recommendation of the PIAB could not be mandatory. Everyone has a constitutional right to an appeal process. Even if we were to consider holding a constitutional referendum in this area I am not convinced it would be successful. The key to the success of the PIAB will be the credibility it will establish early on. My own view is that most normal citizens do not nominate to go to a court of law, given its adversarial nature, if they have an alternative route. Most honest people who are genuinely injured parties want to have their claims settled quickly, to get what they believe are their entitlements and to move on. The PIAB is all about getting what you are entitled to quickly and inexpensively. Eventually, I hope it will be part of the courts infrastructure. I do not envisage its remaining indefinitely with the Department of Enterprise, Trade and Employment. It would be a very important first layer in the courts infastructure.
There is good evidence of a change of attitude in the last few months in the courts in relation to personal injuries. I understand there has been a decrease in the number of claims. That is welcome. I hope some of the campaigns by the Irish Insurance Federation are playing their part in this. With a few exceptions there seems to be greater consistency. That is a matter for the Courts Service. When we get all the data together the book of quantum will help as a guideline to those who are adjudicating on these issues.
We are not trying to reduce the amounts of awards to claimants. If that were the case not many people would use the PIAB. Most people will acknowledge that it is not the size of individual awards but the number of awards, particularly for dishonest claims, and the cost of settling those claims in the court system which add enormously to the costs in Ireland. The PIAB will deal only with cases where liability is not an issue. If liability is contested the case must be determined by a judge and not by a board such as the PIAB. The PIAB is not a court. It cannot decide, as between an employer and an employee for example, who is the guilty party. Where liability is contested the case will still be a matter for the courts. In a large number of cases, particularly on the employers' liability side, it is reasonably easy to decide early on whether liability is an issue. We envisage that the vast majority of employer liability related claims will go before the PIAB. It is intended to start with employer liability cases from January and to move then to other areas of business. The number one priority is employer liability cases and this is probably the easiest area, with which a new body should start.
The Tánaiste's original comment is extremely important. On previous occasions we reformed areas on advice that reform would have an impact. For example, we ended the practice of using two senior counsels and introduced judge's awards but these reforms did not have the impact we were promised. None of us wants to make these changes and still have high insurance costs. The Tánaiste talked about a dysfunctional insurance market. Some of the businesses which gave evidence to this committee described their view of a dysfunctional market. It is a market which does not worry about premia or claims because it is subsidised through investment income and allows a practice to build up where a lawyer-driven system runs insurance claims that take up to two or three years to process, with no one calling halt in any part of that. Is that the Tánaiste's understanding? Does she recognise that as an accurate portrayal of the insurance market, which is only now becoming critical because of the collapse of investment income?
My second question is linked to Deputy Dempsey's. How will the Government ensure that the PIAB will not simply be another step in the process? If one looks at the compensation tribunals, for example, it is clear that one cannot stop people accessing the High Court after receiving a settlement from a tribunal. What experience has she drawn from the functioning of the compensation tribunals? Will the PIAB be a last stop and not simply another step on an incremental scale?
My third question arises from direct representations which I have received. I am told that the accountancy profession faced a 300% hike in public indemnity insurance last year. We know it is extremely difficult for some categories of doctors to be insured but this difficulty is now experienced across the professions. Has the Tánaiste looked at this area from her Department's perspective and can she offer views on how to address this unaffordable but essential requirement for professionals who practise in this State?
Deputy Howlin referred to a lawyer-driven system. I am afraid that is the case. At one of my first meetings with the Irish Insurance Federation I asked them not to take a short-term view and settle every case. I believe there has been some positive response to that. I can understand why an insurance company would think it better to pay €30,000 than to go into court and incur higher costs. However, when people hear of this practice more and more of them are encouraged to claim. Many dishonest claimants know that the chances of ever getting into court are not great because insurance companies are inclined to settle. By the time cases get to the steps of the court the insurance companies have already incurred enormous expense. Insurance companies are now taking a more long-term view and are challenging claims. This is having a positive effect. The current publicity campaign has been very effective and the recent "Prime Time" programme performed a really good public service and shocked many people. I hope we will see a change in this. I have already heard that some lawyers are moving from personal injuries to other business. I welcome that.
When the two senior counsel rule was abolished everyone thought the cost of insurance would be reduced. However, what happened was that the one senior counsel doubled his fee and since the junior counsel's fee was two-thirds of the senior counsel's fee the junior then was paid two-thirds of the double fee. The fees were, therefore, more expensive. I am not beyond recognising that members of all professions, including politicians, find ingenious ways around new programmes. That is why we will not be providing legal fees for lawyers in the PIAB. It would not be sustainable. If an individual wishes to hire a lawyer and pay the lawyer's fee, that will be a matter of choice. The PIAB will run on a very simple basis. It will be very intelligible and the paper required to be completed will be very simple. It will not be beyond the capability of anyone to comply with the requirements. Clearly doctors will be involved.
I am not certain about investment income subsidising payments by insurance companies. Generally, people in business want to make money out of every piece of business. One of the issues that has emerged for the insurance sector is the reinsurance market. That has caused major problems, particularly after 11 September 2001. It would be hard to insure for the consequences of that awful atrocity. I recently heard of one insurance company which paid out claims of €2.8 billion as a result of that event. One can imagine how many premiums must be charged to cover such an amount. Internationally, there are pieces of business for which insurers will not provide cover. In the environmental area this is the case for asbestos and tobacco related claims.
To a large extent, the tribunals are watersheds in that they are trying to deal with past errors. We have been more open in allowing cases such as where people are now deceased and time has passed and in that situation there must be a more liberal environment than would be allowed in a different situation.
The statute of limitations has been reduced from three years to one year and that will be helpful. If a person has been injured they certainly will be aware of that fact within a year and the time is counted from when one becomes aware of the injury. A year should be sufficient time to make a claim once one has become aware of an illness.
Changes such as the requirement for mediation have been introduced in the courts by the Minister for Justice, Equality and Law Reform. The Judiciary is paying attention to these issues and it has been involved in recent years in training, seminars and weekend courses where it is constantly informed and as a result there has been an improvement in this and in other areas.
I have not examined public and professional indemnity. This issue as it applies to the medical profession has been discussed a number of times at Cabinet. It is not possible for a practitioner working in some areas such as obstetrics to obtain cover and there are State schemes which cover that situation. We have not conducted any research on the issue of professional indemnity insurance but when professional negligence happens, it is an expensive cost. There are more serious implications for doctors where there can be a life and death situation but if an accountant causes a serious problem for a company or corporation, then the liability of risk can be very high and this is reflected in the insurance costs. We have not separately examined the issue of professional indemnity insurance.
I welcome the statements made by the Tánaiste and the measures taken by her and her colleagues, the Minister for Transport, Deputy Brennan, and the Minister for Justice, Equality and Law Reform, Deputy McDowell. Quite apart from those measures she and the other Departments envisage, her Department has an enviable reputation in bringing inward investment into Ireland. She and her predecessor, Deputy O'Malley, took pride in encouraging competition policy. What specific measures has her Department and its officials taken in encouraging new players into this market? What specific incentives and encouragement are being offered by the Department to industrial groups or sectors to self-insure - in other words, to provide competition from sectors of industry by insuring themselves? Has the licensing regime been eased and has it been made easier for industrial sectors to apply to self-insure?
One of the issues relating to the Tánaiste's Department is that of competition. She indicated that a year ago she implemented the recommendation to amend the Competition Act 2001, to incorporate the principle of acting against the public interest. Is there any evidence that this has made an impact on bringing more players into the market?
In the context of the European Union, the Single Market was expected to provide the great opportunity for consumers to take advantage of whatever overall cost reductions would accrue from a wider European Union market. In her discussions with the European Commission, was there any indication that barriers can be reduced even further in order to allow greater opportunities for companies to access the Irish market or is it at the discretion of the companies, many of whom still regard Ireland as a high-cost location?
One of the recommendations in the MIAB report was that the preparation and publication of the statutory returns should be amended to reflect the cost of uninsured driving, the size of payments, recorded numbers of cases and that type of information. When will that recommendation be implemented? I do not believe it is high on the Department's priority list.
