Rising Cost of Motor Insurance: Discussion (Resumed)

Apologies have been received from Deputy Sean Sherlock. I remind members and witnesses to ensure their mobile phones are switched off. This is important as they cause serious problems for broadcasting, editorial and sound staff.

This is session A on the rising cost of motor insurance. We will meet representatives of the Injuries Board and the Society of Actuaries in Ireland. I welcome Mr. Conor O'Brien, Mr. Stephen Watkins and Mr. Maurice Priestley from the Injuries Board and Mr. Gary Dunne and Mr. Ronan Mulligan from the Society of Actuaries in Ireland. The witnesses from each organisation will make opening remarks for five minutes and we will then have a question and answer session involving members.

I draw the attention of witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.

Members are reminded of the long-standing ruling of the Chair to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.

Mr. Conor O'Brien

I thank the committee for the opportunity to present today on this very important issue. I introduce my colleagues, Mr. Stephen Watkins and Mr. Maurice Priestley, who also work at the Personal Injuries Assessment Board, PIAB.

The PIAB is an independent, self-funded, State organisation which was established to provide a low-cost, speedy delivery model for the settlement of motor, employer and public liability claims. We assess personal injury claims. We have assessed more 100,000 to date and we have awarded in excess of €2 billion in compensation to people who have been unfortunate enough to be involved in accidents. We remove cases from unnecessary litigation, and up to 70% of cases no longer have the need to go to court if they use our process. We offer a low-cost alternative to litigation, and our processing costs were at their lowest levels last year, at 6.5% of the award. We make compensation payments to injured parties in line with the book of quantum, subject to prevailing rates, and our average award levels have remained consistent over the past five to six years. We publish statistics regularly on the number of applications we receive, the average award, the time to settle and the settlement costs. Through our process we also preserve the right of access to the courts if that is required and people's constitutional rights are not impinged upon.

I want to bring the committee briefly through our process and to give a high level overview of it. If somebody is involved in a car accident he or she will try initially to settle the claim directly with the insurer. If that cannot happen, a claim is then submitted to the Injuries Board which will ask the insurer if it consents to the board assessing the claim. If consent is granted, we proceed to assess the claim. If consent is denied, the case can proceed to court. At that point, but only at that point, we will issue a writ.

The case is then assessed. We must assess such cases within a nine-month timeline. We have an average assessment time of seven months currently. Once the assessment is finished, taking in independent medicals, etc., a notice of award is sent to both claimant and the insurer. The insurer and claimant must then decide whether they want to accept the award. If both parties accept it, a notice of award is sent to the insurer and it must be paid within 28 days to the claimant. If either party rejects the award, then and only then may a writ be issued for the claimant to proceed to court.

I have spoken in the past few minutes about our set-up and process. It is very obvious that there is a significant problem with insurance premiums in the country, particularly as they have risen by over 70% in three years. This has had a very significant impact on the public and, potentially, our overall national competitiveness. It is a very complex issue, with many reasons being cited - to this committee and in the media - for the increases. Those reasons include underpricing and under-reserving, increased claims, investment returns, increased fraud, levies, the failure of Setanta, changes to the legal environment and Solvency II. What is not clear is the contributory factor of each of these items to the overall issue. Specific information breaking down the size of those issues would lead to better targeting and resolution of the problem.

It is not entirely clear how claims are contributing to the issue, and that is specifically of interest to us. Our figures in recent years do not support the level of increase in claims and we cannot see how it would justify the increases we have seen. It is also very important to consider what has changed with respect to the level of claims and awards. One can look at the average level of award at €22,000 and see what has changed in recent years, driving into that increase in premiums.

I have a brief description of the different settlement channels that outlines the data available and different facets of those channels. Claims may be settled directly between parties - the insurer and the claimant. Claims may be settled through the Personal Injuries Assessment Board, PIAB, channel or through the courts. The biggest issue, as many people have said before us, is the lack of data or the ability to target where the issues are. If the issue is not with claims, is it in direct settlements? Is it in the direct settlements process before or after getting to PIAB? Does it relate to litigation costs or the average settlement amounts? Some data is available through the courts at an aggregate level and some extra information in terms of a breakdown between personal injury and, for example, medical negligence would be very useful. We could look at the average awards in courts to see if there is movement in the figures.

What is the Injuries Board doing about this? There has been much discussion about the book of quantum. That has been finalised and will be issued in the coming weeks, in line with the new court term. If adopted by all parties settling claims, it will bring increased consistency to awards and allow the insurers to reserve more accurately. It is not a silver bullet for current issues with the insurance premiums but if it is used consistently, it will certainly help the issue. The book will reflect closed claims by the courts, the Injuries Board and claims data from the insurers and State claims agencies for the years 2013 and 2014. This extensive exercise was undertaken by independent consultants and involved the analysis of over 50,000 claims. There are also other changes to the book, with more gradation of awards and more injuries covered where data was not available for the initial book of quantum. There will also be a better explanation of individual injuries.

As with many other bodies and individuals, we are seeking more transparency in claims settlements and the movements in these settlements over the past couple of years. This may be a difficult exercise but there are four basic pieces of information that could be published. These are the number of injury claims, the average settlement amount, average fees being paid and the length of time taken to settle those claims.

We are working closely with the Department of Finance working group to find ideas for reducing the cost of motor insurance. There are some specific ideas that could be looked at in the context of this group's work. Others have mentioned the idea of creating a national claims register to increase transparency, which would be a significant addition in identifying current and future issues with claims. There would be some other benefits to the introduction of such a database, such as easier and more regular updates to the book of quantum because of the immediate availability of information. It would also allow analysis of injuries and accidents in the State to consider root causes and try to bring this back to what is causing the claims in the first place in terms of road and other accidents.

We would also like to see a review of the personal injuries environment in Ireland, perhaps through the establishment of a commission to consider the various options discussed by this committee and others. We would like to see a mechanism by which we could increase the level of acceptance of awards through a number of measures, either through fast-tracking cases into the courts or other mechanisms that could be considered.

Mr. Dunne will make a submission on behalf of the Society of Actuaries in Ireland.

Mr. Gary Dunne

I start by thanking the committee on behalf of the Society of Actuaries in Ireland for inviting us to present at this meeting. We aim to help the committee by providing insights into the context of the rising costs of motor insurance. We will also discuss how the Society of Actuaries in Ireland can support informed policy-making by contributing to a Government-led and market-wide statistical analysis of the industry. We welcome and support the call by the Minister of State, Deputy Eoghan Murphy, for greater transparency in the industry.

I am the chair of the general insurance committee for the Society of Actuaries in Ireland. I am joined by Mr. Ronan Mulligan, the deputy chair of the committee. The Society of Actuaries in Ireland is the professional body representing actuaries. It is primarily a voluntary body and we are not representative of the industry. The society's roles are: to develop the role and standing of the actuarial profession in Ireland and enhance its reputation; support actuaries throughout their careers; and develop, maintain and enforce actuarial standards. The society seeks to make an impartial contribution to public debate on social policy and public interest matters where an actuarial perspective may add value. This committee - and its eventual report - provides one instance to make such a contribution so we are delighted to be here to assist.

I will discuss insurance premiums and the factors behind them. The premium a customer pays today will discharge the claims that may be settled more than ten years into the future. The time taken to settle a claim introduces uncertainty when the policy is being priced. Property damage claims are relatively predictable in terms of both incidence and cost but injury claims are not only the largest component of an insurance premium, they are also subject to the greatest level of uncertainty. The key factors relating to the price of insurance are the total cost of claims - which, in turn, depends on the number of claims and the average cost of an individual claim - the insurance company expenses, including the commissions paid, and the insurance company's profit target.

I mentioned earlier that we would like to bring some insight into the rising cost of motor insurance and, in particular, the base to which the rises are being compared. Part of the recent increase in premiums reflects the need to restore pricing to a level that provides better security for claim payments. In effect, this is a return to the correct base level. Central Statistics Office statistics indicate that car insurance prices fell 27% between 2003 and the start of 2010. Thereafter, Quinn Insurance went into administration later in 2010, Royal Sun Alliance incurred a loss of €240 million in 2013, Setanta collapsed and there have been changes to court awards. In addition, we had the Russell case in 2014, the proposed civil liability (amendment) Bill relating to periodic payments orders in 2015 and the FBD loss of €96 million, also in 2015. During the period in question there has been a 42% increase in the number of Injuries Board awards for motor insurance as well.

Three insurance companies required significant increases in reserves. This meant their pricing was too low over the period. This is backed up by Central Bank of Ireland statistics indicating motor underwriting losses of between €20 and €30 per €100 of premium between 2013 and 2015.

