JOINT COMMITTEE ON ENTERPRISE AND SMALL BUSINESS debate -
Wednesday, 18 Oct 2006

Reform of Irish Insurance Market: Presentation.

Chairman

I welcome Ms Dorothea Dowling, chairperson, and Ms Patricia Byron, chief executive, from the Personal Injuries Assessment Board, who are here to assist us in our examination of the reform of the Irish insurance market. I also welcome back the consultant, Mr. Myles O'Reilly. I thank the witnesses for their ongoing interest and help to the committee in considering reform of the industry. Before asking Ms Dowling to commence her opening statement, I draw attention to the fact that while members of the committee have absolute privilege, the same privilege does not extend to witnesses appearing before the committee. Members are reminded of a long-standing parliamentary practice to the effect that they should not comment on or make charges against a person outside the House, or any official by name or in such a way as to make him or her identifiable.

I ask Ms Dowling to commence. I understand that Ms Byron will also address the committee in the opening statements. We will then have a question and answer session as we have previously done so successfully with the witnesses.

Ms Dorothea Dowling

I thank members of the committee for inviting us here today. As members are aware, I am the non-executive chairman of the governing board and none of us on the board becomes involved in actual assessments, which are carried out by the statutory officers. I will hand over to our chief executive, Ms Patricia Byron, to answer members' questions on the phenomenal success her team has made of the non-adversarial model, which we call the PIAB and which is soon to be followed in the UK and elsewhere. However, the committee has asked for some general comments about the cost of insurance. I will make some brief comments in the time available to me.

Great credit must be given to the joint committee for the fact that the average cost of motor insurance has decreased, in simple terms, by 45% in the past three years. This has been verified by the Central Statistics Office index. The cost of motor insurance is now less, in real terms, than it was in December 1989. The Government's original target of a reduction of 33% in the cost of motor insurance during the term of the insurance reform programme has already been exceeded. It is undoubtedly a model for joined-up thinking in other areas. The committee's reports have detailed exactly what needs to be done to meet challenges in areas such as road safety and uninsured driving. It is now just a matter of getting on with it.

Irish policyholders continue to pay one of the highest rates of insurance costs in the European Union. We can make further substantial savings, perhaps of up to 50%, as long as we do not become complacent about what has been achieved to date as a result of the cross-party efforts of this committee and the Dáil at large. I ask members not to forget what happened when the penalty points system was initially launched. All the news was good for a while, until the pressure eased somewhat and all the successes which had been achieved were reversed and matters got worse.

The Personal Insurance Assessment Board has powerful and well heeled opponents, including those who are unwilling or perhaps incapable of embracing the new reality. My colleague, Ms Patricia Byron, will give the joint committee some details of the rate of acceptance of PIAB awards which currently stands at more than 61%. I can reveal to the committee that 14% of rejections are accounted for by just four firms of solicitors. These guys and girls are simply messing with our statistics. There is no evidence of their injured clients getting more money subsequently, but, of course, it will take three or four years before they will know whether they fare better or worse in the courts system. We know that many cases have been settled for the same figure subsequent to rejection. We know of an instance in which the taxing master decided that the solicitor should be rewarded with costs for rejecting an award and putting the client through a litigation process in which he or she achieved a level of compensation that was no higher.

It is obvious that legislative amendment is needed to ensure these cynical practices, which are neither in the interests of claimants nor respondents are stopped. A number of parties have already made representations to the Department of Justice, Equality and Law Reform in this regard. Thankfully, the vast majority of solicitors are proceeding professionally in all their dealings with the PIAB. Many privately admit to being embarrassed by the actions of the sneering minority. It is not the first time that the reputation of an honourable profession has been sullied by the activities of a self-appointed few. It is too early to propose to the elected and accountable Members of the Oireachtas what legislative changes might be required to protect injured parties and premium-paying policyholders from the activities of vested interests.

I would like to bring a further startling development to the attention of the joint committee. Before the judicial review in which the Incorporated Law Society was involved as an amicus curiae, or friend of the court, over 50% of claimants were contacting the PIAB directly, at a refundable fee of €50. Since the PIAB was disbarred from telling people they had the option not to use a solicitor, however, over 90% of claimants have been availing of representation. I understand such persons are paying solicitors more than €399 to fill out a form. In some cases, they are paying a percentage of their compensation, which can come to thousands of euro. Under the PIAB structure, the claimant does not have the burden of proof in respect of negligence. It does not matter whether a person has a solicitor, as it makes no difference to the straightforward cases dealt with by the PIAB. An award is not determined by what a solicitor says, but by the outcome of the examination by the independent medical panel. It is converted into money with the assistance of the published book of quantum, to which everyone has access.

Why are claimants choosing to spend avoidable outlay on legal fees? Why are they being deprived of the opportunity of being told their rights in order that they can make informed decisions about whether to use solicitors? The PIAB will not really know the answer to these questions until the outcome of the Supreme Court appeal in the O'Brien case is made known next year. Research in the United Kingdom which the PIAB can gladly make available to the joint committee shows that claimants who do not use solicitors get more money into their hands and get it quicker. I do not suggest solicitors are never necessary, but the beauty of the PIAB system is that most claimants know within a maximum of 90 days of making their claim whether they are likely to end up in court, or whether their case is a straightforward one that will be settled. Surely that is better than finding out on the steps of the court that one has no option other than to withdraw one's claim, or face liability for the other side's costs.