Regarding transparency, is the Tánaiste of the view that insurance companies should have to justify increases in premiums to a body such as IFSRA, in the same way as the banks have to justify the increase in banking charges and fees to IFSRA?
The Tánaiste devoted much of her speech to consumer protection. As a bona fide sign of her concern for consumer protection, will she remove the insurance levy of 2%? This would automatically reduce insurance costs. If it exists for the purpose of compensating policyholders who have insurance cover with a company that goes belly-up, will she use that money to compensate people who have been the victims of losses due to the collapse of the Independent Insurance Group? I understand that information is held in the Department since the then Minister of State, Deputy Treacy's, term of office. It would be regarded as a vote of confidence in consumer protection to use this money which has been paid in by policyholders.
It is not possible under EU law to ask ISFRA to examine increases by companies. Price control in insurance is prohibited. The 2% levy is in effect a tax. The members are aware of my views on tax, the less tax we have to pay, the better. We need tax to run the country. This would be a matter for the Government to consider in the context of the budget. I do not want to build up the Deputy's hopes that it will happen. I am sure if it were to happen we would have to find the resources elsewhere because there are lots of things to do.
Regarding the money to protect consumers, clearly where insurance was compulsory, the motorbike people, for instance, were compensated from the UK. There is no question of Ireland being able to cover all the business carried on here. In the IFSC, 40% of the world's large insurance companies do business through Ireland. By no stretch of the imagination could we underwrite the business that is carried on here. It is unrealistic and it is not affordable.
If the Single Market is to be meaningful from the consumers' point of view, we need a consumer protection mechanism which is Europe-wide. At present, the law in Europe is that if a company is licensed in any of the member states, which will soon number 25, it can carry on business in any other member state. The domestic regulator in that member state has no influence over that company; it is regulated in the country of origin. That makes it extremely difficult from a consumer's point of view. Although I believe in the subsidiarity principle, if the Single Market is to be effective, this is one area where Europe-wide consumer protection is needed.
There are many companies that self-insure or they may self-insure for the first €1 million, depending on their size. CIE, for example, self-insures and notwithstanding the increase in claims, its record is declining in recent years. The chairperson of the PIAB is responsible for insurance in CIE. She will be attending this committee and it might be of interest to ask her why their record is better than the insurance companies. I would not encourage companies to self-insure because it could destroy a company. Big resources are required to fund self-insurance. One claim could be enough to bring a company down. While self-insurance may be an option for large companies and for a certain sum of money, in my view, it is not an option for many companies.
The Health and Safety Authority has been working with the Irish Insurance Federation and has reached an agreement that, where companies have a good compliance record, it will reduce premiums accordingly. The committee may find it of interest to speak to the chief executive of the HSA. As a result of the work, insurance companies will not insure any company that does not have a good health and safety record. In other words there are some risks that insurance companies cannot be expected to cover. I hope it will play its part in encouraging greater compliance and more caution in health and safety issues, not only by companies but also on farms and in many other areas where people take enormous risks and put lives in danger. Unfortunately, we have had far too many fatalities. Shortly we will see an effect in terms of insurance premium reductions for those that have a good record.
There was a question about competition and how we encourage captives. The regulator for insurance is now the Irish Financial Services Regulatory Authority, which is now responsible for the blue book. All those matters have gone to the regulator. An enormous amount of work had been done in my Department before the section moved over and next year the blue book will have all the issues raised by Deputy Hogan. I believe these are recommendations Nos. 29 to 31 on the MIAB list. They are matters being pursued by IFSRA.
The issue of public interest has been legislated for. I have spoken to two insurance companies that do not operate in any of the product markets here. In other words, they cover no insurance in the Irish market even though they operate from the IFSC. They have said they will consider entering the market if we reform it. The last time they looked at doing so, they determined they could not make money here. Companies follow possibilities to make money. When we carry out these reforms, I hope it will be far more attractive for those players that have not yet considered covering products on the Irish market.
There is an Irish company that will make €100 million in profit. Does that not prove there is substantial profit to be made in the Irish market? A profit of €100 million is a considerable amount of money for a very small Irish company. Its interim report is showing in excess of €50 million for the first six months.
When will all the recommendations of the MIAB be implemented? Is the Tánaiste still confident in her assertion that following the publication of the action plan there will be a 31% reduction in premia within 18 months? Of all the areas in her Department only the PIAB will make any difference to costs.
A number of issues have had an effect. The 15 days' notice is definitely having an effect. I hear evidence all the time of people getting a quotation and being able to get reductions by ringing around. The biggest effect of 7.5% is due to PIAB. The agenda of the Minister for Justice, Equality and Law Reform will have an enormous effect as it will reduce the number of claims. The next big issue is that of safety on which the Minister for Transport has been very proactive. He has been in discussions with insurance companies to deliver a quid pro quo reduced premium for penalty points. To date one insurer has offered to do that. I believe many others are waiting to see the success of the penalty points system, which will have a dramatic effect - 10% according to the report. I am very confident we will see major reductions in premia across the board.
While the Tánaiste answered my question by referring to the dangers of individual companies self-insuring, I was asking what the Department of Enterprise, Trade and Employment is doing to encourage groups of companies in industrial sectors to self-insure as a group by pooling risk. This is done in the United States and it is an aid to internal competition if as the Tánaiste states external competition is not prepared to enter the market.
I am sure the Tánaiste is aware we have received many submissions on this issue. It is in that context and without putting any slant on the issue that I ask my question. How does the Tánaiste address the claim by the Bar Council that the PIAB will introduce a new and unnecessary layer of bureaucracy at considerable cost to the State? The council also states that the PIAB working alongside the existing courts system will not be effective, as there will not be sufficient incentive to encourage people to go to the PIAB in the first place. While the Tánaiste may disagree with that, what incentives will exist to encourage people to go to the PIAB rather than the courts?
If reforms come about, as I am sure they will, the public needs to know of the savings coming from those reforms. Is the Tánaiste considering establishing an independent monitoring committee to monitor the insurance industry's pricing in particular? If there are to be reforms, there need to be improvements and the public need to know they are getting price reductions. The history of insurance companies would suggest that unless they are nudged or encouraged to make this information available they will not do so. The MIAB report referred to the fact that insurance companies did not co-operate that well in the preparation of that report. Representatives of some insurance companies who were involved are present today.
Will formulating the book of quantum be a task solely for the PIAB? If so, does the Tánaiste agree with the suggestion in many reports to this committee that the rates should be associated very closely with the UK rates? Will the Tánaiste, as the responsible Minister, have any input into the preparation of the book of quantum?
I welcome the Tánaiste, who has attracted the largest audience in this series of committee meetings seeking evidence on the insurance industry. We have all been waiting for her words of wisdom. She took on a very large task when she made it her number one political priority. This is a risky undertaking and not many politicians would have given it the priority she has. I wish the Tánaiste success.
The Tánaiste has established an interim board for the PIAB. When I was in the Department of Industry and Commerce, the Dáil was recalled to introduce a companies Bill to save Goodman. However the Department of Enterprise, Trade and Employment does not seem prepared to introduce this legislation before the Dáil recess. I do not understand this, as legislation should be a priority. The same is true for the Tánaiste's colleague, the Minister for Justice, Equality and Law Reform, Deputy McDowell, who announced that the perjury Bill would be introduced in two years time.
Have you a question? There are only 12 minutes left.
I cannot understand why we cannot give priority to an area that is causing 2,000 job losses. Goodman had problems; we solved them and we saved him. Some 2,000 jobs have been lost because of insurance costs and 10,000 companies are not insured. Lawyers are bringing cases on a no foal, no fee basis. It is win, win, win for them and lose, lose, lose for the economy. Solicitors are still advertising on that basis on local radio stations. The Oireachtas must give the Tánaiste its full support in introducing legislation. Every party would work day and night and through the weekend to get this solved.