Another part of the increase in costs is a higher degree of uncertainty in awards driven by court and other changes. In addition, the experience has been worse than expected with more claims and higher costs. In our view, for policy makers to be able to take effective action to control costs now and in the future while maintaining a properly functioning insurance market, it is essential to have ongoing information on the key factors impacting these costs. This must include information on how these factors are evolving over time. One of the key issues in resolving the rise in costs, however, is the lack of adequate information. We are aware that many other bodies have called for greater transparency. As insurance is quite a technical industry, the design of any study is very important.

There has been criticism of the lack of information on claims and market trends in the Irish motor insurance sector and this contrasts with the availability of information in the USA and UK, to cite just two examples. The Institute and Faculty of Actuaries in the UK has undertaken a market-wide analysis each year since 2010. This annual analysis has highlighted factors behind changes in insurance costs which allows policy to be informed by evidence-based research. For example, it was possible to show that after legal reforms, legal costs reduced from approximately 40% to approximately 20% of claims below £100,000. This has also allowed the institute to provide other support to policy making such as the 2013 Transport Select Committee investigation into whiplash claims. We do not have this market analysis in Ireland and it is therefore not possible to see the contributions of various factors to the overall premium. We have carried out initial work on the feasibility of the Society of Actuaries performing a similar analysis in Ireland. Considerations that we have needed to address include access to data, financing and resourcing the work. We have also received legal advice that there may be competition law considerations. We note now that Insurance Ireland is starting a process to gather industry data and it may be that this data can be used to undertake a market-wide statistical analysis. Evidence-based research is vital to underpin informed policy making. As such, we support the call of the Minister of State, Deputy Eoghan Murphy, for greater transparency and urge the Government to commission an annual analysis similar to that performed in other jurisdictions. Such an analysis should not just cover industry data but also data from the Injuries Board and other road safety data. The Society of Actuaries in Ireland will be very happy to lend its technical expertise and contribute to the design of such a study.

I thank Mr. O'Brien and Mr. Dunne for their opening statements, which were sent to allow us to consider them in advance of the meeting this morning. Clearly, both witnesses' organisations are very informed as to what is going on within the insurance industry, particularly motor insurance. A number of members have indicated that they wish to put questions. Generally, we allow each member to put questions, get responses and then put further questions before moving on to the next member. I may interject from time to time as Chair.

I thank the witnesses for their presentations. For the last two weeks, we have been putting all the pieces together and as such it is very interesting to hear the different perspectives. We have proposed that the CSO take on the role of providing an independent voice in regularly publishing data on the industry. Does the Society of Actuaries in Ireland feel that it is better placed to do that and, if so, why? Can the society explain further its relationship with Insurance Ireland? Is it fair to say it has a symbiotic relationship with the insurance industry? Might that interdependence affect its ability to act independently in any role involving collecting data and publishing it in a neutral way? Mr. Dunne stated that the key factors in the price of insurance include the total cost of claims which in turn depends on the number of claims and their average cost. The insurance companies' expenses, including commissions, and their profit targets are the other key factors. The committee has been sitting for two weeks and I have yet to hear any evidence beyond spin that the total cost of claims, and again we have heard it today, has increased in any meaningful way. The number of claims may have increased as one would expect in a growing economy but beyond that any other claim that costs have significantly increased has been well and truly refuted, including today. Given that we have seen a 70% increase in two years, is it the case that companies' commissions in terms of their profit target is responsible for the increases? I would like the society's thoughts on some of those questions.

PIAB has come under a great deal of scrutiny and many aspersions have been cast by the industry. As such, it is good to have its representatives here today to have a look at some of the real figures. There is a view that PIAB is designed to be a lawyer-free zone and that it has been taken over by the legal people. We had the Law Society in here yesterday. Based on what Mr. O'Brien told the committee, it appears that a high proportion of claimants have always chosen to use the law which figure has not changed significantly. Has it increased in the last two years and, if so, by what level? Are there any circumstances in which PIAB covers legal fees? If so, what are they and what has been the cost of that in recent years? Has that decreased or increased?

We continue to return to two important issues around the book of quantum and the lack of data. A representative of the Law Society told us yesterday that from what he had heard, the book of quantum will show an increase in the lower levels and the higher levels. Is that PIAB's understanding of what will happen with the new book of quantum? Has the insurance industry provided all of the data it could to the book of quantum reviewers? How can the process be made more transparent? Is the book of quantum being delayed due to any lack of co-operation on any side? The Central Bank publishes many statistics on the motor insurance sector. What is missing from the data already published? Why has the book of quantum not been reviewed for such a long time and will it be reviewed more regularly from now on? Is there anything within the gift of PIAB to address the fact that people's first instinct is to see a solicitor when they have had accidents? Does PIAB feel the legal profession is giving people enough information around the services PIAB can offer? I am getting at the low number of people who have taken up the avenue of PIAB instead of going straight to court. How can we reduce the legal tie-in with PIAB as it was never set up to be that? It was established for people to access themselves and to provide a fast track.

I will ask Mr. Dunne to come in first.

Mr. Gary Dunne

I thank the Senator for her questions. They are multifaceted and as such I will answer some and let Mr. Mulligan address others. The first question was on the CSO collecting data. From some perspectives, that could actually be quite a good thing. One of the things I referenced earlier was potential competition law concerns. While I do not speak as a lawyer, it is a difficult area. We would have to ensure that there were no issues there. If the Central Statistics Office was able to collect data and make it freely accessible, the Society of Actuaries would consider that fantastic. The society does not want to collect data itself. That is not what we are about. In practical terms, to carry out the analysis that has been done in other countries requires a vast volume of data. The Central Statistics Office is used to dealing with individual points. To do a proper statistical analysis, one would seek to get a great deal more data. Again, I said that is something the Society of Actuaries is happy to contribute to in terms of the design but the question of who collects it is one on which we are fairly agnostic. It is more that it should be collected and we should have an annual analysis. The design is crucial to ensure that we find out what the key components are. There are many anecdotes around why insurance prices are going up and that is the reason we need a committee. There are too many anecdotes and not enough evidence. It is really about striving for evidence, obtaining which is the only way we are going to know.

I do not know how one would characterise our relationship with Insurance Ireland.

It is friendly. We do not have a formal or informal relationship with it. We meet it on occasion but there is no real need for interaction between our two bodies. We are doing different things. We are a voluntary body - primarily a professional body for actuaries - so there is no real relationship there, but we will happily meet it and discuss any issues as they arise.

The Senator asked a question about independence. One of the things actuaries would very much pride themselves on is the ability to be independent. One of the society's tenets is to contribute independently to debate, and it does that wherever it can. That is evident from our sister entities in other jurisdictions. In the UK there is a very comprehensive and detailed analysis, done from an independent perspective, to show what the factors are and to show the impact of changes, such as the legal reforms I mentioned which halved legal costs. That brings transparency such that if premiums did not drop to allow for this, the market sees that. That is happening on an ongoing basis. Actuaries would very much pride themselves on their ability to act independently and to provide an independent voice in those circumstances.

Has the society stressed to Insurance Ireland the importance of making the data available in order that it can be analysed properly?

Mr. Gary Dunne

As part of the society's desire to create or develop this analysis in Ireland, we met Insurance Ireland to see if it would support this. We met informally with a number of companies as well to see if, in principle, they would agree to something like this. The answer was a clear and resounding "Yes". Among the companies and industry bodies we met, there were no concerns whatsoever about replicating the UK level of analysis, which is very detailed. There were never any concerns mentioned to us. They were quite supportive of it.

Did they say why it had not been done to date?

Mr. Gary Dunne

No, we did not discuss that. The society was coming from the perspective that we thought it would be useful to do, so we were saying that we proposed to do it. We did not ask them if they had thought about doing it or whether they were going to do it. We were coming up with a solution.

Mr. Ronan Mulligan

This work has been done in the UK since 2010. I presume it took quite a period before it could be properly designed and implemented, the data analysed and published and the competition concerns addressed. It was quite a while in incubation but it has been published since 2010 and has developed over there. We were seeking to start the conversation here. It is helpful in the UK in terms of assisting actuaries in doing their work. It helps to address issues around uncertainty and knowing what is happening in a broader market context outside of one's own company. As part of our role in supporting our members, we thought this was a good idea. It is also probably more pertinent now given the issues that have emerged in the motor insurance market over the last couple of years.

Is there any competitive impediment to the gathering of the data?

Mr. Ronan Mulligan

We received some advice on that, which Mr. Dunne can provide. We took some legal advice which said that there might be competition concerns with this, so we need to take more legal advice to dig into those issues and understand what they potentially are. Our legal system is similar to that in the UK and the latter has been able to surmount this. I believe it pertains to European regulations as well, so it should be the same regulation. We do not believe the problems are insurmountable but they have not yet been overcome.