We must not become complacent about exaggerated claims in the court system. The members of the joint committee who are familiar with my work as a former chairman of the Motor Insurance Advisory Board will agree that I am not seen as a defender of the insurance industry. I question the low level of profitability reported for the most recent year of accidents. I acknowledge the industry's frustration that the new deterrents to overstated claims, including increased fines, are simply not being applied by the courts, to the extent that such cases have reached trial to date. A number of decisions are currently on appeal to the Supreme Court. If the will of the Oireachtas, as reflected in the Civil Liability and Courts Act 2004, is seen just as words rather than as the reality, Ireland will again be the litigation capital of Europe, as the chairman of Lloyd's suggested last July when he complimented the Government on the reforms it had introduced to improve this country's reputation in the eyes of potential players in its insurance market.

Last year's litigation figures — there were just 4,000 cases in the courts, compared to 35,000 the previous year — reflect the change that has taken place in the culture of society. People used to have an opportunistic mentality — they thought they should have a go because the odds were better than the national lottery. Society now acknowledges that this is not a victimless crime paid for by insurers. It accepts that it imposes a cost on all of us that warrants the new deterrents, in the form of fines of up to €100,000 and imprisonment of up to ten years. Seeing is believing, however. None of us is aware of the reality of how these deterrents will operate.

Over 30,000 genuine claimants have had their claims resolved within less than nine months, compared to approximately three years under the old litigation system, as a result of the work of the professional and committed team at the Personal Injuries Assessment Board. I emphasise that the PIAB, just two years after it was established, is now self-funding and, therefore, does not cost the taxpayer anything. Surely it serves as a role model for other organisations in that regard. It gives me great pleasure to hand over to the inspirational chief executive of the board, Ms Patricia Byron.

Chairman

Ms Byron is very welcome.

Ms Patricia Byron

I thank the joint committee for the opportunity to report to it on the progress of the Personal Injuries Assessment Board to date. I would like to go through the PIAB's objectives, the mission that was set for it, its operations, its results and the challenges it faces. Ms Dowling mentioned that there were challenges. While the PIAB has had good results, it is important for it to remain focused on areas which have yet to be encountered and dealt with. As the chief executive of the PIAB, I would like to highlight some of those areas at this meeting on behalf of the operational team.

The PIAB has made a great deal of progress, but much more remains to be done. The PIAB's mission statement makes it clear that it has been established to act as an independent facilitator in the delivery of compensation entitlements in a fair, prompt and transparent manner for the benefit of society. I will not go through the PIAB's six clear objectives in detail, although I would like to mention some of them. The PIAB is charged with assessing fairly and accurately the amount of compensation due to individuals. It is responsible for reducing administration and processing costs, while maintaining the actual level of compensation for injured parties. It has to promote a culture of innovation and excellence within the new environment. It is very focused on its duty to develop a superior level of customer service. It knows there are two key parties — the claimant and the respondent — and other parties, including the staff of the PIAB, are servants in that process. It has a responsibility to increase public awareness of the board and its benefits to society. There is no point in developing a superior service if people do not know how to access it. The board is charged with contributing positively to the changing environment across a large spectrum of public services, including the health service. Other classes of claims are made in other parts of the public sector.

I would like to remind the joint committee of how the PIAB model was developed. The legislation that brought the board into being was passed by the Dáil in December 2003. The board was formally established in April 2004 and it brought its operations into service in July that year.

As members may recollect, there was a rush of litigation by the legal fraternity at that time. We really had no work to handle for the rest of that year and new accidents had to occur during the latter part of 2004 for work to arise. The first trickle of claims came through in 2005 and now, in 2006, we are ramping up our volume. Full-cycle processing will be carried out next year.

Our first awards came through in March 2005 and these resulted from trawling through the small volume of claims on our books at that time. This at least proved the model to those Members of the Oireachtas who had confidence in us. We are now delivering in a higher-volume environment.

It is very important that we all be clear on how the process works. It is a simple seven-point process, as can be seen on our website, www.piab.ie. One’s claim is notified by telephone to the service centre, although we will be moving to a full web service next year which will be available at any time of the day. Claims are currently notified through our lo-call 1890 number between 8 a.m. and 8 p.m., six days per week. We assist the claimant in completing his or her application form over the telephone and then send it out to him or her for signature. If the claimant wants to fill out the form at home, it can be sent to him or her for completion. The form is returned with a medical report. This report does not require a new medical examination; it is simply a record of the treatment received by the patient at the time in question. We only ask the medical professionals to tell us what they encountered and saw and not to prognose beyond that. If we do require a further medical examination, we have it carried out by one of over 300 practitioners on the independent PIAB nationwide panel.

Once the medical record is received, the claim is entered into our system and registered fully. We follow through by looking for special damages, which might include hospital doctors' bills or a wages declaration. We make our awards within the statutory timeframe of nine months and we are currently delivering them in just over seven months. When full claims processing obtains next year, we will make awards in nine months.

Once an award is made, we issue formal notification to the claimant and the respondent. The respondent has 21 days to accept it and the claimant has 28 days. Once the award is accepted by both parties, an order to pay is issued. This order has the same status as a court decree and that is the end of the matter.

The vast majority of claims are settled between parties in our service centre where we facilitate the claimants in copying from the papers what has been pursued. Many claims are settled at this point and the vast majority of the remaining claims are settled by means of the formal award system. A very small volume of claims now remain within the court system. That is the good news today.

When the PIAB was established, it took three top deliverables from the relevant legislation as points of focus within our operations, namely, to deliver the same awards as the courts, to do so in a shorter timeframe, and at a lower delivery cost. Every employee in the PIAB has these deliverables in mind when at work.