I agree with the Tánaiste that the PIAB is the best thing introduced so far. I would like to see this extended to all forms of claims, which should be legally binding. The Tánaiste has suggested that, if required, a constitutional amendment is unlikely to be passed. The public's concern about this issue is such that the Minister might be surprised by its willingness to vote in favour of making a constitutional amendment.
I thank the Minister for taking a special interest in trying to reduce the cost of insurance.
To clarify the position on the order of contributions, it has been agreed that members from the Government and Opposition will speak alternately.
Most companies would argue that reducing the cost of insurance is now urgent, as their insurance bills are their second highest cost after wages. Unless something is done quickly, many will go out of business. We must ensure this does not happen.
How soon can the PIAB's responsibilities be extended to cover all insurance claims? I understand it will, initially, address only employers' liability insurance. It is important it moves quickly to deal with all claims. Everybody who has appeared before the committee has noted that the introduction of a book of quantum will be vital. If payments are set too low, it will not be used. They must, therefore, be set at a reasonable rate.
It should be possible to allow judges to use the book of quantum. The committee has been informed that plaintiffs are shopping around for judges who will pay out higher claims and wait for the day when a particular judge will come to court. If this is the case, the book of quantum should be extended to the Judiciary to ensure we are all singing from the same hymn sheet.
The suggestion by the Bar Council that the PIAB will have cost implications for taxpayers is wrong. The body will be self-financing and will not cost taxpayers anything. The Bar Council also stated the PIAB would not work. It is clear the current system is not working. It is expensive and the country cannot afford it.
In relation to the cases which will go before the PIAB, it will be mandatory for all cases which have not gone to trial by the date on which the PIAB becomes operational, which will be in early January, to be brought before the PIAB, provided liability is not an issue. This brings me to the issues raised by Senator Leyden. Were a constitutional referendum to be held, it would have wider implications than the PIAB. It would have serious implications for the whole judicial system. To take the route suggested would effectively mean that a body, a court of first instance or the PIAB, would make a determination and one would have no redress or means of appealing to another body. It is not sustainable to advocate such a position, nor is it fair. Even the most authoritative group of experts can be wrong. People have become accustomed to appeals mechanisms in many areas and it is important we retain one.
We did not take the legislation through the Houses because is it is not yet ready. It is extremely complex legislation due to its constitutional and legal implications and has not yet been drafted. Only this morning, a long meeting on the issue was held in the Attorney General's office. It is being drafted on a priority basis in the office of the parliamentary draughtsman, which is a good reason for not recalling the Houses to deal with it. The PIAB worked on the heads of the Bill and as soon as these were ready, they were submitted to the Government, approved immediately and published. We are confident we will have the Bill in September and with goodwill on all sides it should be through the Oireachtas by the end of the year.
In any event, on an interim basis, the PIAB has a major job to do in recruiting actuarial staff and drawing up a book of quantum to be used in the courts or before the PIAB becomes involved in a case. There may well be cases where both parties to a claim, the insurer and insured, decide to settle between themselves using the data in the book of quantum. The book is being compiled in conjunction with the Courts Service and the National Treasury Management Agency, which handles claims on behalf of the State or connected to the self-insured sector. All the data are compiled in conjunction with various bodies which hold relevant information.
In relation to the advertisement Senator Leyden stated he heard on radio, he should report it to the Law Society because it breaches the society's rules. I have raised with the Law Society the issue of solicitors taking a percentage of costs in addition to the costs awarded. This is an illegal practice and contravenes the rules of the Law Society. I received a positive response from the Law Society which is determined to enforce its rules and take action against those who are in breach of them. I suggest Senator Leyden refer the advertisement he heard on radio yesterday to the Law Society. If I hear it, I will bring it to its attention.
The radio station in question is in the Chairm
an's constituency.
I did not hear the advertisement.
I am sure if the advertiser is a constituent of the Chairman, he will be more than anxious to bring it to the attention of the person in question.
On Deputy Conor Lenihan's question, we have not done anything to bring companies together to engage in self-insurance. The relevant regulatory authority is IFSRA. The regulatory framework governing captives and so forth is not over-complicated and is in line with regulation in most other countries. It is not a matter for the Department to headhunt companies or bring them together to encourage them to go down the self-insurance route. This is a matter for companies and not one in which Government needs to get involved. While we would facilitate such moves, self-insurance is not difficult if companies or sectors wished to pursue it.
The PIAB will have an independent cost-benefit analysis carried out on the old and new systems. The committee would be a good forum for independent monitoring of the system. It is doing a good job and would, therefore, be in a good position to perform this function given that it will receive feedback from constituents and the public and will have access to all the players in the sector. In the first instance, however, the independent cost-benefit analysis will be undertaken at an early date and this will give us a good indication of the costs and benefits of the new system compared with the old system.
On the question of when the PIAB will extend its remit to other areas of business, it will do so as quickly as possible. I hope it will deal with employers' liability insurance in the first six months and then move on to other areas. We will have to wait for advice, based on experience, on which area, whether public liability insurance or motor insurance, should be covered next.
I accept the ruling that Government and Opposition members will alternate and can understand the reason the Chairman thought Senator Leyden was a member of the Opposition.
Given Deputy Howlin's position, I had to allow him to speak first for the Labour Party.
That is a compliment coming from a former member of The Workers Party.
The quality of insults in the Houses has declined in line with the quality of representation. We are all aware of people who have been severely incapacitated for the rest of their lives through accidents. I have always found it peculiar that such people must rely on a lump sum payment which is invested by the courts, sometimes in a precarious stock market as is currently the case, and thereby left to the whim of the markets.
If we opt for a radical overhaul of the system of claims, payments, procedures, mechanisms and so forth, it would be much more sensible to make interim payments to those with very serious injuries, who often have to wait up to four years before their case comes to court, by which time they are usually in hock to the banks because they have had to borrow to carry out adjustments to their homes, obtain particular equipment or access a variety of services. This disrupts the lives of everyone involved. An interim payment to cover this type of radical adjustment would be sensible.
People in such circumstances go to court not to get what is due to them but to obtain security for themselves or their families. Is it possible to introduce a mechanism by which they would receive regular payments from a dedicated fund for the rest of their lives? That life could be either short or long. If we are looking at how to deal with people in that situation we should do so in a radical way. The difference between Ireland and other European countries, particularly Denmark, is the transfer from the public to a private system. The difficulty here is that people are forced to resort to the courts in certain cases because they know that the State does not provide all the services they will need, such as the transformation of their homes. In some instances a new house might need to be built if they are in two-storey accommodation. If we are looking at this issue, we should do so from that point of view. While this will not apply in all cases, it needs to be looked at in the context of severe cases.
The Tánaiste has responsibility for consumer protection. In terms of road safety the focus is often on penalty points, but we should not forget that car manufacturers must bear some responsibility. If one were to lean against a car in the parking lot, except for the very heavy duty ones, that could put a dent in it. A small child kicking a car door can put a dent in it. Cars are not safe and manufacturing standards need to be looked at. God knows, none of them is cheap. This area needs to be investigated in regard to consumer protection.
The legislation which is to be introduced in September will need to be scrutinised. By that time we will have been waiting for up to seven years for the entire process to be completed. Is there any timeframe envisaged? Are we talking about before Christmas, next January or this time next year for the new measures to be in place and in operation?
I, too, welcome the Tánaiste and her team and thank her for her presentation. Many of the questions I wish to ask have already been asked and I am aware that time is of the essence.
When the legislation is in place and the PIAB is working to tackle the current difficulties in the insurance market, to what percentage of reductions can we look forward? The increase in premiums over the past three years in particular has been excessive. I do not think the operation will be a success unless huge reductions are apparent to the public.
We could all give several examples of the current high levels of premia. On a previous occasion I gave an example of a small builder who paid €12,000 for insurance last year and is paying€42,000 this year, although no claims have been made against his company. What percentage decrease will that company have to see for this operation to be successful?
I am delighted this matter is being tackled. There is tremendous public interest in it because of the huge costs which companies are currently paying, but there must be an appreciable decrease at the end of this operation. Can the Tánaiste indicate what the expected percentage decrease in premia will be?