Mr. Gary Dunne

The advice we received was that the net issue related to whether the exchange would have the object or effect of preventing, restricting or distorting competition in Ireland. There was a significant risk of this occurring. Ironically, greater transparency in an industry can facilitate collusion rather than inhibit it because participants then know more about what each other is doing. The issue is fundamentally quite complex and we are definitely not lawyers. We know the UK has managed to overcome this barrier and we were hopeful that we would be able to overcome it as well. The society spent money getting legal advice to see if we could achieve this, but we paused our efforts because we understand Insurance Ireland is starting a process to gather more data itself.

We were told by one person last week that there are 22 players in the Irish motor insurance industry and by somebody else that there are five main players. If you agree that there are five main players, they are nearly all multinationals with operations in both Ireland and the UK. Is that correct?

Mr. Ronan Mulligan

Yes. FBD, of course, is an Irish company but the others are UK and/or European.

They have the IT and central services somewhere that have done this type of work for the UK already.

Mr. Gary Dunne

Yes, some of them.

We cannot be very different in terms of our market, laws, legal system and so forth.

Mr. Gary Dunne

In fairness to the companies we approached, I wish to stress that they were absolutely supportive. There was nothing that said they were not supportive of this. What stopped us were concerns around competition law. One of the pitches we initially made was that we put up the list of the companies that do this in the UK and one can match many of them in terms of having an Irish presence as well. They have different IT infrastructure, but that is okay because the issues in Ireland are a little different as well so we need to get different data.

Is the society a member of the Minister of State's working group or has it made a submission to it?

Mr. Ronan Mulligan

I am not aware that we are.

Mr. Gary Dunne

We are not a member of it.

Mr. Ronan Mulligan

We are happy to support it but we are not represented on it.

On Senator Conway-Walsh's question regarding a symbiotic relationship with the industry, obviously our guests are professional people who have qualifications and so forth. Most people understand the profession and consider it very important. Are most actuaries employed by insurance companies or are many of them working on their own behalf as consultants? What is the breakdown in that regard or do our guests have statistics on that?

Mr. Ronan Mulligan

I do not have statistics on that. Actuaries work for life insurance companies, general insurance companies, pension advice companies and as consultants. Mr. Dunne and I, for example, work as consulting actuaries.

It would be fair to say that many actuaries are not employed by and on the payrolls of insurance companies, and certainly not motor insurance companies.

Mr. Ronan Mulligan

Exactly.

Mr. Gary Dunne

We can categorically say that the overall majority are not employed by non-life companies.

Mr. Ronan Mulligan

The expertise the committee wants is from people who have operated in the non-life area as well. It is difficult. It needs people who understand the market and have worked in the market but it needs people who are not beholden to the market. I believe we have managed to service that need as a professional body and as professionals working for firms and/or as consultants in the past. We can service that need in the future. I appreciate the concerns but there is a balance to be struck between those two competing constraints.

Thank you. Will Conor O'Brien address the questions?

Mr. Conor O'Brien

I will deal with some of them and pass some of them to my colleagues. The solicitor involvement has not changed much over many years. Between 90% and 95% of claimants are represented by a solicitor and always have been. It is a person's choice as to whether they come to us directly or go through a solicitor. It is entirely up to them. If they decide to come to us with a solicitor, they must settle their fee with the solicitor themselves. We do not allow fees unless there are certain circumstances which I will refer to momentarily.

I will ask Maurice Priestley to deal with the questions on the book of quantum in terms of decreases or increases in awards.

Mr. Maurice Priestley

I must explain the background to the work on the book of quantum before I can answer the question. Independent consultants were commissioned to prepare the book. They collated data from the Courts Service, Insurance Ireland, the State Claims Agency and the board from closed claims in 2013 and 2014. The findings in the book are reflective of what is happening currently in the market. It will not have an inflationary effect on the cost of claims in Ireland, as has been suggested in other arenas. Within the book each injury has a number of levels of severity and each level of severity has a band of values attached to it. It is difficult to make a general observation given the level of detail in it. An overall general observation is that there has been some upward movement at the lower end of the scale and a reduction at the higher level. Without having the book available and going through each injury, it is difficult to comment otherwise. We are happy to return to the committee when the book is issued to go through it, if that is required.

Mr. Conor O'Brien

There was a question about legal fees and what is allowed by the Injuries Board. Stephen Watkins has information on that.

Mr. Stephen Watkins

We allow legal fees in certain circumstances such as where there is a minor involved or a person under 18 years of age has had an accident. When we make an award in those cases, a court will ultimately have to rule on the quantum of damages. There are other certain circumstances depending on the capacity of the individual and his or her ability to transact with this. We would allow fees in such cases. Another example would be in public liability cases where there would be a difficulty in identifying who is the person at fault. The typical person might not be able to determine who is at fault because there could be several people involved.

The total amount we allow in fees annually is less than €1.5 million a year, which would have a negligible impact on the cost of insurance. On Mr. Conor O'Brien’s point about the numbers who deal with solicitors, since 2006 when the O’Brien Supreme Court decision was given, we have had 90% to 95% of people using a solicitor. It is currently 93% and it has not changed over the past three years. We still have 2,000 people a year who will make their claim directly to the board. Over the past ten years, there was only one occasion where fewer than 90% of people used a solicitor. That was in 2008 when we embarked on an extensive advertising campaign which had the impact of bringing it down to 88% for a short period. However, that was not sustainable in the long-term.

We have carried out research as to why people would use a solicitor and there are valid reasons as to why people would prefer to have somebody dealing with us on their behalf. The main point is that there has been no change over the past number of years.

From the information the board has, is there any monetary advantage to using a solicitor when dealing with such cases?

Mr. Stephen Watkins

From the data we have, there is no evidence to show that one gets more by using a solicitor. We make awards based predominantly on the medical information we get, which comes from the treating doctors' report and independent medical specialists we commission to look at cases. We are not making the award on what a solicitor says.

Mr. Maurice Priestley

It makes no difference whatsoever to the assessment of the claim by the board that somebody is represented or not. It is assessed on the same basis. It has no impact whatsoever.

Will those who do not use solicitors save money on legal costs? Essentially, they will end up financially better off than those who use solicitors.

Mr. Maurice Priestley

Whatever arrangement they have with their solicitors for the processing of the claim will have to be paid out of the award.

The award will be the same whether one has used a solicitor or not. Their net position will be better.

Mr. Maurice Priestley

The awards are exactly the same whether one is represented or not.

When the board is making an assessment, does it take into consideration the high medical costs in this country as opposed to others?

Mr. Maurice Priestley

Yes, we do. Any expense incurred as a result of an accident is included. In Ireland, hospitals are entitled to recover the cost of medical treatment provided following a motor accident. If one is entitled to pursue a claim, one is obliged to recover the cost of the hospital treatment. That is automatically included in the assessment of the claim.

Mr. Conor O'Brien

On the other questions, the insurers provided data for the book of quantum. However, it was for that purpose only. It was not to be used for any other purpose. There were no delays or lack of co-operation in the provision of data.

On the issue of missing data to figure out what issues are at play, I stated in my presentation that there were four basic pieces of information, namely, the number of personal injury claims, the average settlement amount, and the time it takes to settle and associated fees. If that was tracked over several years, it would certainly help.

Why was the book of quantum not revised up to this point? The book of quantum was originally compiled in 2004 and would have taken several years to come fully into operation. We then went through a long period of reducing premiums. Accordingly, there was no call or context to revise the book of quantum. However, in our 2014 strategic plan, we identified that it was probably time to review the book. It was initiated in 2015. We intend to review it on a three yearly basis from this point.

I welcome the witnesses from both organisations.

Several weeks ago Aviva insurance wrote to its customers by e-mail in which it stated Ireland has the highest claim award levels in Europe. It pointed out the average pay out for whiplash in Ireland is €15,000 while it is €3,000 in Italy and Spain and €5,000 in the UK and that 80% of motor injury claims relate to whiplash in Ireland compared to 3% in France which adds €130 to the cost of every premium. From the board’s experience of dealing with thousands of claims every year, how do Aviva’s claims stack up with its evidence?

Mr. Conor O'Brien

It points back to data again. Those are quite interesting figures and it would be interesting to see the analysis behind that and what other information could be published. A key question is whether they have changed in recent years. For example, if the average whiplash payment is €15,000, has it increased dramatically over the past several years or has it remained static? There are two separate issues involved. One is the actual level of awards and the other is the change over time.

On 80% of claims relating to whiplash, again that is an interesting statistic. We do not know exactly what data is being used to reach that figure.

To be fair, the board is in a better position to critically analyse those claims. It is dealing with thousands of claims every year. Do 80% of the motor injury claims going through the board have a whiplash element?

Mr. Maurice Priestley

Reflecting on our data, that is probably a bit on the high side. It is difficult to comment because we only see the claims that come to us.