I assure the committee that the board is making the same awards the courts would make. We have trawled through the Courts Service's statistics and noted that 89% of claims awarded historically in the courts were under the Circuit Court threshold of €38,000. On the claims made through the PIAB, 93% of awards were under this threshold. Therefore, the same claims profile remains and we are making the same awards. The variance of 4% is owing to the fact that we are not dealing with medical negligence claims. There is a category of claims that we release to the courts under section 17 notice as we deem them inappropriate to our timelines. They are either longer term or shorter term but more complex and require adjudication by way of oral hearing. These are the outliers which, in a lower volume environment, require adjudication.

The circulated graph shows that the vast majority of court awards under the threshold of €35,000 are now awarded by the PIAB. The average timeframe for delivery by the PIAB is 7.1 months or less. The maximum statutorily allowed timeframe is nine months and we are adhering to this in respect of all claims. In the past, the average litigation time was 36 months and we are all quite aware that many cases took four or five years before they were resolved.

Let me focus on savings in delivery costs — I refer to the processing costs and not to the level of compensation. Where an award of €10,000 is made, the PIAB makes a saving in delivery costs of €3,250 over the figure pertaining to the courts. On an award of €20,000, it makes a saving of €7,850 and on an award of €30,000 it makes a saving of €12,450. The vast majority of awards are under €38,000, which is the old Circuit Court threshold. It is the low value to medium value claims that we are clearing from our books in a much shorter timeframe and at a much lower delivery cost.

The new system has resulted in a significant cultural change. The relevant slide projects that, on the basis of emerging trends, 40% of all personal injury claims will be resolved by the PIAB's intervention in the service centre, 40% will be resolved by the formal awards and 20% will enter the courts system.

How did the cultural change arise? An alternative to the courts was long advocated. I will not outline the history of the PIAB, as the members know it. Suffice it to say that, in 1996, a report on insurance costs was issued by Deloitte & Touche. In 2003 the Government insurance reform programme began and the results are coming through in 2006. It is thanks to the Legislature and the vision of the joint committee that the PIAB is in existence and in a position to deliver upon its promise. Insurance costs were crippling small and medium-sized businesses and affecting economic productivity.

Will, conviction and action were required to effect the cultural change. Legislation came first and it has proven to be very solid and tight. It has been a privilege to work with it. It has served us very well and there are only a few sections that might need to be tightened. The agency came second.

It is important to remember that habits which developed over more than 100 years have changed over the past three years, starting with the Legislature and ending with the formation of the board. It is important not to lose sight of the fact that we are tackling approximately €450 million in litigation costs.

The great cultural change is very significant and it is good for society. One of the Bacon reports highlighted that, for every €1 saved in personal injury claims, there is a knock-on impact amounting to approximately €8 across the economy, particularly across State services. It is important to keep these chunky figures at the back of one's mind. As Ms Dowling says, we should not become complacent so as to maintain our momentum and close any gaps.

The cultural change was driven by the opening of a service centre. We banked on the fact that the public wanted a better service and a more appropriate and efficient system. They have embraced the new model and have connected with us. We have reached out to them and they responded to us very easily once we spoke to them in very straightforward terms. As Ms Dowling stated, in the early days, prior to the McMenamin judgment, claimants were coming to us directly. We were stepping up our awareness campaign and they wanted to be kept in the loop. Once their solicitor was copied, that was what the public wanted. We will go back to the Supreme Court and we hope to win that appeal. If not, however, we may need to come to this committee to talk about that.

Medical facts are exchanged from the outset. What we derive in the first 90 days is absolute clarity. Insurers are now carrying out their investigations within those 90 days and in many instances within 40 days. The small volume of claims where a dispute arises is being identified within the 90 days. Once that has happened we release those cases into the courts system for adjudication. More importantly, we harness the volume of claims where no dispute or fog are involved and bring them into the PIAB to have them resolved. We engage with the public, assist them where they have any difficulties in sourcing information and point them in the right direction.

There are two key outputs of the PIAB. One is the service through the service centre where clarity is promoted in terms of identifying the small volume of claims involving a dispute. Insurers are then in a position to resolve those claims within 90 days. For claims that cannot be resolved at that point, we make a formal award. The smaller volume of claims sits in the courts system for adjudication.

There was historic public dissatisfaction with the old system, which was lengthy and costly. It was not customer-centred, but adversarial. As we find from our daily customer surveys, very few people want to go into an adversarial environment. They may be injured enough as a result of accidents in cars, at work or in public places and they do not want any more adversity in their lives. They want to get their claims resolved with the redress effected and then get back to their normal lives and in many instances back to the work place.

Some 90% of claims do not involve a dispute and never did. This is not a new fact but is just harnessed by the new system. Some 90% of claims were under €40,000. Some 10% only ever went into a trial room and, of those, only 4% were ever successfully defended in a trial room, yet it took three years to get that resolution and a processing cost of an add-on of 46%.

The PIAB is a key part of the Government reform programme. The public have spoken and did so years ago in stating that they did not want the old system to prevail. The legislators responded in the form of legislation and the new agency that was set up. We are happy to report that this does not involve a charge on the State because we are a self-funding agency. We are pleased to have delivered upon the target set for us by the Legislature. There is no going back but we want to ensure that complacency does not set in and that the loophole issues we have highlighted today are plugged.

There are a few important challenges ahead. We need to increase public awareness of our service. We take that on board and will undertake to move forward on that front on behalf of the legislators. However, to truly understand the full outputs of the PIAB, I will provide members of the committee with some compelling statistics on our sales, processing costs and deliverables on the formal awards. However, we cannot source data on the 40% of claims being resolved through our service centre where we supply both parties with copies of the claims papers, after which those claims disappear and do not reappear on our books. They do not require a formal award.

