JOINT COMMITTEE ON ENTERPRISE, TRADE AND EMPLOYMENT debate -
Wednesday, 15 Oct 2008

Annual Report 2007: Discussion with PIAB.

Vice Chairman (Deputy Cyprian Brady)

I welcome Ms Dorothea Dowling, chairperson, and Ms Patricia Byron, chief executive, of the Personal Injuries Assessment Board and thank them for attending today's committee meeting. The Chairman, Deputy Penrose, sends his apologies as he cannot attend the meeting.

I draw witnesses' attention to the fact that members of the committee have absolute privilege but that same privilege does not apply to witnesses appearing before the committee. Members are reminded of the long-standing parliamentary practice to the effect that members should not comment on, criticise or make charges against a person outside of the House or an official, either by name in such a way as to make him or her identifiable. I invite Ms Dowling to address the committee.

Ms Dorothea Dowling

I thank the joint committee for the invitation to meet with it today. We extend our good wishes to the Chairman, Deputy Penrose. I acknowledge the fact that Senator O'Toole, as one of the two Irish Congress of Trade Unions' nominees to the board, is vice chairman of the Personal Injuries Assessment Board. I wish to make some brief introductory remarks before I hand over to Ms Patricia Byron.

Members will probably agree that given the current economic challenges we are at least fortunate in Ireland that through the cross-party support of this committee we have tackled the 46% litigation overhead which had been on compensation for accident victims. The benefits we can see already include the reduction of the price of insurance, which according to the CSO index has reduced on average by approximately 50%. Credit for these operational achievements must go to our excellent CEO and our hard-working team to whom I record my gratitude this morning. Ms Byron will make a detailed but short presentation, as I am sure members are anxious to get to the question and answer session. We extend an invitation to another breakfast briefing, which members found helpful on a previous occasion.

I wish to highlight one area as a hazard. The last thing any of us need at the moment as we try to reignite enterprise, trade and employment is a major increase in the cost of insurance. Members are aware that affects the costs of all goods and services and in the past it has been the cause of major job losses. We must also remember accident victims. We have come a long way from 1996 when the Deloitte & Touche report to the then Minister of State, Deputy Rabbitte, showed us that it was taking five years for cases to reach trial before victims were compensated. Today injured parties know it takes a maximum of nine months for their PIAB award to be delivered.

There are two stakeholders in the whole project; the injured parties and the premium paying public, but it must be acknowledged that the current situation does not suit a number of vested interests. We must be careful about lobbying and threats, which are solely self-serving. The committee may have noticed recently that our chief executive roundly rejected suggestions by insurance brokers that premium rates were to increase by 20%. Insurers may have to reduce the super profits they have been making in recent years, possibly because they will have to strengthen their solvency margins, but as long as we curtail accident frequency — that is always the key — claims costs should not become an inflationary influence. Companies in Ireland have been making an underwriting profit. They have not been relying on investment income as, for example, insurance companies have been doing in the United Kingdom in recent years. There are also some threats from a small number of individuals in the legal community, which Ms Byron will explain to the committee.

At a time of straitened public finances, on behalf of the governing board we are very pleased to be able to confirm that the PIAB is a self-funding model and, therefore, not a draw on the Exchequer nor on any of the committee members constituent taxpayers. We see that situation continuing in the future.

In the context of public sector reform there are other areas where the PIAB could save the State many millions. We are currently in early discussions with our governing Department about extending our remit, for example, into the area of medical negligence. As members will see from the draft Bill for the PIAB, that was originally intended. I will deal with that point in more detail if members wish at the question and answer stage. I now hand over to our chief executive, Ms Patricia Byron.

Ms Patricia Byron

I thank the joint committee for the invitation to provide an update on where we are four years on. It is a privilege to speak on behalf of my back office and some of my team that are present. It has been a good and productive four years. We feel there has been a cultural change in society in regard to the way personal injuries claims are now resolved. Most people thought that every time one had an accident there would be a row and that there were legal matters involved. Of course, that is not always the case. We now realise that in the vast majority of cases one does not have to have a row or seek legal recourse. We are well able to get on with our lives without resorting to consultants and third parties. In fact, if one puts Mrs. Duffy and Mr. Smith in contact with one another, in most instances they are reasonable and want to get on with their lives. That is what we are all about.

I wish to fill members in on the background for those who may not know the detailed running of the organisation. I will respond to the committee's invitation to focus on the annual report and perhaps bring members up to date with some case studies and information on the year to date.

We were set up as a result of deliberations within the House on the soaring cost of insurance. Four to five years ago we saw on RTE news and in our newspapers that businesses were closing down. As we know the productivity of the country, no more so then than now, is built on small and medium enterprises, but the cost of insurance was ridiculous and was closing down businesses. We were set a task to administer personal injury claims. We are personal injury claims administrators with the remit to reduce the cost of delivering the claims compensation from A to B. In other words, we are the delivery truck that goes from A to B and we reduced the time it takes to bring that truck along the line and give the same compensation to the injured party. We were never asked to change the level of compensation but in eradicating inordinate costs in that journey and in that timeline we thereby reduced the cost of insurance. The results have proved that has happened.

I wish to outline a few key facts about the past. A total of 90% of injuries cases ultimately were resolved under €38,000. When we look at the statistics historically and when we look at them today after four years trading, the vast majority of claims are bone and soft tissue injuries or a combination of both. In the country at that time 30,000 writs and court summonses were issued every year as a matter of course. Once a claim was made following an accident two parties entered into dispute. There was always a perceived need for a dispute and a perceived need for legal proceedings to assist everyone back to good health. Fewer than 10% of those writs ever entered a court room and only 6% of the 10% were successfully defended. That waste was identified and that is what we were set up to tackle.