That is what I am asking about.

Mr. Maurice Priestley

It is between 70% and 80% of what would be termed “soft tissue injuries”. There are a number of definitions as to what a whiplash claim is. However, if one uses a general definition of soft tissue of neck and back injuries, it is between 70% and 80%.

Aviva’s figure is reasonably accurate.

Mr. Maurice Priestley

It is not unreasonable.

The value it put on it of €15,000 is, again, probably not unreasonable as an average figure. The real issue is that it has always been that way. There is no suggestion that it has changed over the years. There has always been an issue between the level of damages in Ireland and the level in the UK, particularly for soft tissue claims. That has not changed as far as I am aware over the years. Why it has been identified now as a particular issue in the context of the increase in premiums is difficult to understand. As Mr. Conor O’Brien said, unless the data behind the facts being put out is made available, it is very difficult to comment further on it.

The board has not seen a change in the make-up of, nature of or the pay-outs in claims to warrant the increases we have seen in premiums.

Mr. Maurice Priestley

From our data, we have not seen anything to that effect. The focus has been on the soft tissue side of the claims.

Of the 33,000 personal injury related claims the board receives every year, how many are settled by way of an agreement through the injuries board process?

Mr. Maurice Priestley

It has to be broken down. Of the 33,000 claims we receive, we are dependent on the insurance companies consenting to us assessing the claims. Of the 33,000, we get consent on 50% or 55% of them and, within those, we are dependent then on the medical evidence available to us as to whether they are capable of being assessed. We are subject to timeframes. If somebody has an injury and it is not possible to determine the final outcome of the injury within the nine months available to us to assess the claim, we have to release it. That accounts for some of them.

Last year, we assessed approximately 12,000 claims and of those 12,000, approximately 60% were accepted, but it would be somewhat narrow-focused-----

Accepted by whom?

Mr. Maurice Priestley

Both parties.

Approximately 7,000 claims represented the end of the matter.

Mr. Maurice Priestley

Yes, but it would be somewhat narrow-focused just to examine the cases accepted through the board because in that 33,000, we are providing information that was not previously available. Of the cases rejected, we do not know what is happening to them. They are not appearing in the courts system, and we believe many of them are being settled just after we have assessed them based on our assessment. It is difficult to get the overall picture of the impact of the board, both direct and indirect, until such time as the information is available.

With the information we have, of the 33,000 claims that come into the Injuries Board, approximately 7,000 end up with an award through the board, and that is the end of the matter in respect of those claims. How many would be rejected by the board? They can go to court if they wish but, typically, of the approximate 33,500, how many would be rejected?

Mr. Maurice Priestley

The board does not reject them, as such. Of the 33,000 we receive, we filter them to see which are appropriate for assessment by the board. We do not assess claims such as wholly psychological claims. Some of the injuries are so complex they are not open to assessment. I do not know what the figure would be; it may be about 10%.

Mr. Stephen Watkins

If we get 33,500 cases a year, we lose a number at the start - it may be 1,000 or 1,500 - that never go anywhere. We do not know whether they have settled or are not being pursued. We are then relying on the insurer to consent to the case or not. They would consent to approximately 18,000 cases, with us assessing. Even after that we lose a few thousand cases before assessment. They are not pursued. We do not know whether they have been settled or are just not being pursued. The problem is that we can tell the Deputy the exact number of cases we assessed and the number we received. We know the outcome, but there is a huge volume of cases about which we do not know the outcome.

The Central Bank did a study in 2011 in which it asked insurance companies for the outcome of three months of cases that had been finalised. They broke it down into cases that were settled before and during the Injuries Board process. The outcome of that study was that 70% of cases were finalised either by the Injuries Board, through settlements or were not pursued. Only 30% of cases ended up going into litigation. When the board's model was originally conceptualised, the view was that two thirds of cases would be taken out of litigation. Those 2011 figures, which unfortunately are the most recent, would show that approximately 70% of cases have been removed.

We do not know the split of that in terms of the percentage settled through the board and those settled directly.

Mr. Stephen Watkins

At the time they reckoned that approximately 35% were settled before they even came to the board. Various amounts were settled during the board's process. We believe that if this kind of information was available on an annual basis, we would have a proper understanding of what is going on in the market.

I fully accept that the data gap is huge and needs to be dealt with. We do not know the number of claims that are settled before they even come to the board, but of the approximate 33,500 that knock on its door, how many reach finality through the board? It would appear that it is only one fifth.

Mr. Stephen Watkins

Yes, through the board. It depends on the way one looks at it. We have no control over cases that will not be pursued, that will be settled or which the insurer does not consent. We can only assess cases where consent is given, and that is what we do.

Another point is that we do not know what happens to our rejected cases. It may be that some of them are settled some weeks later for a small additional or that many of them end up going into the costly litigation system. We do not have that breakdown.

I have a few more questions. I am aware that the book of quantum is being updated in cases that go to court. Do the courts have to have regard to the book of quantum? Is it binding on them? What is the status of it?

Mr. Conor O'Brien

The Judiciary must have regard to the book of quantum under the Civil Liability Courts Act.

In terms of "have regard to", is it a case of "whatever you're having yourself"?

Mr. Conor O'Brien

The Judiciary operates independently. Its members take each case on its own merits, but with the new book of quantum we hope the Judiciary would have more regard to the book of quantum and the values it contains. We have done a good deal of work to try to address some of the feedback we have had on the book of quantum, particularly in the past year, in terms of the levels of detail in the book, the granularity of awards and new injuries that were not in the previous book

My final question is for the actuaries. Their presentation seems to rationalise the reasons premiums have increased so much. They set out the background and the reasons and, in a sense, a justification for it. They do not reach any conclusion as to whether it is justified, but do we have data on the financial performance of the Irish arms of the multinational insurance firms? The witnesses gave a number of examples of financial performance, but do we have data on the performance of the Irish operations of the insurance firms? Can they give us a sense of that? Have the insurers been losing money in the motor insurance market in Ireland in the past three or four years? What is the picture?

Mr. Gary Dunne

We have some data. The Central Bank publishes statistics on an annual basis, although there is quite a lag to that. We referenced some Central Bank statistics that were given to us that show a loss of between €20 to €30 per €100 of premium on motor insurance; that is for Irish motor insurers. There is evidence to say that Irish motor insurers were losing a substantial amount of money from 2013 to 2015, at a minimum.

Mr. Ronan Mulligan

The Central Bank will publish financial information, as in profit and loss account type information, that it gathers as part of the annual insurance statistical review. As Mr. Dunne said, that will break it down at a certain level between a motor liability and property split, therefore, one can look at the motor business on its own. That would show losses through 2012, 2013 and 2014, which is the latest date it has put out information-----

Is that on an aggregate basis?

Mr. Ronan Mulligan

It will show the results by company. One can add them up and get the results for the market as well. That said, if we go back, they have made a lot of money in motor insurance in the past as well. If we consider the period between 2001 and 2007, the motor market would have made quite a lot of money. Between 2007 and 2012-13, the market was breaking even. It made money in some years and lost money in others. That is characteristic of an underwriting cycle. Money is made. People chase market share. They chase that profit. Prices come down. What we were trying to say in the presentation is that they came down by too much, and that is a natural part of the underwriting cycle. As companies chase market share, they reduced premiums too much and what we see now is prices coming back again but at a very pronounced level; 70% is an enormous number over the past three years. In terms of understanding that, they are coming from a low base, and then we have this uncertainty in the claims environment that they are pricing in too.

There is evidence that they have lost money in the past two or three years. Perhaps we should take a longer term view, and actuaries would always recommend that we look at these matters over the longer term and over the cycle. We are where we are, and we shall see in the Central Bank returns over the coming years where the insurers' profitability lies.

The problem is that it does not address the issue right now and that information is delayed or lagged because it is published in arrears and the financial results the insurers produce tend to be lagged as well relating to accounting rules.

Of the 33,500 claims received, can the Injuries Board share with us the percentage that are motor injury-related? Presumably it deals with all kinds of injuries that are not motor injury-related.

Mr. Stephen Watkins

Over 60% of the claims we receive relate to motor injury.

The others are various trips and falls and things like that.

Mr. Stephen Watkins

Employer liability and public liability. Typically three quarters of the awards we make relate to motor injuries. That has been stable for the past three years. The balance is made up of public liability and employer liability. Public liability is probably double the amount of employer liability.