Deputy Quinn

Can Ms Byron elaborate on that?

Chairman

No, I am going to take Ms Byron's statement.

Deputy Quinn

I will come back in later.

Chairman

Please continue, Ms Byron.

Ms Byron

We need data from insurers on those claims. They have occurred; they have come to us; we have an accident report on them; we have a medical report on them and have supplied copies of the claims papers to both parties, but at that point they stop. We understand from insurance companies that those claims are being resolved, about which we are happy. We are happy to have driven that up-front settlement programme. To fully understand the output of our organisation we would like to understand those data. I must add that it is a free service for which we do not charge. We have sought that on several occasions going back to the autumn of 2005 and most recently summarising it in a letter last week to the Irish Insurance Federation.

We also need data from insurers on claims in which the PIAB has made formal awards but which have been rejected and yet are not appearing in the courts system. This is something we really need to understand. If the PIAB makes an award for €10,000 which is rejected, we assume they believe the award is incorrect. However, if the claim is not being pursued in the courts system — we have authorised them, by means of a formal authorisation once they reject the awards, to go to the courts — we understand from anecdotal evidence that these claims are being settled. We want information from the insurance industry on what those claims were settled for. Were they settled for more than the PIAB award or for the same figure but with legal costs being paid? We do not advocate that legal costs be paid on the same award that the PIAB makes because this undermines the system and is not a habit we would like to see being extended.

As I mentioned, we aim to resume direct communications with claimants, always copying letters to their solicitors, or if it is the other way around, by sending the letter to the solicitor and copying it to the claimant. We have no difficulty in that regard but we aim to resume that once we win the O'Brien appeal to the Supreme Court. However, if that judgment does not go in our direction, we will have to examine the matter because we truly believe that direct communication with the public is essential. That is not just a personal belief of those on the board or those working on its operations. We communicate with 10% of our claimants every day of the week by way of a public survey. In addition, we currently are bang in the middle of a Lansdowne Market Research survey which I sat in on yesterday. There was a comment from a 90-year-old gentleman on the telephone yesterday, who said: "If I'd known about PIAB and had known of the option that I could have gone direct, I would have taken this route because it's very simple. I really don't want to travel into a solicitor's office when I could have sent in my medical report and my application form and got the same money." Therefore, people need to be aware of the service and we will certainly ramp up our awareness programme. In addition, however, it is important that people have the right to remain in communication with claimants.

I talked about declined assessments and we want to know where those claims have gone if they are not in the courts. We also want to know if people are paying legal costs just as some sort of sweetener to close them off. That is something that does not support the model and will ultimately erode it. Historically, we cannot be complacent about it.

In terms of substantial results, I will run quickly through the next few slides. Members can see the pattern of writs here. The figure of 35,000 writs issued in 2001 had moved to 31,000 in 2003. In 2004, between the Circuit Court and the High Court some 35,000 writs were issued. As of December 2005, there were just 4,000 writs in the system, so there has been a phenomenal change. It makes sense when one examines the number of awards made by the courts, that is, the 10% that went in and the 4% that were successfully defended. Approximately 3,000 awards were made three years ago, between the High Court and the Circuit Court. That figure went down to just over 2,000 two years ago and to 1,500 more recently. If one takes a round pot of 35,000 claims under the old system, only 3,000 were ever formally awarded, yet 30,000 were still in the system and that is what we have cleared out. There is no Houdini element to this; it is just that we have administered those claims.

I have mentioned our satisfaction survey. Arising from a press release, I was talking about our results last week on the Pat Kenny show. Just after the show there was a phone-in. It is hard for us to get testimonials because we are talking about people's lives, health and private medical details. It is not easy to get people to talk about these matters, so that is why I am highlighting this one from a caller to the Pat Kenny show directly after my interview. A lady had been involved in an accident. Her claim came to the PIAB and was settled within a matter of weeks. This is where we copied the same papers to the two sides. The insurance company picks up the ball, carries out its investigations and the matter is resolved. Her husband's claim dates back three years, and she said that it is still in litigation.

I have already referred to our timelines and full-cycle claims next year. With regard to our profits and costs to date, by December we will have saved €15 million over the old system on the claims awarded by PIAB. Savings of €20 million were made on the processing cost alone of claims in which formal awards were made. The figure could be more substantial if we had data on the other claims that were settled with facilitation before the establishment of the PIAB and on what happened to subsequent claims that have not gone before the courts. In many respects, therefore, these figures represent the tip of the iceberg. In terms of formal awards alone, €40 million will have been saved by December 2007. We are already making good inroads into the figure of €450 million but, if we could add the figures pertaining to cases that remain outside the court system, more substantial savings would be revealed.

As of today, more than 5,000 awards have been made and that figure will reach 6,000 by December. There are currently 4,000 cases in the court system. We are in a transition period, so if one takes a total figure of 27,000 to 30,000 claims, the remaining 12,000 to 15,000 cases, including cases we released to the court system, genuine disputes and cases we are not currently handling, are filtering back through the old litigation system. We will have much more clarity next year because, although we have begun work on those cases, it takes nine months to process them. We are working towards targets for next year of 10,000 formal awards, 10,000 cases to be resolved through the service centre and 5,000 through the court system.

The savings to the economy are substantial across all State services, although we will be able to provide more compelling statistics once we compile data in this regard. The non-economic benefits include fewer visits to health services, earlier rehabilitation, courts being freed for more suitable criminal cases and medical practitioners no longer having to waste their time on cancelled court cases.