What we asked the staff of the PIAB to do was to look at the timeline and the delivery cost and nothing else in terms of tackling costs and to make sure people got the same level of money they got under the old system. A total of 90% of cases were resolved on the steps of the courts under the old system and that took, on average, three years. A total of €1 billion was paid out and it cost €450 million to get that €1 billion into the hands of Mr. Smith from Mrs. Duffy. The new model is now fully operational. We can say that with confidence. We were before the committee when we were still building and we offered promises and sought the confidence of the committee, but we can say that has been achieved and we feel we have delivered. The results are tangible, most importantly to the consumers, which is what we were set up to do as a State agency. That is our role as agents of the State.

There has been refinement in the legislation, and we have encountered throughout and continue to encounter, some stakeholder practices that are to say the least unsavoury.

The process is straightforward because it is purely one of administration. We need the application form which includes a medical report from the treating doctor, not a new doctor appointed to mount a claim, but the doctor who was asked to heal the person.

One third of the cases that come through our doors are not for us. Either they do not fit within our remit as set out in the legislation or they are disputed cases such as where Mrs. Duffy stated that Mr. Smith ran into her car when he was not even in the country on the day concerned. Such disputed cases are clearly for the courts system and we were never asked to deal with them. We were asked to release those cases to the courts and we do so.

We were tasked at the beginning to release that one third of cases, but we were also tasked to take the other two thirds of the 30,000 writs out of the system because they were straightforward, and that is what we have done. We have now reduced the delivery cost of getting that compensation to the claimants in a nine-month statutory timeline. As our staff take on board every day, that is not a service level but a statutory obligation.

Let us look at the annual report in a little more detail. We are delivering claims, resolutions and awards within nine months, in accordance with the statutory timeline. We are now delivering them at a cost which is less than 10%. I am proud to state that we keep that at 7% currently, despite taking on additional costs during the course of our four-year period. That is because we are committed to continuous improvement and efficiency drives. That is part of our business. Terms like "cost-benefit analysis", "modelling" and "value for money" are just part and parcel of the daily operation.

We were privileged to be a greenfield operation, and clearly it is easier for us to have started like that and continue to follow through on that basis. We are a paperless office and highly driven by technology where it is appropriate. However, clearly where we are dealing with human beings and their injuries, we deal with them by telephone and in correspondence, and look after them in a caring way.

The same level of awards continues. As I mentioned, 91% of claims are resolved under €38,000. We awarded €181 million in 2007. Two thirds of cases have been removed from litigation. Awards range from €1,000 to €620,000.

In terms of acid test results with the insurance industry, premiums have gone down in real terms to 1996 levels. The Financial Regulator's recent report pointed out that between 2002 and 2006, premiums have gone down by 40%.

The amending legislation to deal with some of the practices found to be interfering with the operation of the board was enacted in July 2007. As I stated, we have evolved our policies over the years in accordance with the experiences with our customers, the victims of personal injury accidents.

Our chairperson, Ms Dorothea Dowling, has mentioned that we are a self-funding agency. We are not a lean on the Exchequer. We set our costs against those responding to claims, predominantly the insurance industry, but there is the self-insurance sector which pays a fee on a case-by-case basis. It is good value for money because whether it is a €1,000 case, a €620,000 case or a €1 million case, we charge a flat fee because the administration on a €1,000 case is not any different in most cases than on a €620,000 case. The reason for this is that it involves a medical report or two, and the loss of wages calculation — the factor pumping in higher figures — but this does not necessarily make it any more complex. In fact, a small nerve injury to a finger could be a much more chronic case and require much more detailed consideration.

Some 97% of our fees are levied on those responding to claims. Delivery costs were 46% before we started up, they are now down to 7% and we are confident that we can keep them below a steady 10%.

We have a service centre for customers which is open between 8 a.m. and 8 p.m. six days a week. We have now enhanced our services by offering on-line functionality in terms of processing claims and gaining information. We have, as I mentioned, an ongoing efficiency programme and to ensure that people know how to access the service now that we have something to offer — now that we have built a service — this year we have notified people about access to the service in the form of a limited brand awareness campaign.

We also dealt with some judicial reviews along the way. We are just waiting for determination on an appeal to the Supreme Court. That case was resolved and we have the determination since the autumn of our first year of trading in 2005, and we have continued to deliver despite that determination.

On case studies, the committee will see in stark terms on the slide in the presentation an award of €63,000 which was delivered in nine months and where the delivery cost was a flat fee of €1,500. In another case, involving a motor accident, an award of €230,000 was also delivered in nine months at a fee of €2,000. The variation in the fee is due to the cost of the medical report where a specialty report was required.

The board thanks the Houses for the support we have received. It has been critical and essential throughout the building of this reforming model. We are committed to continued resolution times exceeding past practice and lower delivery costs. We are saving €100 million per annum and we have, I suppose, delivered in terms of the acid test in that the cost of insurance has come down and stayed down. I thank the committee.

Vice Chairman

I thank Ms Byron. There are a number of members who want to ask a few questions.

Deputy Deirdre Clune

I thank Ms Byron for her presentation. It is refreshing to see, four or five years later, how the Personal Injuries Assessment Board is working. We can see it has reduced the cost of premiums, which was the task it was set.

I will tease out a few areas which occurred to me during my preparation for the meeting. The first would be the involvement of the legal profession such as solicitors, who were against the establishment of the PIAB. The idea was that solicitors would be removed from the process.