Mr. Conor O'Brien might address Deputy McGrath's points on the book of quantum. Are there any statistics or any kind of data on the percentage of times the judges fall within the book of quantum or is it so vague that those kinds of statistics are not available? Somebody told us yesterday that the book of quantum could give anything between €30,000 and €80,000 for a particular type of injury. If that is the case, one judge might give €30,000 for an injury while another gives €80,000 for the same injury yet they will tick the box that says they both fell within the book of quantum. Is the book of quantum so vague that we do not know what individual judges are paying out? I was told anecdotally last week, in connection with employer liability or public liability, that insurance companies decide the settlements outside the courts when they hear which judge is on because one individual pays out a lot more than another in similar situations. While the Injuries Board deals with cases that do not go to court, does it or the actuaries have any understanding of that?

Mr. Conor O'Brien

One of the things we have been working on in the new version of the book of quantum is to give a lot more detail about the individual injuries. Where there were three levels of impairment in the original book, we have increased that, where the data is available, to four levels of impairment and have given more description in each of those levels. That will allow judges and others using the book to make more informed decisions. The book is a guideline. It could not possibly encapsulate every personal injury that happens in the State. It can only ever be a guideline and it gives those broad bands to allow people consider relative awards for different injuries. In the overall scheme of things, not many cases go all the way through the courts. We would not have any data on adherence to the book of quantum. It would mainly be anecdotal.

I think we were told in earlier sessions that because the book is relatively out of date judges are less likely to adhere to it than if it was current.

Mr. Gary Dunne

Our society has no access to data that would give evidence either way. The more data, the better. The volatility of awards will generally mean there is a higher level of uncertainty and that tends to mean higher prices purely because it goes one way. Awards go up. They can only go down by a limited amount.

I thank the witnesses for the presentations. My first question is for the actuaries on the Central Bank statistics. Table 15 of the Central Bank statistics on motor insurance shows in 2014 a loss for companies with headquarters in Ireland of €137 million and in 2013 a loss of €195 million. Before that it shows profits of €145 million in 2012, €156 million in 2011, €7 million in 2010, €124 million in 2009, €113 million in 2008 and for the five years preceding that a significant profit of €500 million on a yearly basis. Is it fair to say that, as a whole over ten or 20 years, car insurance has been highly profitable in Ireland? When added together the results for 20 years come to €2.86 billion in profits for companies headquartered in Ireland. Over three years premiums have gone up by 70%. That tallies with profits falling, for example, in 2013 they went down. Would the actuaries agree that is consistent with the rise in premiums being an attempt to restore profitability?

Mr. Gary Dunne

I will deal with the latter question first. There would not be an industry unless there was a reasonable level of profit. There has to be a reasonable level of profit within an industry to ensure that there are competitors, because otherwise competitors will pull back. If the losses were sustained over 20 years, if we had lost several billion euro over 20 years, how many companies would want to stay in that market? It is not for us to decide the definition of the word "reasonable" in that instance but there does need to be a reasonable level of profit. One of the points we made in our presentation was that the rate increase does look very high and one reason for that is that the base was too low so in most recent years there was an unsustainable situation. As a result part of the reason for the rate increase was to support that.

In general is it fair to say they have been "highly", "fairly", or "reasonably" profitable - the witness can choose his own word - over a long period?

Mr. Ronan Mulligan

That is difficult to say. Deputy Murphy has to think about how much capital they had to put into the industry to be permitted to trade and what those numbers represent as a return on that capital. The absolute number is a big number but they have to hold enormous amounts of capital on a regulatory basis to be allowed to trade as insurance companies in the State and therefore expressed as a percentage of that capital is that a great return or not for the investments they have made? That is how I would look at it. On that basis, I apologise but the numbers get even more complicated because the capital is supporting not only motor business, but property business, commercial business and lots of different types of activity, each of which has variable profits. Unfortunately, it is very complex and it is not really for me to say they were making huge amounts of profit or normal or low profits. One could do that type of analysis but it would be complex and get a better answer expressed as a rate of return rather than an absolute amount.

Let us consider profitability in a different way, as an average surplus per policy. How much profit do they make on the average policy? Do the actuaries have any figures for an international comparison? I have seen figures that suggest that the average surplus per policy in Ireland is significantly higher than in Britain, which is a good comparator in terms of the market.

On that point, there was a figure I heard the witness quote earlier that they were losing €20 or €30 per €100. For what period was that loss? Was that in a particular year or was it over a sustained period of years?

Mr. Gary Dunne

That was specifically 2013 to 2015.

The suggestion is that for every €1000 premium they are losing €300.

Mr. Gary Dunne

Up to that. It varied from year to year. There is a range because it was different in every year.

Mr. Gary Dunne

Yes.

Mr. Dunne can continue to answer Deputy Murphy but those were the most recent figures we were given.

Have the actuaries got any comparative data for profit per premium for Britain?

Mr. Gary Dunne

One of the key points in our presentation was that the Society of Actuaries does not have access to the data so it is quite difficult to make the comparison. The Deputy is probably referring to the private motor insurance statistics that the Central Bank has published. That is where it uses the term surplus per policy.

One of our reasons for saying that we feel that we would be very happy to support the design of a study is because, as the committee will notice, the surplus per policy changes over time as claims are paid. If we go out to the ultimate point of the claims being paid over ten years, the surplus in year 1 will be a certain number that will drop and drop and will potentially become negative. In the most recent years, we expect it to become negative. As Mr. Mulligan said, from a technical perspective, we call it the combined ratio. When it is above 100%, one is underwriting losses and when it is below 100%, it is underwriting profits. That would allow for the expectation of how the claims would develop over time.

In response to the point about the profits being a necessary cost, there is an alternative here. That is why I think we should broaden the scope. There is a different model of insurance, which is a not-for-profit model in which we do not have to have this extra cost. That €2.86 billion was paid by people in premiums as a cost. If Mr. Dunne thinks, ideologically, that it is necessary then it is a necessary cost, but it does not have to be.

Mr. Gary Dunne

Absolutely. There are definitely competing models and other countries have gone down different routes. The UK has not. The Deputy mentioned them as a direct comparative. The UK has not and it obviously feels that competition is the best way forward. One thing I would like to emphasise is that models like that can hide underlying issues. It takes a long time for these issues to surface. Take the example of paying on the price of the pump if one decides to increase the price of petrol or diesel to allow for third-party liability motor insurance costs. The rationale is that the more one drives, the more likely one is to have an accident. That seems fair. However, if there are underlying issues such as inefficiencies in the market in terms of dealing with claims, be they legal, expenses, medical or whatever it may be, they are hidden for a while because it is just the price of the pump and it is spread across absolutely everybody. Therefore, it is a bit harder because it is not being allocated back to the people. There are definite positives to an approach like that but also negatives as well. As long we consider both of them, we can make an informed choice.

I think Mr. Dunne would have a hard time convincing those who are now facing these massive hikes that the market is particularly efficient right now or is delivering for people. I thank Mr. Dunne for those responses.

In terms of the Injuries Board, a big issue is the black box of lack of knowledge that we have, which is all that is not settled through the court or through the Injuries Board. I accept that. There was someone from the insurance industry - either this morning or last night - who was suggesting that lawyers are responsible for the majority of claims not going through the Injuries Board and instead being settled outside of that body, be it in court or privately. Is that the case, given what the witness is saying about the insurance companies only agreeing that something like 55% or 60% will go through the Injuries Board? Surely the majority of the decisions that are made by the various actors that result in claims not being processed through the Injuries Board are more on the side of the insurance companies than the claimants. Is that fair to say?

Mr. Conor O'Brien

One of the things we do not know is the level of representation in settlements, particularly early settlements, before they ever come to the Injuries Board. We do not know how many of those people use a solicitor and we do not know if fees are paid at that stage or not. As Mr. Watkins said earlier, we have seen no change in that representation in our own data and unfortunately that is the only data that we have on this.

Mr. Stephen Watkins

If one does not settle one's case directly at the outset, the law is that one must make one's claim through the Injuries Board. The claimant has no choice in the matter. The next step in the process is that we notify the respondent, which is typically an insurer, and it has a decision to make. It decides whether we can assess the case or not. The next decision is when we make an award and both parties have to decide whether they accept it or not.

At that endpoint, Mr. Watkins said that 7,000 or so claims are accepted by both parties. In cases in which it is only accepted by one party and rejected by the other, what is the balance?

Mr. Stephen Watkins

I do not have the exact split or know whether there is a difference if there is a solicitor involved. 93% of cases involve solicitors so it is reasonable to presume that a similar figure of cases that are accepted or rejected involve solicitors.

What I mean is that when the rejection takes place, is it a rejection by the respondent or the claimant?

Mr. Stephen Watkins

What typically happens is that about 60% to 65% of claimants or their solicitors will accept the award. In the case of respondents, it is usually around the 90% mark. However, there are different dynamics at play. For the respondent, there is the issue of going into a high cost environment. There are different issues for the claimant.