We intend to expand our public awareness campaign to address the gaps I identified. A 24-hour, seven-day applications facility and an anytime, anywhere service will also be available shortly.

I have circulated case studies to the committee outlining claims made in respect of employer's liability, motor accidents and public liability accidents, all of which were resolved within months despite the substantial nature of the awards made.

Chairman

Ms Byron has given us the information we had hoped to receive. As parliamentarians, it has been a great experience for us to introduce reforms as substantial as these. The work was started by the late Jim Mitchell in the Committee of Public Accounts and the efforts of this committee have been every bit as important and successful. Irrespective of what committee has responsibility in the future for assisting industry, I hope the work we have done in terms of reforming the insurance industry will be continued.

It appears that the PIAB receives no response to the copies of claim documents it sends to both sides of a dispute in cases where insurance companies proceed to settle directly with the claimants or for other reasons. The PIAB claims to be aware of what is going on in 61% of cases. Does that mean that the PIAB does not know whether 40% of these cases have been settled or are before the courts?

Ms Dowling

There are two stages of data. The 61% figure refers to the acceptance rate of formal awards by the PIAB. Six firms of solicitors account for 14% of rejections and, if they had not run a campaign against us, we would have reached our targeted 75% acceptance rate.

Chairman

Is it correct to say that six legal firms in Ireland appear to be totally opposed to or unco-operative with the work of the PIAB?

Ms Dowling

The analysis of data indicates they have a skewed curve in the sense of rejecting every award made by the PIAB. We do not yet know what will happen in those cases until they go through the court system. However, there is no evidence as yet of court proceedings because of the reduction in the volume of writs and civil bills, which, as Ms Byron explained, involve more serious cases released at the outset because they are not appropriate for the PIAB or medical negligence cases in which we are not yet involved.

An earlier stage concerns the more than 30,000 claims from the past two years which people have asked us to resolve. A surprisingly large number of those cases were not pursued with us once we made the parties exchange all relevant information. As Mrs. Justice Susan Denham has said, we have entered a new era of early, honest and open disclosure. These cases do not earn fees for the PIAB but they achieve the objective of a non-adversarial resolution by virtue of the fact that they have not been pursued with us. We will soon know for certain whether they will be pursued because the statute of limitations has been reduced by the Civil Liability and Courts Act 2004 to two years, so if the cases have not been resolved through the PIAB or in the courts system, they will be extinguished. We know from anecdotal evidence and research conducted by the PIAB that the vast majority are being directly resolved between the parties concerned. The chief executive has sought data from the insurance industry on the matter but, based on my experience of the industry, I make no prediction with regard to how long the response will take.

Chairman

We will need that information before we can conclude our deliberations on the final report of the industry in January. Through our consultant, Mr. O'Reilly, the committee will seek details from the insurers and will make it available to the PIAB when we receive it.

Ms Dowling

We greatly appreciate that. The committee might also obtain assistance from the Financial Regulator. I anticipate that Deputy Quinn will ask a question on statutory returns, which are the only published data.

Chairman

Ms Dowling should wait until the Deputy puts the question. In fairness to him, he has been endeavouring to attend the meeting.

With regard to Ms Byron's appearance on "Today with Pat Kenny", it is obvious that about 90% of the population do not know of her existence. What problem prevents her from letting everybody know the good news? Fair play to Pat Kenny and Ms Byron's public relations people for arranging the interview. There was a tremendous reaction to it.

Ms Byron

It is a matter of evolution, in that now is the right time to expand our public awareness campaign. In building our new organisation, I wanted to ensure we had something to deliver before I advertised it. I did not want to offer a service to the public if it was not at the cutting edge.

Ms Dowling

From the point of view of strategy and policy, members of the governing board feel strongly that the people who need to be made aware of our existence are the claimants who have sustained injuries. We are not seeking to undermine solicitor-client relationships or advising against the use of solicitors but want to inform people about their options. We feel we should be able to inform individuals who have claims and whose solicitors have contacted us but, because of the judgment by Mr. Justice McMenamin, we have not been able to do so. The board had to hold off until after the Supreme Court appeal out of respect for the courts.

Chairman

Would Ms Dowling agree that more than 90% of people only ever have one accident and they do not have past experience on how to deal with the challenge? We must bear that in mind.

Ms Dowling

Most people listening to advertisements have not had an accident and the advertisements go in one ear and out the other. People only need to know about the existence of the personal injuries assessment board on the day they have an accident and begin the claims process. That is when they need to be told about their rights and options.

Chairman

In fairness to the insurance industry, in 2003 we requested them to run a national advertising campaign on television and radio and in national newspapers. It was magnificent in its response.

Deputy Hogan

I must go to the Dáil. I congratulate the PIAB on the magnificent story it tells today and the impact it has on insurance premia. I was interested by Ms Dowling's assertion that a further 50% reduction in premia is achievable and possible. That is what we want to deliver, through her good offices and whatever mechanisms are required. I do not subscribe to her assertion that profits of insurance companies are quite low.

Senator O’Toole

No, she did not state that. She stated she disagreed.

Deputy Hogan

I think Ms Dowling is able to answer for herself.

Profits have increased enormously. I would like to see the benefits of the work done by Ms Dowling passed to customers and not only reflected in increased and enhanced profitability for insurance companies. They have sufficient leeway in the investment portfolios they have used for the past five or six years to make up any shortfall in premia income. This is a tremendous good news story for customers. The excellent work done deserves the congratulations of this committee and the general public. I agree with the chief executive that one must tread carefully and slowly and the time to attract new business and publicise is when one has a good story to tell.