I welcome the Tánaiste and her officials and thank her for outlining her position. Given the impact of insurance costs on the cash flow of small businesses, can the Tánaiste state if she will seek to reverse the advance payment of corporation tax introduced in the last budget? I am sure she and her Department are monitoring the profit levels of insurance companies to see if their profits and costs are increasing as a consequence of the reforms being introduced. Has there been any change in the reported profit levels?
In regard to the promised 31% reduction to which Deputy Hogan referred, can the Tánaiste give an indication what measures she might take against the insurance industry in the event of that reduction not materialising?
There is anecdotal evidence that the number of cases being taken has reduced as a consequence of the increased publicity in regard to fraudulent claims. Will the Tánaiste quantify the level of reduction and the extent of savings that should be passed on to consumers and businesses?
I welcome the Tánaiste. The insurance industry does not work in a vacuum. It is aware of the work of this committee, the intention of the Government, the book of quantum, the PIAB and the actions on fraudulent and exaggerated claims.
Has there been an increase in interest by insurance companies in setting up in the Republic? If not, perhaps we should be looking for a cartel at European level. Such a practice has already been seen in the steel industry. A group was arrested in a Swiss hotel carving up the European steel market between them. If European insurance companies are not coming here, in light of the work we are doing and the efforts we are making, we must ask why that is the case.
What role does the Tánaiste see for Enterprise Ireland or a similar group in promoting the Irish market to insurance companies abroad, particularly those companies not hit by 11 September reinsurance claims, which appears to be mostly European companies?
The events of 11 September are often used to explain in part the increases in insurance. In regard to the current limit on not more than 15% of an insurance company's funds that can be invested in property, surely, in view of the performance of the equity market in recent years, this should be increased to 30% to allow assets to be invested in property. Investing one's assets in cash one is lucky to get a 2% return but in the past 30 years the increase in rental income has been able to guarantee a return of 10%. From what we have heard from the various companies that have come before us, it seems sensible that this should be addressed to ensure that we do not go through the same experience as the manufacturing industry.
The average increase in premia has been 280% since 2000. A survey by the Irish Hotels Federation revealed an increase of 351%. Such increases are unsustainable. We appreciate that the Tánaiste, in particular, with the Government has made this a priority. Urgent and meaningful work needs to be done before the next premia are due.
I welcome the reduction in the injuries notification time. If I heard the Tánaiste correctly, she said that it has been proposed to reduce it from three years to one year. Many groups that appeared before the committee proposed that it shuld be reduced to only three months in the case of a serious accident. In 95% of actions the case is proven on medical evidence. Why do we have to wait for 12 months for someone to claim they had an accident on the premises in the past year?
One issue that has not been sufficiently amplified is the mechanism of the book of quantum, in many of the submissions we received from business there was concern that we would institutionalise the level of claims here. They have explained who is involved in it. Has the Tánaiste simply handed over the task to the bodies she mentioned or will there be any personal input by her into the final product? If the final product is not what we want, it will be a millstone rather than an asset. This is at the core of the PIAB's function.
The Department is represented on the PIAB and is putting together the book of quantum; the data of claims which have been settled, whether through the courts, NTMA or self-insurance. If we as a society decide to put a limit on claims, that is a different issue. We have not gone down that road, although some people are saying we should consider that. It is a separate issue, however, and would have to apply to the courts.
Is the Minister saying that the raw data of compensation rates for the last number of years will produce an actuarial figure that will be the defined rate for an injury, even if it is entirely out of kilter with a similar compensation rate in the UK?
Yes, unless we decide to bring in particular rates for particular injuries.
Is the Minister happy with that?
Is the Deputy telling me that claims here are too high?
Some of them are.
A Deputy
The awards are too high.
The biggest problem is the number of dishonest claims and the cost of settling claims. The level of awards is a separate issue and has wider implications that go beyond the PIAB. If we were to go down that road we would end up mandating the courts to say a broken leg is worth X or a broken arm is worth Y, which has constitutional implications.
Does the Minister not propose to do that even indicatively?
No.
That will be a shock to the people who have given evidence to us.
All the book of quantum will do is indicate the level of award that has been given in the past. Is that correct?
That is right.
That is totally different from what we had envisaged.
Is it the view of this committee that people support the notion of capping awards for particular injuries? That is news to me. This matter has been discussed over many years. It has constitutional implications and leaves no discretion to either the court or the PIAB. Two broken legs can be worth very different amounts to two different people. They are completely separate issues and should be covered by different debates. What we are seeking to do here is to provide a simpler, quicker mechanism for settling claims, dealing with the compensation culture and ensuring through the use of sworn affidavits that we only give money to genuine claimants and that we do that quickly and inexpensively. If we were to decide that the PIAB was to cap particular awards for particular injuries, one thing is certain: everybody would go to the courts. What we are seeking to do through the PIAB is to ensure that people get what they would have been entitled to through the court system.
So the level of awards will remain as high as it has been.
One sees many headlines about big awards. My view, which I share with many people in this area, is that for genuinely serious cases the awards here are not high, although they may seem so. What causes problems is the volume of claims, the dishonest claims and the cost of getting the money to which one is entitled. If we can root that out of the system, there will be an improvement.
The MIAB stated in its report - this is from the insurance industry - that if we implement its recommendations, the cumulative difference would be more than 31%. That is the view of the MIAB.
Does the Minister believe that?
I do not know. I am not an insurer.
The Minister asked whether it was the opinion of the committee that awards were too high. My opinion, from what I have heard here, is that they are four times too high compared with whiplash injury or soft tissue injury in the UK. What has also come across to me - I am not speaking for the committee - is the inconsistency of the awards by different judges. As I said to another witness, it is like looking for a particular referee for the game between Wexford and Kilkenny and a different one for the game with Waterford.
I agree with what Deputy Dempsey said: there is inconsistency and that causes enormous problems. One hears a lot of anecdotal evidence of people deciding not to go into court until a certain judge is presiding. That brings the court system into disrepute. The book of quantum eliminates that because it deals with averages. The last few months have been quite different from the experience of the last couple of years. The Judiciary has been responding to the current situation.
With regard to Deputy Lynch's problem, perhaps her problem is that she is only one woman out of 15 members on the committee.
That does not carry much weight.
If the order of speakers was male followed by female every time the Deputy might be better off.
I am not getting involved in that.
There is certainly a gender imbalance in this committee.
This is a committee of equality.
Not in gender terms, I am afraid.
The Labour members are gender balanced. When will the Government provide the same balance?
The Government is keeping up the influx of new faces into Parliament.
I agree with what Deputy Lynch said. With family law and divorce cases, you can revisit the case if circumstances change. Although that was controversial at the time of the divorce referendum, it is a good thing. People's circumstances do change. There are three recommendations of the MIAB in relation to that matter and they are under consideration by the Minister for Justice, Equality and Law Reform. I suggest that the Deputy put her case to him. It is a valid point.
In relation to the reduction of time from 12 to three months, if somebody is seriously injured and in rehabilitation, he should not have to think about receiving his insurance claim quickly. The first thing people want to do is to recover. For this reason 12 months is reasonable. There has been a jump from three years to one year.
There is a new digital video system out whose quality is almost that of film and which can record for four months. If someone walks in the door and says that he or she slipped in one's toilet three months ago, given the date and time one can retrieve that piece of video evidence in seconds. No witnesses are needed. The Alliance for Insurance Reform came in here and gave us some horrifying evidence substantiated by video footage. What will come out in this report is common sense. Systems can be there to record events in any part of any premises at any time. If someone has an exceptional injury and he or she is in Dún Laoghaire that is an exceptional case, but for 95% of the cases that came before us this system is foolproof. It can assist the Department hugely.
I welcome the introduction of anything that could help to root out dishonest or exaggerated claims. As a private citizen, however, I do not look forward to being recorded in the bathroom. I am not here to endorse any product.
It is for the public areas of the bathroom.
I will be careful the next time I am in the Chairm an's hotel.
It is not in operation there.
I am so happy to hear that.