Mr. Watkins cannot speak for cases that are settled elsewhere, but in terms of the Injuries Board's own figures, has there been any increase in the amount that was awarded in terms of claims or in the volume of claims between 2015 and 2014, for example?

Mr. Stephen Watkins

No. With regard to motor claims alone, between 2013 and the end of 2015, motor claims received by us went up by 4.95%. That only relates to the claims that were received by us. We do not know how many claims were settled at the outset. This year, the number of claims has reduced by just under 1% in the six months to June 2016 compared with the same period last year. Our average awards are stable. By way of example, in 2013 our average motor award was €21,730. The average motor award in the last 12 months to the end of June was €21,782. The figures are almost identical. If one looks at our average motor awards over the past six or seven years, they fluctuate by 1% or 2% every year but are basically stable.

The insurance companies talk quite a lot about fraud. Is fraud something that the Injuries Board has a category for and statistically takes note of to say that it rejected X number of claims because it believed that they were fraudulent? Does the Injuries Board have those figures?

Mr. Conor O'Brien

When the insurer consents to us assessing a claim, it is assumed that liability and fraud are effectively set aside.

Okay. So they are accepting whatever percentage-----

Mr. Conor O'Brien

They have three months to investigate the claim.

Okay. That is useful. Are there reforms that the witnesses think could be implemented that would make the work of the Injuries Board more effective and bring more people under its remit? What are they?

Mr. Conor O'Brien

We spoke a lot about the book of quantum. It is not a silver bullet as we said earlier, but consistent use of it by all parties would have a beneficial impact and would encourage more people to accept the awards that the Injuries Board grants. We would also like to see if measures could be taken to speed up the process for rejected awards in order that they are dealt with as quickly as possible to minimise the legal costs associated with them. That would be very useful. As everybody else has been saying, overall it is very hard to identify specific issues in the absence of knowing precisely where the issues lie.

Very briefly before I bring in the next member, the Injuries Board is dealing with 33,500 claims and it says 1,500 get lost. That is a relatively small percentage and I am happy to discount that. The insurers consent to 18,000 being looked at and again some are lost there. Some 14,000 are not consented to. That would include those fraud claims. What other reasons are there that the insurance company would not consent? Do the witnesses have a figure or an idea? I suppose if they do not consent, they do not have to tell you why. Do they?

Mr. Conor O'Brien

They do not.

Of those 14,000 claims, have the witnesses any idea why the insurance companies do not consent? Do they just say, "No, we are not dealing with it", and let it go to court?

Mr. Conor O'Brien

Yes. There is no breakdown of that but anecdotally-----

And they do not all go to court.

Mr. Conor O'Brien

No. Some of them will go away and be settled and some are related to fraud or liability. We think those are generally the reasons the claims are not consented to. It would be very useful to know why they are not being consented to.

Does the Injuries Board have to do a lot of work with those 14,000 that initially come to it? That is a lot of administration taking up the Injuries Board's time to ultimately have an insurer say, "No, we are not letting you assess it".

Mr. Maurice Priestley

There are statutory requirements for every claim that comes into us and we have to serve statutory documentation. If the insurance company does not consent, or if the respondent does not consent to the assessment, the case is released. We issue an authorisation for them to go to court. We are doing processing work that does not lead to an assessment.

Just for my own benefit and that of committee members, will Mr. Priestley outline how the costs of running the Injuries Board are met. Who picks up the tab?

Mr. Conor O'Brien

The board is totally self-funded. Claimants pay €45 per application and insurers pay €600 per assessment.

Is that for the assessments that are consented to?

Mr. Conor O'Brien

Yes, for the ones that are consented to.

The Injuries Board processes approximately 14,000 claims but only receives €45 per claim. Each claim could potentially involve quite an amount of work.

Mr. Conor O'Brien

Yes.

Mr. Stephen Watkins

The fee for the respondent is set at a level which ensures it will cover all of our costs. It is true that we must do work on those cases that are received, but when we receive the papers, we notify the insurance company of the claim and there is immediately availability of papers to both parties. If that facilitates an assessment that both parties are-----

There is a huge savings potential-----

Mr. Stephen Watkins

-----happy with, then that is a good thing, particularly when it is done speedily.

Before I call Senator Paddy Burke I would ask members to restrict themselves to questions rather than commentary because we are running out of time.

Various stakeholders have been before this committee but none has taken responsibility for the increase in costs. It is nobody's fault that the cost of premiums has risen by 70% in the past three years, which is a staggering figure. According to the submission from the Personal Injuries Assessment Board, PIAB, the figures show that personal injuries motor claims volumes and average award values are static. The witnesses have argued that there is an absence of overall data, an issue that has been raised by several groups as a major problem. It has been argued that improved availability of data may help to reduce the cost of premiums. The PIAB has also said that there could be an issue with the claims that are settled outside of the PIAB process but it does not have access to the full facts on those claims.

The Minister for Finance has suggested that legal fees were a contributory factor in the increase in insurance costs. However, representatives of the legal profession appeared before this committee yesterday and refuted this suggestion. They also pointed to the absence of data as an issue.

The book of quantum, which is currently being reviewed, has also been raised on numerous occasions. Do the actuaries have any input into the preparation of the book of quantum?

Mr. Gary Dunne

As a professional body?

Mr. Gary Dunne

I do not think we had an input the first time round.

The Society of Actuaries does not make any recommendations concerning the book of quantum. Is that correct?

Mr. Gary Dunne

As a professional body, not that I am aware of, no.

It was stated that the cost of motor insurance fell by 27% between 2003 and 2010. Did the level of awards drop during the same period?

Mr. Stephen Watkins

No, they did not. In 2007, the average award was roughly the same as it is now. What did-----

Does that only apply to Injuries Board awards?

Mr. Stephen Watkins

I can only talk about our data. Prior to the establishment of the board in 2003, cases could really only go into litigation. A small number of cases were settled but most could only go into litigation to be resolved. In the cases that are dealt with by the Injuries Board, while the award levels are maintained, the delivery costs involved are quite low. For example, at the time of our establishment, a typical case that ended up in litigation would have had an additional 50% add-on in terms of costs, according to the Motor Insurance Advisory Board, MIAB. In our system, the add-on is only 6% or 7%. Back in 2003 when cases were being diverted to us, they were benefiting from an overall lower cost model which would have been a factor in the cost of claims which, one can assume, had an impact on premiums.

When the premiums went down, one would think that the cost of awards would go down too. We have heard that whiplash awards in Spain are around €3,000 while they are approximately €15,000 here. Does Mr. Watkins think that the awards should also have dropped?

Mr. Stephen Watkins

Our role was to award damages at the prevailing levels. The contention is that damages in Ireland are out of sync with other countries but it has been thus for years. There has been no change in that regard. Even before the Injuries Board was established, the cost of damages in Ireland was higher than elsewhere.

Mr. Maurice Priestley

It is also fair to say that we have no involvement in the correlation between premium calculations by insurance companies and awards made by the board. The board is obliged to assess claims on the current level of damages and that is the extent of our remit.

The board has an input into the book of quantum. Judges do not have an input but the Injuries Board does. Is that correct?

Mr. Maurice Priestley

Yes, the book of quantum is a guideline on the level of damages. We assess claims based on the guidelines but our contribution, for want of a better word, to premium calculations is the delivery cost. A claim through the board has a delivery cost of approximately 6.5% at the moment-----

Mr. O'Brien mentioned €600.

Mr. Stephen Watkins

Yes, €600 and the cost of the independent medical assessments that we commission. On an average award of €20,000, the cost would be around €1,300 which is €600 plus the cost of the medical assessment.

Plus, I presume, the cost of the insurance companies' own time, processing on their end.

Mr. Maurice Priestley

There are two advantages to our scheme in terms of costs. First, the fee is fixed. Irrespective of the size of the claim, the fee is €600. Second, the net cost is 6.5% compared with 50% or 60% in the litigation system. That is where the real saving lies. It is not related to the level of damages and the board has no remit to set the level of damages. We just deal with cases based on the current levels.

Mr. Priestley has acknowledged that the 70% increase in the cost of insurance in the past three years is excessive but has argued that there is no correlation between the calculation of premiums and the awards made by the board.

Mr. Conor O'Brien

What we have been saying is that there is nothing in our data that supports that level of increase. We cannot see what is forcing it. As we said earlier, it needs to be broken down into the different components of the premium increases to see what has been forcing it. In terms of claims, we have been calling for more transparency in terms of the data on the insurers' own settlements in particular.

Would the actuaries have taken into account the decrease in premiums between 2003 and 2010?