I note that increasing numbers of people are involving solicitors and end up paying their fees, whereas the PIAB does not. Solicitors have become increasingly involved. Am I correct in saying that the claimants go to solicitors first to deal with the board? The claimants themselves will absorb the costs but, ultimately, does that not support the case that it would be easier to go to court where the legal costs could be paid by the court? I ask Ms Byron to address that issue.

It seems the number of cases going to court is increasing, but certainly not to 2003 levels. There are substantial increases evident over the past number of years. The number of such cases is creeping up. The figure I have for such case in 2007 is 595, whereas it was half that number in 2006. I ask Ms Byron to tease out those two points.

Vice Chairman

We will take two members' questions at a time.

Deputy Arthur Morgan

I, too, thank Ms Byron for making such a succinct presentation, and commend the board on the work to date.

In the first of the case studies to which Ms Byron referred, Michael was awarded €63,000. Was there a legal representative in that case? In the second case study, I note that the presentation slide stated that the claim was submitted directly. I assume that means there was no legal representative in that case. I wonder whether that was the case in those examples.

There is a point on which I am not quite clear. In cases where there is a legal representative, does the PIAB communicate with the legal representative, with the claimant or with both, or is the board prohibited from communicating with both? It is extremely important that the board would communicate with both, not that I would for a moment distrust men prancing around with 18th century horsehair on their heads — whatever they want to do themselves.

Are there many legal challenges to the board's work? Generally speaking, what is the nature of those challenges? I understand there were a number, but I am not familiar with their detail.

How would Ms Byron characterise the attitude of the legal profession to the board's work? We have heard about the significant savings. More than 50% of the total cost clearly was going into legal fees and all sorts of such costs. That, of course, would lead me to understand the legal profession might well have an axe to grind.

Ms Dorothea Dowling

I will answer the policy and strategy questions from the point of view of the board and Ms Byron can add to that. I will deal with the questions in order.

Regarding the involvement of the legal profession, the difficulty is that at the very outset we could tell people they had a choice. We could inform people that they did not need to use a solicitor if they felt happy enough to complete the application form, which is very simple, and that we would help them. At that time the office was open six days a week from 8 a.m. until 8 p.m., and we now operate on a 24 hours a day, seven day a week basis. When we could tell people they had a choice and they could make an informed choice, 50% of them chose to make their claims directly through us. As Ms Byron stated, the vast majority of cases are straightforward.

As Ms Byron indicated, following the initial O'Brien case in the High Court, which was taken in the autumn when we opened our doors, the High Court directed we could not contact a person who had a solicitor. We appealed that decision. We have no desire to cut out the legal profession where people want to employ either a legal professional or any other representative. What we want is to inform people of their choices, to tell them the service that is available from the board and then let them make up their own mind. We suspect that habit and tradition at the moment mean that many people are going to solicitors because that is what they have always done.

We find it extraordinary that as an independent statutory body we are prohibited from contacting any person who has a solicitor to explain how the system works, how long the process will take, or to refer to the one and only form one has to fill out and then outline the next two steps that one must follow. That is difficult to understand, especially given the result of the case in the High Court of Domican v. Axa Insurance Limited that held an insurance company could write directly to an injured party who had a solicitor. It is hoped in our Supreme Court appeal not only that we will be successful but that we will get clarity on this point because quite frankly I think at the outset there was a misunderstanding that perhaps we were trying to do down the legal profession. The legal profession has a rightful and important part to play in litigation cases but, as Ms Byron indicated, the vast majority of cases are not in fact litigation. The person one needs to ask about the adequacy of one’s compensation is one’s doctor, whether one is going to get better, if one is better, whether one’s condition is stable, whether one will suffer from arthritis in the future or if there will be any further come-back from an injury. That is medical advice not legal advice.

Originally, when people knew they had a choice there was a 50:50 split between those who wanted representation and those who chose to go directly through the PIAB. Time has moved on and, as the committee is aware, the O'Brien case has not prevented us from operating. However, the reality is that the vast majority of people have solicitors.

Regarding the question on litigation numbers, the number of personal injuries summonses in 2004 was 35,000. That was unusually high because many cases were rushed into the system in 2004 to try to circumvent the PIAB. As a result of that front-loading of personal injury cases, the number of summonses issued in the next two years was very low because all of the stuff that would normally have been issued in the following two years had been issued in 2004, plus the new statute of limitations came into effect.

For the purposes of sound statistical comparisons I would ignore 2005 and 2006. We are going from a situation where we had 30,000 writs generally to 13,000 in 2007, which is approximately one third. If one goes back to the early days of debates in both Houses on the role of the PIAB, we always said that one third of cases would be more appropriate for the courts. We had absolutely no desire to trespass on that area. From our point of view the two thirds, one third split is now being achieved and is the way we see it in the future. There are cases that must involve solicitors, barristers and oral hearings. As members are aware from the Courts Service's annual report from which we drew the figures, there are only 1,000 oral hearings per year. They are the cases that involve debate and require time, whereas we can pursue a large volume of personal injury awards.

Deputy Morgan referred to the attitude of the legal profession. A total of 99% of the profession have got real with the new world. They are business people and they are getting on with things in their own interests and in the interests of their clients. Six firms continue to cause us difficulty. Ms Byron will deal with that matter in the context of seeking assistance from the committee and the Houses of the Oireachtas when the ruling on the Supreme Court case has been delivered and we know exactly what is its guidance. If the outcome is that there is a defect in the legislation and that we should have had express power to do A, B and C, then obviously it is a matter for the Houses of the Oireachtas as to whether they wish to make such an amendment.

Ms Patricia Byron

Deputy Morgan asked about the case studies. The first case study, which was on the lower amount, was through a solicitor and the higher amount was direct. In fact, I think it was an elderly lady, which is very interesting.