I am interested in how we can achieve the further 50% reduction outlined by the chairperson. It is probably in the remit of this committee in its final report.

Ms Dowling

What I very carefully said concerned the low level of profitability reported by the insurance industry for the most recent year.

Deputy Hogan

Is Ms Dowling stating they conceal their profits?

Ms Dowling

I will elaborate on that. If one examines the blue book containing the statutory returns in which some analysis is provided, as required by MIAB recommendation No. 29, one will see by the end of 2005 the four largest insurance companies settled and finalised 77%, 75%, 77% and 75% of their claims. Those claims are gone and the amount of money involved is known. To my mind, the level of estimated outstanding liability is not consistent with the reality that many of the outstanding cases will be processed through the PIAB system without the historical 46% overhead processing cost. Therefore, how could the average cost shown for those claims be higher than average costs under the old litigation system? Time will tell. Most of the profits reported recently relate to the release of reserves from earlier years regarding which, quite frankly, there is nowhere left to hide them.

Chairman

Is there a possibility they might be waiting for the decision of the Supreme Court?

Ms Dowling

Yes. As I mentioned, I acknowledge their concerns. There has been a refusal to apply the deterrents to exaggerated claims established under the Civil Liability and Courts Act. There is concern also about what will happen in post-PIAB cases. Some of that concern is legitimate. It depends on how pessimistic one's mindset is.

Deputy Quinn

I join in the words of congratulation and praise justifiably offered to Ms Dowling and her colleagues on the board and to Ms Byron and her staff. We should not be under any illusion about the resistance factor and 100 years of practice. I recall in 1992 how the industry resisted the idea of a book of quantum which was mooted. Deputies Rabbitte and Richard Bruton advanced the process. It has taken many people in various fora, including this one, to keep advancing it. The battle is not yet won and we should be aware of it. Without casting aspersions on the legal profession, in a sense it believes it has a monopoly on inquiry and adjudication in certain territories. The late Jim Mitchell was cited and the expediency and speed with which the DIRT inquiry was conducted by the Committee of Public Accounts is in marked contrast with what is happening at Dublin Castle as we speak. The public at large must understand that and the legal resistance to extending the remit of the Oireachtas

Chairman

Imagine how long it would have taken if this inquiry had gone there.

Deputy Quinn

Exactly. One tribunal has been in existence for nine years and I am not aware if it has made any formal report.

We want to get the 50% reduction which I believe is possible and we must be aware we will face resistance and alert the public to that resistance.

I have questions based on that observation. Six firms seem to be acting out of character with the performance of the vast majority of solicitors' firms which serve their clients' best interests. Has this been brought to the attention of the Law Society?

Ms Dowling

Yes.

Deputy Quinn

Has the Law Society acknowledged the concerns of the Personal Injuries Assessment Board are well founded?

Chairman

The questions can be answered together afterwards.

Deputy Quinn

That is the first question. Following an earlier presentation and meetings I had with members of the delegation I had a briefing from one insurance company. Ms Dowling has more experience of this than anyone else in the room. The company stated issues of confidentiality and competitive advantage informed it in terms of how it would reveal data to a third party such as the Personal Injuries Assessment Board. Is it possible to have a mechanism, introduced by legislation if necessary, to require the insurance industry to report cases in a manner which retains the competitive advantage of the industry or the particular company but gives the rest of us an outline? We would know the totality of the data rather than the identity of individual insurance companies.

The point was made that settling more quickly than other firms or having lower costs can be advantageous or disadvantageous for a company, depending on its point of view. Companies would love the industry to report but they themselves do not want to report.

Ms Dowling

On the first point we asked for a meeting with the Law Society and it has agreed to that meeting. We work effectively with the vast majority of the legal profession. We have concerns about particular firms running a campaign against us. Speaking for myself and Ms Byron, they run a smear campaign against us on a personal level in newsletters. Most recently such a campaign was conducted against a taxing master of the High Court who supported the PIAB.

Deputy Quinn

Is this through word of mouth?

Ms Dowling

No. This was in the last issue of the Law Society Gazette. He demanded an apology and considers that he was defamed.

Regarding data from insurance companies there is a sense of déjà vu about the excuse given. There is a way to do this. It can be done adequately through the financial services regulator. The figures on the level of finalisation of cases and the speed with which cases are being finalised is already part of the statutory returns from which I quoted. We seek a subset of that and want to know what portion of the 77% was completed within the 90 days without going through the full PIAB process. It can be done through IFSRA and given to us anonymously without the names of claimants or companies. We would have no difficulty with that. We have no desire to focus on any particular company; we are concerned about claimants in general and the competitiveness of the economy.

Ms Byron

In August I held a meeting with the Law Society to discuss the six firms and advised that I saw an unusual bell curve for rejection rates from them. The Law Society has a responsibility to clients and might want to look at this from a professional negligence point of view. There is an acceptance rate for the vast majority in the region of 70% to 80% but it was as low as 14% among these firms. We married the findings with day-to-day difficulties with the firms in terms of an inability to find medical reports or wages declarations and noticed a pattern. Our wonderful staff deal in a patient and professional manner with these difficulties.

As early as 2005 and throughout this year I asked for the data and met the chief executives of the major insurance companies and the Irish Insurance Federation. I have expressed an interest in the methodology of collation being undertaken in an aggregate format, with privacy and competition issues all covered. It was mentioned that an independent actuary may be appointed with other options but nothing has yet happened. At this stage we must ask if we are to receive the data and if the group sees it as important to see this through in terms of the figure of 40%.