Mr. Gary Dunne

It is a pretty interesting debate. I think one of the key points to remember is that a lot of things happened in 2003 which led to a decrease in claims costs which then resulted in a decrease in premiums. Claims costs can refer to the average claim as well as the total number. In 2003, the Injuries Board was established which had a clear, visible impact. What the representatives of the board have said on costs is that the amount of money that the injured party received stayed the same but the legal element, when cases used to go through the courts, disappeared or was reduced to a fixed fee. Therefore, the amount that the insurers actually paid out was reduced. At the same time we had the introduction of penalty points and a major focus on road safety. This meant that the number of claims reduced. So, not only did the number of claims reduce, there was also a saving, at least in part, on each claim. There was also a large campaign conducted on fraud at around the same time. People became aware that it is not a zero-sum game and that insurance fraud is literally taking money from someone else's pocket. As a result, the amount of fraud reduced. A series of things happened that meant that claims costs, as a total, reduced which then led to premium reductions over that period. Actuaries would have been taking that into account in their pricing.

They would say, looking forward, costs are reducing, we accept that and recognise it and therefore the prices should reduce so that is why the prices have come down.

Did Mr. Dunne also make the point earlier that poor business decisions had been made by insurance companies looking for market share? I thought he made a reference to that in his previous submission, that it was not just about efficiencies in terms of penalty points, fewer crashes and less expensive crashes but that the insurance companies went off chasing the market and that is a cyclical thing. Is that a part of it as well or was it just due to better road safety, better roads perhaps and the fraud campaign?

Mr. Gary Dunne

Let me chop it up into different periods because different things happened at different times. Between 2003 and 2007, premiums came down because costs came down due to road safety and the Injuries Board among other factors. At that stage insurers thought the market was profitable and that business was good so they decided to reduce their rates.

Did that happen four years after the initial reductions?

Mr. Gary Dunne

Yes, but it happened in stages. It takes up to ten years to pay a claim. There is a great amount of uncertainty so some of it can be banked but some of it cannot. As costs came down, people were chasing market share. At some stage the opposite happened and either due to road safety, the sheer volume of traffic on the roads, an increase in the number of claims, an increase in the amount of awards or an increase in legal costs, there was an increase in the overall costs. Again, it takes time for that filter through the system because the amount paid in the first year is very low as a percentage of the amount that will ultimately be paid because it takes a long time to pay the claims. There is a lag where the cost of insurance starts to come back up again and insurers decide it is not a profitable business, that it is a loss-making business and they have to increase rates. That is one of the reasons there is a cycle. It is purely because of the way the mechanics work.

Did Mr. Dunne say that companies are losing money and must get a higher premium?

Mr. Gary Dunne

Yes.

There are more cars on the road and there are more people paying premiums. Road safety has improved, as has the state of the roads. The country has become more efficient. The courts are more efficient. The PIAB has said it is not dealing with more claims than was the case heretofore and that the costs awarded have not increased. Why does Mr. Dunne then agree with the increase of 70% in car insurance costs in the past three years?

Mr. Gary Dunne

I will be very clear. From the society’s perspective we do not necessarily agree with the 70% increase but we recognise that-----

But the society does not disagree.

Mr. Gary Dunne

Yes. We have no evidence to say whether it is right or wrong. Part of our submission today is to say that there needs to be greater evidence-based policy making. Right now, we cannot say the correct number is 70%. What we say is that 70% is the number reported by the Central Statistics Office. We agree with that because the CSO has reported it.

I agree that the base is important. It did look like insurers were losing money and therefore the costs needed to come up. It is a complex issue. There are more people on the roads and therefore there will be more claims. It is as simple as that. That is what we have seen in all of the statistics to which we have had access, which is the same public information that is available to anybody else. It does look like there is a material increase, in particular in injury claims, which is the main factor in the cost of a premium. Injury claims have gone up quite materially from 2012 to 2015. There are more claims coming through, but ultimately it comes back to the original point that we do need a good robust analysis of the issue in a transparent fashion which will highlight not only how much money is being made but, it is hoped, it will also allow us to find the factors behind that, which will then allow policy-makers to form policy decisions.

Does the society include fraud in its calculations? From all of the analysis the society has carried out working with companies, is there a percentage included in the projections for fraud?

Mr. Ronan Mulligan

I am not sure whether it is explicit. No. What we do is look at the total cost of claims. We know there will be a certain amount of fraud, as that is inherent in the process. Senator Burke is seeking to price that but I am not sure whether our pricing actuaries necessarily look to say it is explicitly X amount of loading for fraud. If one looks at the premium, about 70% to 80% of it relates to the cost of claims, so that is the number we are trying to estimate. We might break that down between damage claims and injury claims and try to estimate them separately, but I am not sure it is worked out separately how much fraud there is in the system and that it costs X amount. We just know the total cost in a certain region.

Cuirim fáilte roimh na finnéithe. I welcome the presentations and the responses to many questions, some of which I intended to pose. The Society of Actuaries in Ireland has given a good example of what has been happening since 2010, a picture with which we are quite familiar. We have seen an increase of 70% in premiums in the past two years. I do not suggest it has come from the society but there has been much deliberate misrepresentation of what is happening within the industry to create a smokescreen. The sum of €15,000 was always paid out for whiplash claims. They are not the highest in Europe as other European countries have higher payments. If that level of compensation was always the case, then it cannot result in a 70% increase. If legal fees have not jumped, then it cannot result in a 70% increase. The committee is trying to ascertain the reason and what is within the control of the Houses of the Oireachtas in terms of increased premiums.

Mr. Dunne is the chairperson of the Society of Actuaries in Ireland, but is it true that he also works for one of the biggest insurance companies in the country?

Mr. Gary Dunne

No. I am a consultant.

Mr. Gary Dunne

No. I no longer work for Zurich.

Mr. Dunne no longer works for Zurich but did he work for the company?

Mr. Gary Dunne

Yes, previously.

Did Mr. Dunne have responsibility for Ireland, Europe and Africa?

Mr. Gary Dunne

Yes.

Is it correct to say that Mr. Dunne had quite a senior position in Zurich?

Mr. Gary Dunne

Yes.

Is it correct to say Mr. Dunne has a good global view of the insurance market?

Mr. Gary Dunne

Yes, I suppose, in as reasonable a way as I can.

Insurance Ireland will come before the committee but, as Mr. Dunne indicated, we do not have the data and the society does not have the data. However, given his very senior position within Zurich plc, the sixth largest insurance company in Ireland in terms of motor insurance, which was still recording underwriting losses in 2014 according to the Central Bank’s accounts and published statistics, will Mr. Dunne give an insight, as he had an overview of a number of continents, as to why Zurich plc increased premiums so dramatically in recent years?

Mr. Gary Dunne

To be clear, I am here in my capacity as chair of the Society of Actuaries in Ireland so I do not think I can comment on previous employers. That would be quite unfair to both them and me.

The only reason I make the point is that there were a number of comments to the effect that witnesses do not have access to the data, but Mr. Dunne would have had access to the data.

Mr. Gary Dunne

Yes. I am happy talk in general terms.

The information might be confidential.

Mr. Gary Dunne

I am very happy to talk in general terms about comparisons across Europe or globally, but it would be very unfair to discuss my previous employers.

I appreciate Mr. Dunne’s answer. Insurance Ireland was in the media this morning and the comment was made that insurance is a very simple product. The premise is that premiums are taken in and money is paid out in claims.

Mr. Gary Dunne

Yes.

However, there is another element to that which was not mentioned, namely, that insurance companies invest premiums.

Mr. Gary Dunne

Yes.

What has been happening in recent years, according to the Central Bank’s statistics, is that we have lost €100 million in three years in terms of investments. Is that not the case?

Mr. Gary Dunne

Is Deputy Doherty saying that insurers have lost €100 million in the past three years on their investments?

The actual investment income attributable to loss has decreased from €278 million in 2012 to €176 million in 2014, which is a drop of more than €100 million.

Mr. Gary Dunne

I am sorry. I did not understand the question. Is it the case that there is less investment income rather than a loss in investment income?

Mr. Gary Dunne

Yes, okay.

During that period the underwriting loss increased.

Mr. Gary Dunne

Yes.

Is it the norm that insurance companies offset underwriting loss with investment income?

Mr. Gary Dunne

It is. We try to make insurance as simple as possible but one can and should layer on complexities to get the full picture but it is a game of money in and money out, like most organisations. The money in is premiums and also investment income and the money out is primarily claims, operating expenses for the company and brokerage commissions among other costs.

You can distil it to that. It means that if there is less income for that outgoing there needs to be more income.

I spoke earlier about smokescreens. There has been much focus on the expensive necks of the Irish people and fraud but very little focus on the fact that the insurance companies are seeing a dramatic drop in investment income, which is one of the reasons why premiums are going up because the income to offset the underwriting loss no longer exists. Is this analysis correct?

Mr. Gary Dunne

It is fair to say that it is a component. It is money in and money out so if there is less money coming for the money going out, the money coming in must increase.