Ms Dowling alluded to communications. In the early days we wrote to the solicitor and copied Mrs. Duffy, as we called her or Mr. Smith, which we felt was the right thing to do because that is what we were hearing through the service centre. People were saying when they were on the telephone that they wanted to be kept in the loop as it was a way of making sure they were getting service from the third party. We sent the papers out. The High Court decision was that Mr. Smith and Mrs. Duffy could not be copied. We feel that is wrong and that both parties should be kept in the loop. That is not just based on our own personal views, it is based on the experience at the front line. In cases where we have made awards, people have queried a fee to us because their solicitor did not inform them we had assessed their claim. When queried, we discover they may have signed forms. We feel that clarity and transparency is critical where the claimant who is employing the third party must have access to paperwork. That is something we will all have to review in the light of the determination of the Supreme Court.

As the chairperson mentioned re legal challenges I am heartened by the professionalism of the legal experts four years on. They were not very happy about taking €450 million in fees out of the system in the early days but to a large degree everybody settled down. However, a number of firms challenged us in the early days and, unfortunately, they continue to do so.

When I talk about unsavoury behaviour, one of the key challenges currently is non-attendance at medicals. There is only one document that allows us make an award and that is to have a medical report. I want that medical report from the treating doctor, not from some doctor who never knew Mrs. Duffy and who did not deal with the injury when she was being treated. We have poor information on non-attendance in regard to some solicitors. We have written to the Law Society, which has said it will engage with us on the matter. We hope to make progress on the issue. What we experience, for example, is a solicitor with 80 cases in ten months and where 71 of those medicals are not attended. Perhaps it is the fault of the clients rather than the solicitor and he or she is just unfortunate. It seems an unusual bell curve when usually non-attendance is somewhere in the region of 8% or 9%.

Deputy Leo Varadkar

Are those medical appointments the PIAB had set up with an independent doctor?

Ms Dorothea Dowling

Yes. The treating doctor's medical report comes in to register and that gives us a snapshot of the actual injuries. We want to make an award within nine months so we let the injuries settle down in order that we can make a correct award and there are no snap decisions. The vast majority of claims are under €38,000 and relate to soft tissue but we use the statute period to make sure the injuries have settled down. We set that appointment up around month six or seven in the early days so that we are bang on time. When a case is registered we contact the doctors and say that in six months' time and at such a date we would like Mrs. Duffy to attend to check that nothing new has come along of which we should take account in making a correct award.

In some instances what we find with a limited number of firms is that there seems to be a difficulty with their clients and not with other clients in attending medicals. Those solicitors say they have notified their clients but we receive letters from doctors informing us that when notification was given of the cancellation of an appointment because a doctor was going on holidays, Mrs. Duffy did not even know she had an appointment.

Deputy Leo Varadkar

Did the client have any medical report in that case?

Ms Patricia Byron

In that instance the difficulty for us is that we are left with a medical report that came in at registration point and because it is not a mature medical, as it is too early, that leaves us with insufficient information to make an accurate assessment. We are obliged by the Act to make an assessment, so it is not as if we could say we cannot make an assessment as the information is incomplete. We are obliged to make an award on incomplete information and such an award could be rejected. A more complete medical could arrive at a court sitting at a later stage. If, genuinely, in 95% of cases in one firm of solicitors, or in some firms, the clients are unable to make their appointments, it concerns us given that the vast majority of solicitors are able to have their claimants arrive.

Deputy Arthur Morgan

Does the board get the impression the Law Society is engaging constructively with it? Has the board had a number of engagements with the society? What was the temperature of those meetings?

Ms Dorothea Dowling

I wish to comment here, and Patricia can answer on her dealings from an operational level? It is fairly clear the Law Society does not have any control over its members, who are individual practitioners. If they decide to adopt a certain strategy, the Law Society cannot dictate to them. We encounter many such instances.

The Supreme Court will deal with the O'Brien case in due course and we will study it with caution. The O'Brien case means that in the situation of which Patricia spoke we cannot write to an injured party stating he or she has got an appointment in two months' time. What can be the problem with a person who has a solicitor getting information from us about the medical appointment? The person can be asked to contact us. If the appointment does not suit him or her, we can arrange an alternative one.

I will give the committee another example involving firms of solicitors who were closed down in recent times — it will not take the Deputy much time to figure that out. Claimants contacted us to know if their settlement cheques had gone out and we could not answer them.

It seems a draconian limitation on the effort of a independent, statutory body in the 21st century to communicate with educated, intelligent people. Not everybody is vulnerable. There are vulnerable people for whom we must have special arrangements, but the vast majority of people will not be misled by the board by getting simple information such as details of a medical appointment so that their claims can be progressed.

Vice Chairman

If we could continue, we are finished with the first two members' questions. I ask that we move on.

Ms Patricia Byron

Will I just finish?

Vice Chairman

Go ahead.

Ms Patricia Byron

Another example is a letter from a doctor stating that an appointment has been cancelled on the advice of the solicitor not to attend the medical. Our doctor asked for MRI scans because the claimant had attended for a scan but the claimant was advised by her solicitor not to divulge the MRI scans.

We are dealing with factual information. All we want is fact — copies of papers of real fact to both parties, transparency of fact between parties.

We do deal with some claimants directly and, as Dorothea stated, in the early days, before the O'Brien judgment, we dealt with 50% in that way. That was a great deal, bearing in mind the cultural shift in a few months.

We find that claimants want to go for medical examinations because they want to have closure on their claims. I personally do not know many claimants who do not want to go to the doctor to get the medical out of the way and finished, and their award determined within nine months. We are puzzled by this sort of behaviour in these limited number of firms or the clients of these firms. I must emphasis that they are unusual in that their clients have a higher non-attendance rate than anybody else. Perhaps all the letters are going out and perhaps none of their clients want to attend.