I wish everybody in this room would stick to the agenda and not make personal remarks because the Minister is outside waiting to come in.
I apologise. I was a little concerned about what the Chairman said.
That is all right.
Liability insurance was mentioned. To put things in perspective, in the UK this is up 50% this year. There are global issues with liability insurance resulting not only from the events of 11 September 2001 but also from many other catastrophes. One can imagine the implications for premiums of covering these risks.
One thing I am very keen to do is encourage the insurance companies to reward good behaviour. I have spoken to the insurance companies about this. What generally happens is that a claim is spread across everybody in a sector. For example, a hotelier with no claims will find that his insurance has gone way up, not because of anything he has done or failed to do but because of somebody else, which is grossly unfair. That is why the agreement reached between the HSA and the Irish Insurance Federation will be very useful in ensuring that those who operate their premises to a high standard, with a good health and safety record and no claims, do not have to pay for the sins of others. That would have a dramatic impact on many of the cases that have been brought to the attention of the committee.
I look forward to the outcome of the committee's deliberations and to coming back here. I was asked for the timeframe. By the end of this year, 2003, we expect the legislation from the Minister for Justice, Equality and Law Reform and from me to be on the Statute Book and the new regime to be in place by the start of next year.
The evidence was given by Pat McDonagh, as was the footage used on television, and it was his experience that we related. On behalf of the members of the committee, I thank the Tánaiste and her officials for coming here today, for providing a fruitful session and for all their co-operation. We look forward to working with her closely on the interim report which we are going to publish in early August, and on the final report later in the year. We look forward to her coming to the committee many more times.
I welcome the Minister for Transport, Deputy Seamus Brennan, and apologise to him for running over time. We had to tease out a couple of items. I will not repeat my introductory remarks but I acknowledge and appreciate the co-operation you and your officials have given to the committee. I thank you for coming here and I invite you to make your presentation.
I thank the Chairman and members of the committee for having me here today. There is great interest in this subject. I have not circulated a script but I will make a few points and then respond to the committee's questions as best I can.
The issues in the MIAB report that are relevant to the Department of Transport deal with such things as penalty points, access to penalty points and road safety strategy. Members will be aware that 13 of the MIAB recommendations can be expected to reduce insurance costs by 30%; the remaining 54 do not directly affect insurance costs but will enhance the quality of life generally. The 13 recommendations that have cost reduction potential for insurance, of which only two are directly transport related, are primarily further road safety improvements - it is estimated that would bring about a 10% cost reduction - and stiffer penalties for uninsured drivers - this could reduce costs by about 5%.
I do not propose to go into detail about the other recommendations, of which the committee is aware, as the Tánaiste and the Minister for Justice, Equality and Law Reform deal with, and have dealt with, many of these matters. These include the introduction of the personal injuries assessment board, reviewing the Taxing Master's approach to legal fees, the Competition Authority review of professional fees, the Health (Amendment) Act 1996 review, reduction in fraudulent claims, lost earnings, more realistic substantiation of claims, costs awarded to vindicated parties, improved rehabilitation framework for injured parties, introduction of a book of quantum for compensation levels, the abolition of stamp duty on insurance premiums, and so on. I do not propose to go into these in detail unless the members feel that they fall within the remit of my Department.
According to MIAB six of the eight recommendations which fall within its remit do not have cost reduction potential. I have to take issue with that. I do not agree with the MIAB's analysis. It points out, for example, that the items which do not have a cost reduction potential are, for example, reducing the number of provisional drivers, requiring the vehicle rather than the user to be insured, a direct right of action against the insurance company as opposed to the individual, changing the Minister's agreement with the MIBI so that the rights of victims of uninsured drivers are similar to those of the victims of insured drivers, and aligning Irish law and European law. I was particularly surprised to see that it did not regard access to penalty points as an item that would help to drive down insurance costs. I disagree with that analysis by the MIAB. While I thank it for its work, into which it put great effort, I do not agree with that analysis and I take issue with that.
With regard to penalty points, many recent reports have indicated that the system is not working. It is working. The road deaths up to this weekend are 50 fewer than in the same period last year, sparing 50 families. It is a reduction of about 20% in road deaths. There has been about a 33% reduction in injuries. I would like the insurance companies to give me a figure for the reduction in claims, which I believe are down perhaps by as much as 25% to 33%. I would like to get that information.
Penalty points will continue to work only if the Government, the motorists, the gardaí and the insurance companies support the system. It is not enough just to pass the law and then hope it happens. That will not work. We have seen enough of the penalty points to know that the system can work if we make them work. I do not want to be like a broken record on this subject but when the entire list of penalty points is rolled out - more than 62 or 63 offences above the present two, speeding and not having insurance - we will see the real benefit of the system. On 31 July we are adding the non-wearing of seatbelts to the list. The remaining 58 or 59 will come in as the computer systems click in for the gardaí over the next 12 months but it is up to all of us to make it work. I cannot make it work by proposing laws to the Oireachtas. The gardaí have to continue to enforce the system. For that reason I have agreed with the Minister for Justice, Equality and Law Reform that we invite the private sector to supply 50 or 60 speeding cameras in key locations and, at the moment, we are preparing to invite tenders for that.
There is a new road safety strategy being prepared. As I said, we are adding seat belts to the penalty points system at the end of the month. The Attorney General adivses that I cannot sign a regulation on the use of mobile phones, although it is provided for under the legislation. He advises that it requires primary legislation and I propose to introduce that legislation as soon as possible in the autumn.
I also propose to go ahead with random breath testing, that is, random testing in a narrower sense than at the moment, which the Road Traffic Act 2002 permits me to sign. If there is an accident, no matter how minor, the garda dealing with it can randomly test the person for alcohol, as opposed to the present situation where the garda has to form an opinion that the person is under the influence, and that can be a problem in itself. I want to reflect on whether we can go further into full random testing, outside the broken tail light or whatever. On the surface, it is worth considering, once I can sort out the legal issues surrounding that.
Other issues are to do with long-term reliance on provisional driving licences, which I still have to tackle. We are focusing at the moment in getting the backlog of driving tests moved on. There are a substantial number of applications with a backlog of 16 weeks. Some 358,000 provisional licences are in circulation. Many of them were issued up to 20 years ago and relate to trucks.
One area I feel strongly about is motorbikes. These figures are inexact; however a ballpark figure of up to 70% of motorcyclists do not have a driving licence of any sort. The majority of them have not had a day's training either. I have got into the dreadful habit on a Sunday morning of turning on the news to hear of people being killed on the roads overnight. As night follows day, it is almost always a motorbike involved in the accidents. We have a number of proposals to tackle the problem. I believe we must stop thedoublethink on the issue and grapple with it urgently.
There are approximately 80,000 uninsured drivers on the roads. To put that into perspective, the Motor Insurance Bureau will pay out €90 million this year to the victims of uninsured drivers. The levy placed on insurance firms to cover those claims now makes up 10% of all insurance premia. If there were no uninsured drivers, premia would drop 10% immediately. When one pays a car insurance premium, 10% goes to cover uninsured drivers. That figure of 80,000 cars is also 5% or 6% of total car numbers.
With 80,000 uninsured cars, unlicensed motorbikes, a large number of trucks driven by people with provisional licences, and no random alcohol testing, there is a scary situation to which the penalty points system is only one response. It is not the panacea for everything but it will help tackle these issues. Other responses are needed.
On uninsured drivers, I compliment Deputy Howlin, who signed regulations when he was Minister for the Environment in 1994. I propose to implement those regulations for impounding uninsured vehicles. If we believe they should not be on the roads, then they should be taken off. When I finalise the necessary paperwork, the Garda will be in a position to impound uninsured cars, with heavy penalties. To get the vehicle back, owners will have to show they are fully insured and have paid all the penalties. In certain circumstances, a prison sentence is provided for under that heading.
I thank the Chairman for inviting me to the joint committee. With the list of action to be taken by the Tánaiste, the Minister for Justice, Equality and Law Reform and the Department of Transport, coupled with the goodwill of the insurance companies, the support of the Garda and the general public, we can make a real assault on insurance costs.