Deputy Quinn

Is legislation required at this stage?

Ms Dowling

No, the Financial Regulator has the necessary powers.

Chairman

We will write to all the insurance companies this week and endeavour to get the information. If we do not get it, we will have a further public session with all of the insurance companies that will be addressed by the Personal Injuries Assessment Board. In fairness, we have received nothing but co-operation from the insurance industry.

Ms Byron

No one has refused the information. In some corners we received more co-operation than in others. We need all of the information for all insurances in a concise format. In some areas people wish to do something about this but we cannot get a joined-up response.

Chairman

We will try to help.

Deputy Callanan

I welcome the delegates to the committee and congratulate the PIAB on the great work it has done. It is good to hear that insurance rates have fallen by 35% because that was our initial aim. The board's ideas for further decreases are similar to what we have heard in many areas. Enough legislation is in place; it simply must be implemented, particularly that on penalty points and other road safety issues.

There are cost savings of €12,000 between the PIAB model and the old way. That will realise up to €40 million in 2007, an achievement that should be broadcast in order that the public knows what is happening.

If a solicitor makes an application, does all correspondence go to him or her or does the client receive copies? Surely there should be a change.

Ms Byron

That is the result of the McMenamin judgment. From the start, if the solicitor was involved, we would always send a copy to the claimant. We have no objection to doing it the other way around; it makes no difference as long as everyone is in the picture. That is why we are going to the Supreme Court.

Deputy Callanan

At least, if it was the other way around, the client would know if he or she was being codded.

Ms Dowling

We see no reason the consumer should be cut out of the process in his or her own claim, particularly when one of the most frequent complaints to the Law Society is from clients saying they have not been kept properly informed about how their business is progressing. There is an obvious need for that to be done; it is a recognised need and while we were doing it, 50% of people came to us direct. Since we have not been able to do it, 90% have been using solicitors. As the Chairman said, they do not know they have an option.

Deputy Callanan

There were concerns that fraudulent claims were not being persued in the courts. Could we have some elaboration on this?

Ms Dowling

Under the Civil Liability Act, it is not a concern for the PIAB in the sense that we deal with straightforward claims and everyone accepts they are genuine but, in the context of the cost of insurance, the insurance solicitor would say he or she needs such high reserves for the cases that go through the courts system. Under the will of the Oireachtas as reflected in the legislation, if a person exaggerates his or her claim, the entire claim is thrown out. It is not like the old system where a person had a go and while he or she may not have got away with €100,000, he or she would have received the €40,000 he or she would have been entitled to. The new law states that if a person exaggerates any part of his or her claim, the entire claim is dismissed. That is not being applied by the High Court and cases are on appeal to the Supreme Court as to the meaning of the legislation. Until such time as that happens, insurers cannot be sure that we will not go back to where we were with the compensation culture, which will also deter new entrants from the market until they are sure Irish law means what it states.

The Minister for Enterprise, Trade and Employment is going to England in November to emphasise the profits that will be available to new entrants and to talk about the reforms. Having been there, however, I know many of those underwriters will ask for the Supreme Court judgment on the exaggeration on payments to prove the old Irish way is over for good. Until they see it, they will not believe it.

Senator O’Toole

I should declare that I am vice chairman of the Personal Injuries Assessment Board. It has been encouraging for the board to enjoy the support of this committee and the Oireachtas in general. It is difficult to convey the pressure every month since the board came into operation. At every board meeting any one of three or four decisions could go the wrong way. It is like driving through a bog; one wrong move and we are up to our oxters in trouble. We are being watched at all levels; every single vested interest is looking at us. Most of the legal profession sees the reality and we do not have a difficulty with most of it. At least, we are now beginning to identify where problems lie.

The other important issue which the committee should examine is that of new players in the market. We are travelling to London soon to put the case for how this works, while trying to attract new companies into the insurance market. That will only happen when the Supreme Court judgment indicates how the process works and that will only happen when the civil liability legislation which ensures those who exaggerate their claims are dealt with sufficiently is in place. When that happens, we can demonstrate the PIAB model and will be able to attract new companies. We have been trying to do this for ten years but have failed to do so.

Where is the foggy area? There are around 35,000 cases per year, of which 10,000 come from the PIAB. The overall figure is 35,000, of which 10,000 are processed by the Personal Injuries Assessment Board and perhaps 5,000 dealt with in the courts. What is happening in the case of the other 20,000? The PIAB must have this information.

The PIAB has indicated that the figures should ultimately level out. It will give some comfort to lawyers and others to learn that in the long term approximately 40% of cases will be dealt with by the PIAB and a further 40% will be dealt with directly. We are encouraging this shift but we need to know this trend is taking place. If the Personal Injuries Assessment Board is to stay self-sufficient, it must be compensated in some way for this work.

The PIAB also envisages that the remaining 20% of cases will go through the courts but it must have access to the relevant information. While amendments in legislation may not be needed to secure this access, they may be needed once the Supreme Court issues its judgments. Other issues may arise but they should be discussed on another day.

Chairman

Does Ms Dowling wish to add to Senator O'Toole's comments?

Ms Dowling

Yes, I endorse the comments of our vice chairman. He has set out the direction in which we are proceeding. The PIAB cannot take full credit for many other external changes in culture. For example, in the area of employers' liability claims a new IBEC-ICTU voluntary code on workplace accidents has been introduced. Under this code, the injured party is to be treated as a patient rather than a plaintiff. People are dealt with humanely, with the result that litigation is no longer required in many cases. In the past, litigation was often motivated by the adversarial approach taken by the other side, for example, an injured party might decide to take the matter further because he or she was not reimbursed for small amounts of money, perhaps only his or her wages. The atmosphere has changed. It is extremely difficult to predict what the respective volumes of cases will be in the future but we can envisage the ratio of cases as between the courts and the PIAB.