Deputy Chris Andrews

I thank the delegation for its clear presentation. I ask them to clarify what was stated earlier. Is it true in every case that the likes of Mrs. Jones, once she hires a third party to represent her, will not get information back? Claimants who apply on their own will obviously deal with the board but if they hire a third party, will they never get information and will it be up to the solicitor or the legal person?

Ms Patricia Byron

In the early days the solicitors devised a mandate, it seems across the board, which was signed by their clients stating that they would pass on the handling of the claim entirely and exclusively to the solicitor and that there would be no correspondence with any party but the solicitor. That bars us, even when the claimant telephones us.

It is not usual by any means for claimants represented by solicitors to telephone us stating that this matter has been going on a while and they are not sure what is happening, asking for an update on the file, and even asking when the board would like them to go to a doctor. We say that we cannot speak to them. They ask what we mean by that and why we cannot give any details because it is their claim. We reply that they have signed an exclusive mandate. Some legal opinion, which I must question, indicates that such claimants cannot back out once they have signed that mandate.

Deputy Chris Andrews

It could be that a payment is made through a solicitor or legal representative who may be sitting on the cheque. Is the board aware of such cases or is there just anecdotal evidence?

Ms Patricia Byron

We operate to tight timelines. We understand difficulties are being encountered. When we make an award there are 28 days for the claimant to accept or reject it. One of the main issues I was most concerned about when the O'Brien judgment came through is that Mrs. Smith or Mr. Jones had the full 28 days to consider whether that was a correct award or not. If, however, that gets stuck in a third party's office, clearly the claimant is not getting the information in a timely fashion, even for three days. Why should the claimant not have the 28 days and receive a copy of the correspondence at the same time?

It is important to emphasise, as our chairperson, Ms Dowling, indicated, that all we are talking about here is transparency. People understand that the vast majority of claims do not involve dispute, that it costs €50 to process one's claim direct through the board, that one must decide on the value-for-money proposition of bringing a legal person in on a case that does not involve legal matters because all we do is evaluate the nature and extent of injuries and put a financial figure on it.

Ms Dorothea Dowling

This irrevocable mandate which clients sign stating that under no circumstances should they have any communication with the PIAB, is a communication drafted by the Law Society and circulated to all its members and is on its website.

Deputy Chris Andrews

It clearly needs to be addressed. It is a matter of transparency. If claimants are not getting all the information, it leaves them vulnerable to being taking advantage of.

In reply to one of the questions, Ms Byron mentioned unsavoury action by some legal practitioners. Following on from Deputy Morgan's question, is the legal profession still trying to obstruct the workings of the assessment board? She mentioned that the same firms keep coming up. Are there the usual suspects? Are there those who are just causing difficulties and, if so, how can those usual suspects be addressed? Clearly, there is a difficulty if the same practitioners are obstructing the work of the assessment board.

Ms Dorothea Dowling

In fairness, as I stated, 99% of the profession have got to grips with it. They do the work. They are getting on with business.

Deputy Chris Andrews

What of that 1% who take advantage of people?

Ms Dorothea Dowling

As in all profession, it is the 1%, as I think the Deputy will agree. From the board's point of view, we will not come back to the Houses to do anything about that until we have clarity from the Supreme Court in the O'Brien case. It may be a simple matter of the Supreme Court stating there is nothing wrong with the Personal Injuries Assessment Board copying the client or sending details of a medical appointment directly to the client, but those express words are not contained in the legislation. In that instance, we will come back to the Houses to suggest, in everybody's interests, that should be done. That would get rid of many of the problems.

As regards the few firms, one caveat I must add to the question of self-funding is that these, often unnecessary, judicial reviews and other challenges, and the waste of the operational resources, are a cost to the taxpayer. While the board is self-funding, our fees under the legislation can be used only for the making of assessments. When these few firms, who constantly launch these challenges, challenge the legislation, it is the Minister who must fund the defence of the legislation and it is the taxpayer who pays both sides' cost in those judicial reviews. These costs amount to a substantial sum.

At one time we thought there was a new game in town whereby, as personal injury fees had dried up, there was a view to go for judicial reviews as replacement income, but that seems to have dried up.

Deputy Chris Andrews

Is it possible to get a list of the firms who cause problems?

Ms Dorothea Dowling

I suspect not, due to the confidentiality of the litigation. The matters have not been heard in open court.

We in the board have in mind ways of tackling the matter once we have the O'Brien case out of the system. From an operational point of view, the chief executive is in touch with the Law Society to try to resolve the issue.

Deputy Leo Varadkar

I thank the delegation for attending. I am generally impressed with the work of the Personal Injuries Assessment Board. It is a rare public body which manages to cover its own costs, reduce the costs of business and provide some compensation for victims with injuries. In that regard, by and large, the board is doing a very good job.

To follow up on the issue raised about unsavoury practices, I am not clear about the solicitors' motivation. Is it the case that they may be trying to conceal a bogus claim and that is why they do not want their clients to go to an independent doctor or is it that they have an interest in the matter going to court in order to get more fees?

Ms Dorothea Dowling

Personal agenda.

Ms Patricia Byron

I must preface my remarks by saying they may be unfortunate in that their clients do not attend but——

Deputy Leo Varadkar

On the balance of probabilities it is unlikely.