I thank the Minister. Uninsured drivers get five penalty points if caught. Would the Minister consider increasing that to six penalty points, so that on a second offence an offender would lose the licence?
I thank the Minister for his presentation and congratulate him on his efforts to tackle this most serious issue of the high level of accidents and fatalities on the roads. While the measures already taken have brought about a reduction, the loss of just one life shows that there are still problems. I congratulate him too on the actions he is taking in other transport fields.
Will the Minister consider sub-contracting the backlog of driver testing to the private sector in an effort to clear it, as it is a source of concern? Would the Minister consider it helpful to introduce driving skills on the secondary school curriculum? As there are people with literacy difficulties, is there anything that can be done to help them in the theory section of the driving test? I am amazed at the number of people I meet, particularly from rural areas, who drive only 2, 000 to 4,000 miles a year, in and out of town. When they are questioned in the theory test, they have certain problems. Is there any way that can be addressed?
I want to focus on the nub of our accident problem, which is the number of young people involved. As the Minister for Transport stated, I had some responsibility in this area when I introduced a road traffic Act. It strikes me that there are many inexperienced drivers, young drivers often in single car collisions or on motorbikes, being killed on our roads. I remember visiting one orthopaedic hospital in Dublin as Minister for Health where one ward was described as the "Honda ward" because every patient there had been involved in a motorbike accident.
To deal with the issue of quality of driving, should we require a period of tutoring? Allied to that, should we have set standards for driver instructors? Although we have a voluntary code that I introduced in my time, there is no mandatory code for driver instructors. Anyone with a full licence can establish themselves as a driver instructor.
There is no easy solution to the issue of the backlog of drivers with provisional licences. Deputy Wilkinson suggested one, but we have to deal with it immediately. Something like a quarter of all drivers are driving on provisional licences. One of the problems is that we have a 50% failure rate for people who sit the driving test. Obviously, one in every two candidates is presenting him or herself unprepared for the test. We must have a required course of tutoring before someone can sit the test, with no provisional licence issued without an accompanied licensed driver until that set course is completed.
There is huge confusion over speed limits. I am as responsible as the current Minister for some of this. All distances are in kilometres and all speed limits are in miles. A tourist gets off the boat at Rosslare and sees a sign stating "Dublin 100 kilometres" while the speed limit sign states "60 miles per hour". In fact, it only states "60" and not "miles per hour". How are we supposed to be able to work that out? The Minister said he will look at this but it works two ways, and I have spoken about this issue to many members of the Garda Síochána. In an effort to increase the figures, it is shooting fish in a barrel to set up a speed check on a good quality dual carriageway with a speed limit of 30 or 40 miles an hour, as there is coming into the city of Dublin; it is a frustration to traffic and to drivers, yet there is a 60 mile an hour speed limit on country roads, where it is patently inappropriate. What is the Minister considering in terms of speed limits, and when can we see concrete action in that regard?
Deputy Wilkinson spoke about including the theory test on the school curriculum, and I believe I mentioned that previously to the Minister. It should be possible to have a written theory examination for transition year students and to change the culture of road safety by including the theory section as part of the civics programme for first years. That might help reduce the waiting lists. Does the Minister have any intention of doing that?
This question may be superfluous, but is legislation required to allow someone set up a driving school here? If it is not, it should be and if it is, perhaps it is time it was made compulsory for drivers to attend driving schools prior to taking their tests.
Chairman, your first question was about whether non-insured drivers should move from five points to six points. I take the view that we should first fully implement the current system and start amending the numbers later on. It could be argued that two points is not enough and that it should be four, for example, but if we put the system in place fully we can start considering whether it should be three, four, five or six points. The system will only work when many offences are committed and someone can get to 12 points on one journey to Cork, if they are not very careful. It will work only when people start losing their licences in that way. At the moment it is slow because by the time someone gets up to ten points, he or she starts slowing down. I want to put emphasis on getting the system fully in place and I will then examine your suggestion.
Deputy Wilkinson asked about sub-contracting the tests. I have been considering that. Again, the average waiting time currently is 16 weeks. I accept that is too long. There is a substantial number of applicants waiting to be tested. I have started to negotiate with the Department of Finance about a bonus scheme for the existing testers, and we have had some discussions with the Northern Ireland authorities about the possibility of their helping us out, although it appears that will not move for us. We have considered bringing in outsiders from other professions akin to driving testing - former gardaí, testers and so on. We are working on that. I want to put emphasis on the number of tests they can do every week and the quickest way to do that is to work with the existing group of professionals available, get them to put in the extra time and move it on in that way.
The second point I want to make deals with the waiting time for driving tests. There is an assumption, and this goes back to what Deputy Howlin talked about, that if one applies for a driving test, one should get it tomorrow, or next week or next month and that that is somehow efficiency. If someone wants to do the leaving certificate, he or she has to wait until June. The reason they have to wait until June, even though they may want to do it tomorrow, is that they are expected to do more training and study and then sit the examination. There is an assumption which we need to change and perhaps we should be coming at this from the point of view of having a minimum period from the date one applies to do the test. If someone applies on 1 January, is there not a view which says he or she should be able to demonstrate the education, training and all the expertise gathered between the date he or she applied and the date he or she took the test rather than having a bit of paper which says that his or her grandfather taught them how to drive 35 years ago? The debate on the waiting time is an artificial one. There is a real argument for having a proper waiting time following which the person should be able to demonstrate to the satisfaction of the tester that he or she did the required courses.
The Deputy also asked about schools, a question also asked by Deputy Dempsey. The Department of Education and Science has asked the National Council for Curriculum and Assessment about this matter. It commissioned a study and that study is now with the NCCA. The Minister for Education and Science will examine it soon. The Minister for Education and Science and I have agreed in principle, and only in principle, that there should be a road safety aspect to transition year. The study I referred to comes to roughly the same conclusion - that there should be a broader aspect of driver education in the transition year, including road safety appreciation. It should be broader than simply teaching youngsters how to drive, which is much too narrow a focus. I would prefer them to learn about speed limits and everything else. As soon as I have that, we will be able to move on it but the answer to both Deputies question is "yes" - I very much support the idea of road safety education for transition year students.
Deputy Wilkinson asked about the theory test and helping people with writing and reading difficulties. The theory test is done on a screen and the people who run it inform me that they will sit with somebody who has any difficulty. They will read the screen for them and help them get through the test. I will make certain that that is fully followed through so that anybody with those type of difficulties will not experience that problem. They will be supported.
Deputy Howlin asked me about tutoring before someone gets a licence. In the ideal world that is what should be done. If we are starting with a clean sheet we would say nobody will get a licence until they have done the following course but the State cannot set up one big driving school and try to manage it, and I do not believe the Deputy is suggesting that. The driver testing agency Bill will come before the Dáil in the autumn. That Bill will seek to do what the Deputy suggests, which is to lay down standards and a registration system for instructors. It does not go so far as to say - although I will consider what the Deputy said - that one has to have done a specific tutoring course before the test but there is a strong case for showing, to the satisfaction of the tester, that between the time they applied and got the test, they conducted or passed a whole range of training in driving. That might be a certificate from a training instructor to the effect that the person did X number of lessons and so on.
I believe that is done on a voluntary basis already——
Yes.
——and some insurance companies operate a voluntary code. It is to establish that as a norm rather than the exception.
They do, and most insurance companies now have training beyond the driving licence and if the person does that, he or she gets specific reductions. I very much appreciate that.
Deputy Howlin asked about speed limits. Some months ago I established a small group from inside the Department with outside support and asked its members to examine this question. Our speed limits need urgent overhauling. The target I have set to change them completely is the end of next year, 2004. The group has given me an initial report which states exactly what the Deputy said, that the 60 mile an hour speed limits are too high on a range of country roads. They should not be that high. On a whole range of roads we have upgraded, the speed limit is suddenly reduced to 40, 50 or even 60 miles an hour, which is much too low for that type of road. This is important because if we are to have any success with the speeding campaign, people have to——
Be reasonable.