Ms Byron

From an operational point of view, the group has done good work on the road safety initiative. Motor vehicles account for 50% of our book of business. As the initiative proceeds and personal injury claims and claims for fatalities decline, the number of claims being processed by the PIAB will decline. This is the reason it is so important, even from a self-funding point of view, that we consider the economics of not being paid for the work we are doing at the front end. A number of imperatives arise in this regard if we are to sustain our self-funding model. The positive result of a reduction in the number of road traffic accidents will be that we will process fewer claims in the formal sense and there will be fewer at the front end. We are examining this issue and producing models and projections based, for instance, on questions such as: What if the number of claims declines by 10% or 15%? When will this happen and what will the impact be? This is our focus from an operational point of view and the reason we must keep track of these matters. The data are, therefore, of critical importance.

Chairman

The Ministers for Justice, Equality and Law Reform, Health and Children, Social and Family Affairs and Transport have been of considerable assistance in our deliberations. It appears the dedicated traffic corps will increase in size from 575 members in 2005 to 800 in 2006 and 1,200 in 2008. When penalty points were introduced, the number of fatalities and serious injuries on our roads declined substantially. In our two visits to the United States we found that a dedicated traffic corps reduces the number of fatalities and major road traffic accidents. It even resulted in a reduction in crime of one third in New York and is, therefore, a win-win scenario.

The joint committee welcomes the announcement that 600 speed cameras will be installed at accident black spots with immediate effect.

Senator O’Toole

The Personal Injuries Assessment Board could not have achieved so much had it not been for the contribution of several individuals. Ms Dowling and Ms Byron have been the driving forces behind its success and their staff have been superb. The PIAB is a practical example of proper social partnership. Every political party was involved in it, with Deputies Richard Bruton and Rabbitte, the Minister for Health and Children, Deputy Harney, and several Ministers from the Fianna Fáil Party, making contributions to it.

Chairman

They include the Ministers for Social and Family Affairs, Enterprise, Trade and Employment and Transport, as well as the former Minister of State, Deputy Callely.

Senator O’Toole

That is correct. ICTU and IBEC, on the other side, had to gulp and grasp the nettle. I talked to members to of both organisations and it was difficult for them to support the creation of the PIAB. The insurance companies also bought into the concept of establishing an assessment board. Progress would not have been made if the various parties had not been prepared to support the PIAB despite the tensions among them.

My involvement in the PIAB was on the basis of my role in ICTU, rather than my political background. Difficulties arose because trade unions were concerned about whether their members would be looked after under the system and employers were worried that they would be dropped in it. Everybody had to take a leap of faith to enable the system to work. The next step must be to achieve a 50% reduction in insurance premia. We know this objective can be achieved if all parties continue to kick the ball forward together.

Chairman

We must acknowledge the Taoiseach's decision to make insurance the priority in 2004. This was done in the legislative committee, of which I, as Leader of the Seanad, was a member alongside the Government Chief Whip and Attorney General. The introduction of the four Bills requested by industry to make Ireland a safer place in which to travel and work demonstrated to everyone that the Government and politicians were serious and would support the good work Ms Dowling had done in her earlier report and the proposals it contained.

Deputy Quinn

I have a suggestion and a question. In cases referred by the PIAB to both sides and subsequently settled in an informal manner without reference to the awards system, does the PIAB have powers to charge an introduction or brokerage fee? Notwithstanding the high level negotiations between ICTU and IBEC, which tend to remain high level, the PIAB should tell its good news story to the various journals and newspapers produced by unions and employers, for example, Construction News. These publications often seek materials. It is important to get the message about the PIAB across to those who have had one accident or to employers who have a serious problem. This, too, has to be filtered out, although I do not dispute the value of the workplace code of practice.

Ms Dowling

There are two aspects to answering the Deputy's question. The first factor is establishing the data. As I explained, we cannot currently contact a claimant who has a solicitor to ask whether the case has been settled. We need to be able to do this in the first instance. This is the subject of a Supreme Court appeal and a change in legislation may be required. Once such approaches can be made, the PIAB will be in a position to establish whether cases have been settled. While we will consider the charging of fees in the context of business, we wish to avoid dissuading people from making settlements or informing the PIAB of the outcome of cases.

Deputy Quinn

The PIAB will wish to remain self-sufficient.

Ms Dowling

That is the other factor and a further legal issue arose in this respect. From an operational point of view, we have had cases of solicitors telephoning the PIAB at 6 p.m. on a Friday evening telling us they want us to take or refrain from certain courses of action. Before we have time to even consider the matter, we are informed at 9 a.m. on a Monday morning that they intend to take a case to the High Court seeking permission for a judicial review. The issue arose as to whether one could do what we are doing, namely, copying the information to the other side, outside the formal aspect of the process. Fortunately, the Data Protection Commissioner has endorsed our right and duty to do this because it is relevant, proportionate and necessary. This endorsement was given only recently but the PIAB is now more confident that its approach has a solid foundation in law. We will re-examine the matter from a business point of view.

Chairman

I thank Ms Dowling and Ms Byron for attending and their important analysis of the current position. They are doing magnificent work and it gives members great pleasure to have been associated with legislation that has assisted in achieving the progress outlined.

The joint committee adjourned at 11 a.m. until 9.30 a.m. on Wednesday, 25 October 2006.