Ms Patricia Byron

Yes. It certainly raises concerns. A proper medical report is the only document in our office that drives an award. A complete medical report is needed because otherwise we will be hampered in making a correct award. If the right award is not made, it will be rejected by the claimant and the case will go to court. In a court environment there are opportunities to earn legal fees, whereas there are no such opportunities in the PIAB environment. A court environment involves litigation and is adversarial. A case has to be mounted and the costs must be paid. In the PIAB environment there are no legal issues, negotiations, mounting of cases or oral hearings. It is a simple, lean administrative process and we have only one function. We establish the facts regarding the two parties, the nature and extent of injuries, and make the award based on the book of quantum which tracks court awards. It is a very straightforward process. In cases in which there is not a medical report, there is a lacuna in which fees can be earned.

Deputy Leo Varadkar

Do I understand Ms Byron to suggest some firms, rather than looking after the best interests of their clients, are trying to ensure cases go to court to allow them to accrue fees? Is that correct?

Ms Patricia Byron

It is important that we keep the customer at the centre of the process. The customer is the claimant and the victim of the accident. It is in his or her best interests to have every chance to have his or her claim resolved within nine months with the lowest possible costs and the stress of the incident put behind him or her. It seems most unusual that Mrs. Jones would not want to attend the medical appointment and, at least, have the opportunity to consider a full award based on the full facts.

Deputy Leo Varadkar

Does Ms Byron believe the board has a duty to allow ordinary people to become aware of the firms they should perhaps avoid in this context?

Ms Patricia Byron

That is something we will discuss with the Law Society. We take the matter very seriously and expect it will do its duty in any actions it considers appropriate and necessary once it establishes the facts. It will be up to it to examine the matter. As the Deputy is aware, it is both a regulatory and a disciplinary body, something which has been often commented on. It is one of the issues it will have to take under its wing and consider. I presume it is a challenge for it.

Vice Chairman

I presume that will have to wait until the court case is finalised.

Ms Dorothea Dowling

I do not want to sell any false promises. Numerous situations arose where we found that there was a long-standing need for the establishment of a legal services ombudsman. That legislation is at an early Stage in the House but has not progressed. The PIAB will not be the banner bearer in that fight. There are lacunae in the law which must be filled by the Houses of the Oireachtas before the matter will be resolved in the round, rather than the PIAB being left to battle on its own.

Deputy Leo Varadkar

I understand that in some cases insurance companies settle cases that go before the board but which have not been determined by it. Is the board able to find out the details of these settlements and how they compare with what the board would have awarded to allow it do a price analysis?

Mention was made of the potential for expanding the role of the board. As a member of the medical profession, I can see major benefits for injured patients, doctors and the health service in having a similar system for medical insurance. To take obstetric injuries, in particular, obstetricians have to pay millions of euro in insurance, which has a knock-on effect on the quality and cost of care. Those payouts are made largely not because of negligence on the part of the doctor or the hospital but because that is the only way children born with cerebral palsy can receive some support. Does the board see its role being extended into the area of medical injuries, Army deafness claims and other civil torts?

The terms "PIAB" and "injuries board" are used. What is the correct legal term? Is "injuries board" just a brand as opposed to the legal name?

Ms Dorothea Dowling

To answer the last question first, I must apologise to the chief executive officer. I tend to continue to refer to the PIAB because I deal with the statutory term, that is, the name according to the legislation but our trading name is injuriesboard.ie because we are available on-line 24 hours a day, seven days a week. That service only started in June but is working very well.

On direct settlements, we have two concerns. One relates to the data because if cases do not go through the full assessment system and people deal directly with the insurance company, we will not know the compensation levels paid. Therefore, we will not be able to track to the extent that we would wish the savings the insurance industry should be passing on to the consumer. We have had a difficulty in obtaining data from the industry on that front. The Financial Regulator informed us it did not have the power to obtain the data. We are working on the matter through the Department and making progress in that regard. Ms Byron will give members more detail.

The other concern we have from a board point of view is that because we cannot contact people directly, some may be making direct settlements with what I might call aggressive insurance companies for figures well below the value of their claims. We would like to have the data because if we could contact the people concerned directly, we would be able to suggest to them that if, in the meantime, they were offered a sum of money in settlement of their claim, it would be feasible for them to take it but we would have an opportunity to give them the guidelines on the compensation payable for the injury involved. That would ensure a person who may be offered €2,000 for a leg injury would be in a strong position to refer to the PIAB's book of quantum,and be aware that it would award an amount between X and Y, depending on a doctor's assessment of the seriousness of the injury. It is about empowering the consumer. We are delighted people are settling their cases directly but would prefer to see more of them coming through the PIAB process to ensure those who have waited long enough to have a stable medical prognosis are gaining the full value of compensation.

On our remit, it was originally intended that medical negligence would be included in the Bill but members may recall that in 2003 there were discussions about the enterprise-wide liability system which was to be put in place in order that in multi-party litigation the decision would not have to be made as to whether it was the nurse, the anaesthetist or the hospital that was at fault. That issue has now been resolved and, undoubtedly, there is great scope for us to assist with the public sector reform programme in that regard.

Ms Patricia Byron

On the insurance companies, when the board was set up, there were 30,000 writs involving accidents. While one third go to the courts, they do not make it into the courtroom. The number of hearings remains at 1,000. At the height of activity in this regard there were approximately 3,000 hearings in any one year. Of 30,000 writs, there were 3,000 hearings, with 6% being successfully defended. A total of 20,000 writs have been removed and they are being dealt with by the board. We will make approximately 10,000 awards. On what will happen to the other 10,000, we opened a service centre and put the parties in contact with one another. We copied the papers to them and told them that if they could settle among themselves and as long as the case was settled at the right amount, we did not have a problem with this. Our advice and information centre is open all the time in order that Mrs. Duffy and Mrs. Smith can come back and we can tell them that they can go to a third party, even a solicitor or any other person proficient in the area, to make sure the amount is correct. Some 10,000 cases are being settled by this service but that does not appear in the statistics because the insurance industry is not providing the statistics. That is very important because that could allow us drive insurance costs down further.