——support the speed limit system. They have to know that they are sensible.
Yes.
I hope to do that by the end of next year. I also hope, perhaps towards the end of this year, to be able to lay out the scheme in full, and local authorities will be asked to make all the necessary changes. We have to change the speed limit signs to show the speeds in metric. There are issues here relating to rounding off the figures, since we cannot have signs with fractions on them. It is hard enough to follow the existing signs. Then we will have to deal with implementing it and decide whether to change all the signs in one day or do it gradually.
The final point was about speed checks. Enforcement is always an issue. The Garda needs to maintain continuous pressure with regard to enforcement and not go for the easy options.
The penalty points system will work if properly resourced. Obviously, it is not properly resourced at this stage or the Minister would not be looking for another 50 or 60 cameras. When will they be installed and operational? There were some media reports that only a small number of cameras are in operation at present. The Minister is reported to be in negotiation with regard to giving insurance companies access to the number of penalty points incurred by individual drivers. Will he give them access to that information? If so, what is the quid pro quo with regard to good drivers being rewarded?
What will the Minister do about the 358,000 provisional licence holders? Everybody knows that a minority of those licence holders are a danger to everybody else as well as themselves on the roads. That includes some of the people Deputy Wilkinson mentioned, who do not go out often in the car. It could be an old car that is just used to travel in and out of town, but the drivers might not be familiar with the roundabout system. Every day we see people narrowly escape serious injury because they are not up to speed, as it were, about what they should do or because they are infrequent drivers and are probably holders of a provisional licence.
I compliment the Minister on implementing the penalty points system, which has saved lives. He mentioned the speed limits. I drive home via the Athlone bypass, on which I drive at 60 miles per hour. On the country road I use later, I can also legally drive at 60 miles per hour. That is wrong and must be changed.
The Minister mentioned 80,000 uninsured drivers. I assume many of them are young drivers who cannot afford to pay for insurance. We suggested to the insurance companies that they should offer incentives and some of them have done so. One such incentive was that the company would give a high reduction to people who would allow their speed to be monitored. This is a good idea. I will not mention the companies because there are competition issues involved. Another company said that if people undertook sufficient training, it would be able to reduce the cost. We will have to investigate these issues and ensure that everybody is brought into the insurance net.
If one were to rely on press reports on the saga of the penalty points and so forth, one would be led to believe that the Minister did not get co-operation from the insurance industry. Is that still the case? This also came across in the MIAB report, which said that it had not been the board's experience that insurers willingly provided all material information. It appears that the insurance industry is not co-operating as well as it should in the discussion about insurance. Is that still the situation or have matters improved?
The Minister said the impounding of vehicles would be in place when the paperwork is complete. When does he envisage that happening? Is he talking about weeks, months or next year? Travelling at fast speeds is one of the main causes of accidents. However, travelling at too slow a speed also causes accidents as a result of frustration. Slow drivers, buses and trucks should be allowed to use the hard shoulder on national primary roads. The Minister is familiar with the N4 to Galway. It is ridiculous to be obliged to travel that road at 35 or 40 miles an hour on certain stretches. Expenditure on those roads has been invested in providing hard shoulders but they are absolutely useless. They are never utilised apart from when a breakdown occurs. The traffic never utilises them but they could be utilised if the law was changed. Would the Minister consider that?
The realistic review of speed limits has been dealt with. Speed limits are an important issue. The 60 miles per hour limit on county roads is too high. However, the 60 miles per hour limit on some of our primary roads is too low. It is a three-hour journey to transverse the country but it should not be necessary to sit in boredom driving a car at 60 miles per hour.
Does the Minister share the mentality of the former Minister for Justice, Equality and Law Reform regarding zero tolerance in enforcing the speed limits? Somebody driving at 65 miles per hour in a 60 miles per hour zone is not the biggest criminal in the world. Perhaps a little discretion should be used in enforcing the limits.
Deputy Hogan asked about resources. The money is available for the Garda contract to install the computers. The money is ring-fenced. The contract is signed and resources are sufficient in that regard. The Garda Commissioner has not approached me or, as far as I know, the Minister for Justice, Equality and Law Reform and sought more personnel to enforce the penalty points system. If such a request were made, we would examine it but it has not yet happened. Every so often the Garda conducts a major campaign. In future, many of these special Garda campaigns will not be announced. In the past, we tended to announce them but that will not continue.
The general idea is to stop people speeding as opposed to catching them speeding. That is the objective. The more announcements there are, the better. We want to change practice, not catch people.
There is no point in announcing a campaign if it is not implemented to the full extent. That is the worst of all worlds.
Not if it slows everybody down for fear of it happening.
I dealt earlier with the question of cameras. We will shortly go to tender for the provision of cameras. At present, there are about three or four cameras in use and I propose to increase that to 50 or 60.
When?
It will be in the next few months, as soon as the tenders are received.
Will they be in place by Christmas?
That is the intention. However, I cannot tell the committee where they will be.
Of course.
I am proceeding with making penalty points information available to the company that came forward with a specific proposal offering a reduction in insurance premiums to drivers with no penalty points. I invited the federation and individual companies to make proposals. I got a positive response from one company which publicly offered a 10% reduction for any driver who had no penalty points. There are legal issues involved but I decided to make full information on penalty points available to that company, starting immediately.
I would invite other companies who want to make the same arrangements with me to talk to my Department. If there are legal issues, I suggest we do not go down that road because doing so in the name of road safety would not do credit to anybody. I will be making information fully available to that company, which will give them full details of the system, including a full account of everyone who has incurred penalty points.
I was asked about the 358,000 provisional licences and the answer is to test the drivers as quickly as we can. We are moving on with that. Deputy Callanan says, quite rightly, that many uninsured drivers cannot afford cover. We are trying to reduce the cost of motor insurance so that the number of people in the total of 80,000 who have not been able to afford cover - and I am sure there are many - will now be able to do so. That is what we are doing in that respect.
The Deputy also rightly mentioned some commercial systems such as monitoring driving. I greatly appreciate and want to encourage all the private sector initiatives that seek to make roads safer. One on offer is that if one agrees to have the speed monitored one can get a dramatic reduction in insurance cover. Other companies have deals whereby reduced cover is offered if one does not drive after certain hours or if one agrees to do special courses. I applaud such initiatives and would encourage insurance companies to introduce such schemes. If they do, they will have my full support.
Deputy McHugh asked about co-operation from the insurance companies. Other than the example I have given - and the region I have talked about - we have had full co-operation from the insurance companies. I do not want to call it a lack of co-operation. They are entitled to make commercial judgments if they wish but I am also entitled to take decisions in response to them and to make my views known. I have decided to respond by making information available specifically to companies which want to do this while withholding such information from companies that are not prepared to provide a reduction in insurance cover for drivers who do not incur penalty points. That is the deal on offer.
I was asked about impounding uninsured cars and I hope we will be able to implement that at the end of September. I agree with Deputies that those who drive too slowly can often be worse than those who drive too fast. The way to handle that is to continue to invest in roads so that we will have slow and overtaking lanes. That will help because slower drivers can pull over into the slow lane.
I am examining the provision of hard shoulders for buses about an hour out from Dublin, to start with. I am proposing to do that some time in the next six months or so if I can get agreement from the bus companies. As well as dealing with other safety issues, we could open the hard shoulders for buses at peak times, morning and evenings, on an experimental basis. If that works we can look at doing it elsewhere but I would like to start with that to see if it works.
I agree with Deputies that the 60 miles per hour limit is too low in certain places and that is what the review will seek to do. As regards whether I share Deputy O'Donoghue's approach to zero tolerance, I do not know that he and I have——
Maybe the Minister had better not answer that question.
On a serious note, under the Traffic Acts the Garda Síochána has some judgment. One has to leave some area for judgment and that has been done.
Deputy McHugh outlined the position concerning hard shoulders, particularly on the Dublin-Galway, Dublin-Limerick and Dublin-Cork roads. Surely something can be done. Will the Minister look into that?
Yes, but I want to start with this experiment first, Chairman, to see how it will work. Do not forget that hard shoulders were put there for safety reasons originally. They were not meant to provide another traffic lane. On the motorways they are specifically for safety in the event of a major road accident, fire or a plane crash. All sorts of emergencies could arise on motorways so we have to think the idea through. There is no point providing safety features if they cannot be utilised. We have to consider that priority. Subject to being assured of those issues, I would like to experiment around Dublin city and the best way to begin is with buses - turning the hard shoulders into bus lanes for a period to see it that would work. I am talking to the NRA about making some adjustments so that inside the hard shoulder - they have done this in the UK on one particular road - at every 1,000 or 5,000 metres a little bay is cut away to allow emergency vehicles to pull in or out. We will have to see if it works and then we will move on.
That is for one half of the population but Deputy McHugh was talking about the other half who live outside Dublin. The Minister came from the country so will he look into this? It would be common sense to do so. It is unreal for those of us who are travelling to and from Leinster House every day to see what is going on. Everyone is complying with the Minister's new regulation and they are 100% behind him in supporting the great work he is doing in his new portfolio. Now we can see what the pitfalls are, however. As the Deputy has outlined to the committee, it is common sense because at midday there are fewer people using the roads. Large trucks and buses are being held up at peak times when the hard shoulders could be used.
I commend the Minister's proposal for impounding uninsured vehicles but my question concerns its implementation. A driver may have a number of previous convictions, not just for traffic offences. Similarly, somebody may be driving their spouse's car and when they change insurance company they might fail to notice that they do not have insurance cover to drive their spouse's car. That is a simple mistake that could happen. What efforts are being made to ensure that the person we want to put off the road will be put off?
Does the Minister see a proactive role for the Department in promoting road safety through cruise control limits on cars? For example, car importers could be requested, in conjunction with insurance companies, to provide cruise control on many cars.
I compliment the Minister on the excellent work he has done so far. It was a tremendous decision by the Government to have one dedicated Department of Transport. After his five years of nursing the Government along as Chief Whip, the Minister was hungry to do a job where he could get things done. In the words of a former Minister, he has gone through Departments like a dose of salts.
I thought Deputy Healy-Rae was dangerous enough.
What the Minister has achieved so far has been great. He should keep up the good work and not be afraid of the Aer Rianta problems.
It is a bit late.
As regards the Department's overall long-term strategy, I presume neither the UK nor ourselves will ever change over to driving on the right hand side of the road. I presume that suggestion is done and dusted and will never be resurrected. It was debated in the past and we were thought to be out of step with Europe but I presume that is not even on the Minister's agenda.
We are out of step.
It would be an enormous task to get it to work but before the Minister changes all the signs he had better put it on the record that this is it for all time and there will be no change, otherwise there will be changes again.
The NRA is proposing to build a dual carriageway from Kinnegad to Athlone, stop the development for ten miles and then recommence it in Ballinasloe. There is no doubt that the lunatics are running the asylum. I never came across anything like them.
What point are you making?
The Minister mentioned road safety but the NRA is going to develop a dual carriageway to Athlone, and leave the road undeveloped from there to Ballinasloe before recommencing the dual carriageway. Last Friday, the NRA informed us of this proposal at a briefing with Roscommon County Council. The road will not be developed from Athlone to Ballinasloe for a number of years because the NRA says the traffic levels running from Ballinasloe to Galway are different. There are fewer cars so somehow they must disappear in Clonowen or in some bog. The Minister should take a more hands-on approach to the NRA. He is answering questions in the Dáil now, even though he is not obliged to.
We will be talking about the N11 very shortly.
This applies to people from the west. How could you improve a road, leave ten miles through County Roscommon in its current condition and worry about road safety? The Minister will have to take a hands-on approach. The joint committee was treated in a rude manner by the NRA last Friday when it accused officials of not taking certain action.
The Senator should raise the matter in the Seanad.
I will not have the opportunity to do so during the summer recess. A tragic accident happened involving a van which had no safety barrier between the storage of tools and the driver and passenger. The tools hit and killed the driver. This illustrates the need for safety requirements.
Will insurance companies be advised of those with and without penalty points? A constituent of mine expressed concern that the two points she got last week will be reported to her insurance company. Will the Minister allay her fears in that regard?
Thank you, Chairman, for allowing me to speak as I am not a member of the committee. I welcome the Minister and am proud of his work, especially with regard to road safety. He has brought common sense to driving on the roads and has got rid of the cowboys.
I admire the Garda for the work done on the roads. The members of the force are vigilant and do an excellent job. The mobile phone is very important for members as they drive to and from Dublin. A radio in a car is as dangerous as a mobile phone because of the number of stations on offer. It will be difficult to address that aspect.
I support the confiscation of cars of uninsured drivers. It is a disgrace that uninsured drivers can operate and put others at risk. The law regarding the use of seat belts must be more rigorously enforced, especially with regard to rear seatbelts.
I have a great passion for the people of rural Ireland. Former Deputy Deasy and I partially opposed changes to the drink driving laws introduced by the then Minister for the Environment, Deputy Michael Smith. Rural Ireland is very important and we need to reconsider depriving people of availing of a drink. Many old age pensioners rely on a drink and a game of cards in their local pub as their only social outlet. They cause the least problems on the road. The cowboys who hog the roads are the real danger. I admire the Minister's decision to split Aer Rianta, especially his decision to give Cork Airport autonomy. However, I ask him to reconsider the position on random breath testing, especially given that more than half the population live in rural areas.
Senator Hanafin asked about the impounding of cars. The Garda has discretionary judgment in all these areas. Members of the force will establish the facts and make decisions. There is a daily charge for storage and owners may retrieve their cars promptly if they were taken accidentally or without good cause. If a car has been confiscated with good cause, a hefty fine will be imposed. For example, if it is found to be without insurance, the owner could face a fine of €2,500 or three months in prison.
Many car models have cruise controls and they are even beginning to be installed in smaller cars. My legal advice is that we could not make it mandatory that all cars be cruise controlled because of a barrier to trade issue. We must look further at that aspect. I am often asked why it is not possible to ensure that cars cannot go faster than the speed limit. This must be considered in the European context.
There is no proposal to change the side of the road we drive on. Given the situation in Northern Ireland and the United Kingdom, there is no requirement or need to do it. I am familiar with the road to Galway and I will bring Senator Leyden's comments to the attention of the NRA.
With regard to mobile phones, while we cannot solve all problems, we can deal with the danger of the hand-held mobile phone. I am not sure how to deal with those who use handsets. I understand recent technological developments allow for the mobile phone to be used while being left in one's pocket, with the interaction channelled through the car radio speaker.
I have commented on the situation regarding seat belts. Breath testing can be random. However, if people returning home are involved in a small accident they will be breath tested. If they are under the limit they have nothing to worry about.
The erection of speed limit signs is a growth industry. Politicians have a habit of seeking to have them erected, but this should not be done at random. Criteria should apply. Some speed limits are questionable. For example, I recently encountered a limit of 30 miles per hour on a main thoroughfare where there was very little residential development. While they are useful as a source of Garda revenue, there must be some control over their distribution. In the past the Department of the Environment, Heritage and Local Government had responsibility in this area, but it is now left to local authorities. It is now popular to have speed limit signs here, there and everywhere, and that takes from their importance. They must be where they are needed. I would ask the Minister to look at that.
There is another trend of which people who were members of local authorities will be aware, that since it is possible to get planning permissions within the speed limit zone people are now using the extension of speed limits as a way of overcoming planning restrictions. Often the 30 and 40 mile per hour zones stretch for miles outside a village in order to develop housing and it is something which should be looked at.
I asked the Minister whether the fact that people had penalty points will be reported to the insurance companies.
Only to the companies with which we have an arrangement.
Will it apply to those companies' clients only?
No, they will get the penalty point list because they will need that to take an overview.
Will they have it on their websites?
They will not have it on their website because they will not want the other companies to use it.
We have gone way past our time. I thank the Minister for coming in here with this senior official and for being most helpful to us in our insurance inquiry.