The statistics we produced here are based on the statistics we have on the awards we make but we have set up and teed up by facilitating complete transparency on the lower range claims for resolution. The vast majority of the claims are soft tissue injury claims. A routine whiplash claim does not need the full award process of nine months. It does not need to be in our system. We are happy it gets resolved as long it is resolved and settled at the right price. It is the more truculent soft tissue injury that needs nine months, and it is the most unusual one that may need a further period beyond the nine months or maybe there is a legal dispute which takes it into the court system.

If one takes it along a continuum, in regard to that first tranche of claims we are not getting access to the data. It was in 2005 that we first asked the Irish Insurance Federation with which we have had many meetings and much correspondence. I passed it to the Department of Enterprise, Trade and Employment in the past number of months. It has been working hard on it over the summer and I am grateful to the officials there. They indicate there is a possibility that the Central Statistics Office may have some legislative powers to compel this information to be made public. If that does not prove to be the case, clearly we will want the assistance of the House in that regard as well.

Senator Brendan Ryan

I thank Ms Byron for a very clear and concise presentation. I have three questions. One relates to the awards and the nature of claims. The presentation indicates that awards range from €1,000 to €620,383. Are there any claims where there are no awards? Does the board get involved in assessing blame where there has been an injury or loss but the loss is associated with an individual not behaving in a way he or she should have behaved? Perhaps the board could comment on that aspect. That is an example of a case where there has been an injury. In the past there were spurious claims as well where it was doubtful that there was been an injury. Does the board make assessments in such cases?

My second question relates to trade unions. In the past, in a unionised workforce the first port of call for people with an injury was to go to their trade union and initiate the sending of a letter from the union's solicitor. How have unions responded to the changed circumstances since the board was set up?

If I were presenting results for 2007, in a previous existence I would be ticking all the boxes having achieved all my objectives. I compliment the board on a great performance. What are the next challenges in terms of improved performance for the board?

Ms Dorothea Dowling

I will take some of the strategy and policy questions and Ms Byron will deal with the detail. In relation to the trade union role, we have, in the statutory body, taken on what was the IBEC-ICTU voluntary code for workplace accidents and therefore the trade union representatives have been very involved in this throughout and were very much part of the process and they play a crucial role.

As to the membership using firms of solicitors who might act traditionally for trade union members, their subscriptions as trade union members cover those legal fees, so there is a slight difference there in regard to that subset from the market in general. We could never have launched the PIAB without the support of the trade union movement. I put that on the record. We have Senator Joe O'Toole as a nominee of ICTU on the board and we have a second ICTU nominee, Mr. John Fay.

In regard to spurious claims, I would not suggest that we should become complacent about exaggeration — I use the word "exaggeration" advisedly — as opposed to fraud because we had a big problem in Ireland. The reality is that there is a changed culture. Members may have seen the advertisements regarding the fraud helpline. In addition, the Houses of the Oireachtas tackled this through the Civil Liability Act 2004. There is now a fine of €100,000 and a potential jail term of five years for any exaggeration in a personal injury claim.

Furthermore, if any element of a claim is exaggerated the entire entitlement to compensation is lost. There is a big division here now between what I would call straightforward clean claims where there is no question of blame which run through the PIAB, and the one third of cases which continue, rightly, to go through the courts where there is an issue of blame, which is not a matter for the PIAB. Such cases must go to court. It is entirely a matter for the respondent to decide whether to fight the case in court, whether there is evidence to fight the case in court.

Very often in cases which would not traditionally have been regarded as a legal issue, for example, where somebody rear-ends one, one sees such cases coming to court with a section 13 affidavit under the Civil Liability Act. In such instances one must state that after one was rear-ended everything one said in regard to one's claim is absolutely true, to the best of one's knowledge and belief, and if it is not every part of the claim will be thrown out and one will face a fine of up to €100,000 and-or five years in jail. That has had an electrifying effect on the chancers, the people who perhaps started off as quite genuine but then got sucked into a system and the claim has been going on for years, and there is a certain amount of "compensationitis".

I will pass over to Ms Byron to answer the question in regard to the no awards data.

Ms Patricia Byron

The board makes awards to any value, unlimited. In last year's figures we are only getting to near full flow. It depends on the mix of claims that come through the door. It is important to state that the ceiling for pain and suffering as set by the courts is €300,000, so any figure above that is to do with calculation of hospital bills and loss of wages. Big figures mean very little. It is a matter of punching figures into the calculator.

In regard to zero awards, in last year's statistics there were two zero awards. I have been discussing this with my colleagues and there will be a column for that next year because there will be more zero awards, given that there are instances where an injury does not warrant an award. Where there is an injury and there is some doubt as to whom the injury is attributable to, that is called split liability. If it is of such serious import it may be better dealt with in the courts. That could be a situation where somebody trips in a shopping centre and it is not clear whether the fault is that of the person who laid the tiles, the person who put in the electrical wires, the builder who was in the previous week or the person who owns the premises. There could be an issue that would be more appropriately dealt with by the courts. We look at that early on and send the case on.

Some insurance companies might be of the view that contributory negligence compensation from another party would only be a couple of percentage points and that the PIAB is saving them some 35% over the old system in costs and that it is not worth arguing over single digit percentages and, on a commercial basis, pass the case to the PIAB to be resolved.

As Ms Dowling said, we are not really involved in spurious claims, but we have impacted upon them. Under the old system, claims were in the litigation system for an average of three years. Many were in the system for many years. I always felt, just as a journalist would feel, that a trail only gets colder the longer one leaves the file open. It is very hard to go out and find the garda, the nurse or the doctor, many years on when a case has built up a lot of greyness around it which possibly could have served the third parties that build up those grey files. The model that has been developed by the board now requires that a decision to consent or not to the process must be made in 90 days. This means one must go out and do one's investigations, whether one is an insured party, and insurance company or self-insured and get the evidence together and decide whether one is liable.

It is now proven to be the case that the vast majority of claims are not dreamt up by claimants. The accident occurred on a particular night, Mr. Jones did send his car into Mrs. Smith's or there was a defective machine on the factory floor. Once there is clarity around that, that is the end of the dispute. A problem was caused and let us get on with life and evaluate the nature and extent of the injuries. By putting that deadline of 90 days one finds the vast majority of spurious claims are weeded out early. There is still a small number of other cases which are fully disputed in the court system, and we release them into the court system.

On employer's liability claims, Ms Dowling referred to the workplace practice initiative which has worked extremely well from the point of view of the unions because employers and employees now sit down together. The days are gone when an employer would go to his or her solicitor and an employee to the union solicitor and both would deny the truth, even though they had worked together for ten or 20 years and had had good relationships until then. Our statistics show that employer's liability claims are low because they are being resolved early in the process because of the transparency afforded by this model.

Vice Chairman

The board has had a huge influence on the premiums and other charges of insurance companies but, given the global financial turmoil, particularly as it affects international companies, does the board envisage insurance companies using the climate to increase premiums or undermine what has been achieved?

Has the board, in the four years since its inception, witnessed a change in how a client initially makes contact? The board has a website and uses publicity campaigns but do clients use it or does it rely on referrals?

Ms Dorothea Dowling

Members of the committee probably know my views on the insurance industry. Earlier in the summer the fact that the banks of our rivers were bursting was given as a reason for putting up the cost of insurance. The fact that the other banks are in trouble is now given as a reason for putting up premiums. Such statements must be taken with a very large grain of salt. It is important not to get caught up in the white noise surrounding these events and allow the impression to be given that people should expect motor insurance or employer's public liability insurance premiums to rise on account of the cost of claims. That would be totally unjustified. However, we must accept the reality of the capital markets. Insurance companies need capital for solvency but in recent years companies in this country have been making underwriting profits, before any investment income is taken into account, of many multiples of those in the United Kingdom. There have been huge dividends paid to shareholders, creating huge reserves which they may now have to call upon, meaning they will show lower profits than the super levels they have shown in recent years. Again, this would not be a justification for putting up premium rates for motor liability insurance, provided we keep a focus on accident frequency which, according to our cost-benefit analyses, is an important factor. We are doing very well on that score relative to the targets of the Road Safety Authority but much needs to be done and, if the number of accidents increases, the postion might change.

The difficulties the banks are experiencing as a result of the credit crunch will be visited on sectors of the insurance industry. Many members will be aware of premium protection policies where insurance companies will pay the mortgages of people who have been made redundant. The banks also have massive credit insurance, although the extent to which it is underwritten in Ireland is not clear.

We have not talked about indemnities for the insurance industry because a solvency programme is in situ in the form of legislation to provide for cases of administration, as happened in the cases of ICI and PMPA. I hope that will not come to pass but if I were chief executive of an insurance company, I would be able to give the committee many excuses for putting up premiums. These excuses have to be dismantled and analysed individually as various factors operate. The PIAB interface is solely with motor and liability claims and in those areas there is no justification for an increase, provided accident frequency continues to improve.

Vice Chairman

What about the question on the way in which clients make contact with the board?

Ms Patricia Byron

I will add a point on the cost of personal injury claims. They are the only claims that impact on the bottom line and drive premiums. There has been an increase in accident frequency in the books as a result of accidental damage claims such as fender benders. In recent years most of our young people have bought new cars and taken out comprehensive insurance cover. They like their cars and make a claim if they have a scrape but the figures are small. There may be higher volumes of accidental damage claims but the value of personal injury claims which makes the heaviest impact on premiums has decreased and that has brought down premium bills. If we keep the number of deaths on the road down and the good work of the Road Safety Authority continues, it will keep the cost of personal injury insurance down. The Bacon report stated eight personal injury claims arose per death on the road. This impacts on the personal injury bill. There has been an attempt in recent weeks to suggest premiums may go up but, as Ms Dowling said, we need to look at such statements with a forensic eye. For those who understand the system it is very important that credit insurance losses are not mixed with personal injury losses and the cost of motor insurance claims.

On contact with the agency, in our first six months 50% of claimants came to us directly. They paid their €50, sent in their application forms which are similar to the forms for a passport or taxi licence, with a report from their treating doctor. After the O'Brien case people decided they needed legal advice when no legal issues were involved. Now in the vast majority of cases solicitors are involved. However, that is not a case for legal fees. If solicitors are involved in cases where there are no legal issues, Mrs. Duffy should know she can process her claim for €50. The brand awareness campaign has helped and the number of hits on our website has risen enormously. The representation rate has dropped but we cannot make any serious progress in that regard until the O'Brien adjudication is dealt with by the Supreme Court. We will consider what steps are necessary at that stage.

Vice Chairman

On behalf of the joint committee, I thank Ms Dowling and Ms Byron. There is universal recognition of the work the board has done and I wish them well in their work. There was a suggestion about a further breakfast briefing, as many Members of both Houses found the last one very helpful. Perhaps the delegates will keep us informed of developments in that regard.

The joint committee adjourned at 11.40 a.m. until 10 a.m. on Wednesday, 29 October 2008.