We had discussions last week with Mr. Conor Faughnan who said that there were rules precluding insurance companies from investing in the stock market or equities generally and that it was Government bonds. Does historical data exist? We are obviously not asking for it in the case of a particular company but is there any historical data saying that the percentage of investment income in the motor insurance business was 20% or 5% of the total? Do we have any figures?

Mr. Ronan Mulligan

One would be able to derive some of that information from Central Bank statistics which would break it down between underwriting income and investment income. Some assumptions are needed to allocate investment income, particularly to motor insurance, but one can get the information from there.

The investment income in 2012 would have been about 20% of the premiums that would have come in.

Mr. Ronan Mulligan

The Deputy's point is correct. The model is that one either makes money through underwriting or investment income or, ideally, one makes money through both. One tries to make one's total return from those two sources.

Does Mr. Mulligan agree with the assessment of the former Governor of the Central Bank when he wrote to the Minister for Finance in a confidential letter that was released to me under freedom of information? In the letter, he said that a number of non-life insurance companies took a very optimistic view of the future economic outlook, built up unsustainable overheads and followed an imprudent pricing and underwriting approach across most business lines. Does Mr. Mulligan agree with that assessment from the former Governor, Professor Patrick Honohan?

Mr. Ronan Mulligan

I would say it is a general comment and I am not sure one can apply general comments across the entire market. During the period-----

He refers to a number of non-life insurance companies. He does not suggest that it applied to all of them.

Mr. Ronan Mulligan

During the period, as we have said, companies were defending market share. It is a very price-sensitive product so the primary strategy they would have had to achieve that would have been to reduce premium rates through that period in an attempt to defend that market share. What we can expect of insurance companies is that they will act in their own economic best interests so they would have made a judgement that this was in their economic best interests through that period. In respect of Mr. Honohan's comments and whether it was imprudent or not, one would need to go back and consider what the strategies of the insurance companies were through the-----

We know this from statistics but when Professor Honohan referred to this cohort of non-life insurance companies, he said that several Irish general insurance companies had eroded their capital base. Can we accept that this was a factual point in 2015? He was talking about previous years. Part of the letter is redacted, which I presume is composed of figures that I am not allowed to see. Professor Honohan went to say that the Minister would have noticed as well that these companies had put at their helm new CEOs to effect this return to profitability. Is that not the point here? The point is that these companies were behaving imprudently, saw a massive reduction in their investment income, appointed new CEOs and are now ramping up profitability because they have an issue with their own capital base and because Solvency II kicked in at the start of this year. The other issues, such whiplash, extra claims and legal fees are important and we need to deal with them but it does not actually deal with the substance of the big issue, which is that the model at that point in time was not fit for purpose.

Mr. Ronan Mulligan

I am not sure I agree with all of what the Deputy has said. It is true that the CEOs have changed; that we were coming from a position from 2010 through to 2014, for which we have statistics, when insurance prices were at a very low base; that a number of companies did suffer erosion to their capital bases because they were not profitable through that period; and that there were some failures and some withdrawals through that period. The Deputy said the model was broken. What I would say is that prices were too low for there to be a sustainable profitable model and insurance companies have responded-----

That is the model. They charged on that basis because they were of the view that they would have this type of investment income into the future. Quantitative easing came along and basically meant that they could not get the 4% return on their Government bonds that they used to get and would get negative rates. This means that insurance companies have lost that portion of their income but earlier this year, the governor of the Central Bank, Philip Lane, told them not to chase risky investments so they are now in a situation where they have to charge insurance premiums at a cost that will cover all the claims and the investment income does not really come into it. Is that not-----

Mr. Ronan Mulligan

The Deputy is right in the way he characterised it. During the period, they were underwriting losses but were able to subsidise those with returns on investment. We are now in a place where yields have fallen to very low levels and there is no possibility of subsidising underwriting losses to the same extent because yields are so low now. They are returning to underwriting as a source of profit.

I accept that. The problem is that the underwriting or investment losses are not only attributable to the motor insurance industry. In respect of the €100 million that was lost in those three years or the smaller amount of income generated between 2000 and 2014, a small portion of that came from the motor insurance industry. Is it not the case that because motor insurance is compulsory, losses made by non-life insurance companies in other areas are now being passed on to the motor insurance division? Is it true that to make up the shortfall caused by investment losses of €100 million, even though about €40 million applied to motor insurance, they must make up for the losses in other areas, for example, home insurance, but it is being loaded on to motor insurance because motor insurance is compulsory? Is it not the case that basically, we have given the insurance companies a blank cheque?

Mr. Ronan Mulligan

Motor insurance is compulsory but other forms of insurance are also compulsory. Employers liability insurance and public liability insurance are products that companies will almost always purchase. Is motor insurance bearing all of it? Motor insurance probably is the largest piece of business that any of the insurance companies will underwrite so one's motor book is obviously one of the principal things one would target in order to return to underwriting profitability.

I thank Mr. Mulligan for those answers, which have been very helpful.

I thank the delegation from the Injuries Board for its presentation. A number of Deputies and Senators have gone through the figures but if we look at the end figure of 33,000 that has come to the board, we can see that only 7,200 claims have been assessed by the board and agreed by participants so we have a huge gap in terms of numbers of claims that would have come to the board while at the same time not knowing how many of them were directly settled before they even came to the board. In respect of the other 26,000 claims, it could be the case that the individual was not satisfied with the settlement that was being offered by the Injuries Board but in most cases, it would be the insurance companies that have not consented. I know the board says it does not have numbers relating to the levels of claims but can the witnesses give us any indication? Has the board monitored what has been happening in the courts? How many of the 26,000 claims that came to the board that it did not process or accept ended up in the courts?

Mr. Stephen Watkins

The Courts Service's annual report for 2015, which was published in July, lists about 18,000 cases where personal injury suits were issued. That would include medical negligence cases that would never come to us in the first place. The balance would be made up of cases where we issued an authorisation because the award was rejected by the claimant, cases where the insurer did not consent to us assessing the case and cases we do not assess, which the legislation authorises us to release. These would be wholly psychological cases where the claim might only include post-traumatic stress disorder.

There would also be a certain kind of case of abuse in that with which we would not deal. There would be other cases in respect of which there may be pre-existing injuries from previous accidents and complications such that we would not assess those cases. What we do not have is a breakdown of the court writs, which would be useful. However, it is probably reasonable to say that most of the rejected cases will end up in litigation.

Does the Injuries Board have access to the insurance data that were provided to compile the books of quantum for 2013 and 2014, the secret information for which we have been screaming for quite a while, or were they given directly to the private consultants?

Mr. Conor O'Brien

The data passed through us to the private consultants and were expressly given on the basis of their use for the book of quantum only. The data also would not contain all the information sought by the committee; they would only contain part of the picture and would only cover a particular period.

They would, however, contain information on, for example, the number of claims settled out of court out of the total number not agreed by the Injuries Board.

Mr. Maurice Priestley

No, they did not contain that level of detail. The book was made up of research of closed claims over 2013 and 2014. The information we received was, say, a list of claims that had been closed, so we had the claim number and the amount paid. That was the extent of the information received. It did not detail, say, the stage of settlement, that is, whether a case was settled before, during or after it came to the board.

Mr. Conor O'Brien

The purpose of the book of quantum was not particularly to consider that type of information.

It was the payouts-----

Mr. Conor O'Brien

Yes.

-----and that was it.

Before we move on to the book of quantum, the Society of Actuaries in Ireland makes the point that there has been a 42% increase in the number of claims being processed by the Injuries Board. Is that not a reason premiums are rising? We know that the levels of awards are not causing the rise and that the level of solicitor representation has not really increased beyond the margins, so is the frequency of claims not an issue that could have led to the need for the insurance companies to increase their premiums?

Mr. Stephen Watkins

I am not sure what that figure is based on. I think it is based on the number of actual awards we made between 2010 and 2015, not the number of claims we received between those years.

In fairness, that is the way I read it, and that is the important part. If there are that many awards-----

Mr. Stephen Watkins

One could argue that the more awards made-----

Mr. Stephen Watkins

It is better because more people are using the system. The number of claims received in that period would be a lot smaller than that - I think it is under 30% - but, again, if we focus on the past three years, we see that is when the problem emerged. The 4.5% increase in motor claims between 2013 and 2015 - it was slightly down in the first six months of this year - shows that the problem of premiums seems to have arisen in the last three years.

Mr. Conor O'Brien

Another problem is that the applications to the board do not reflect the settlement strategy of the insurers. We do not know whether they are settling more or less themselves, so there is a problem with relying on those numbers alone to figure out what the issue is.

Let us consider the book of quantum. When the Injuries Board assesses a claim, does it rely on a book of quantum which is based on claims that were paid out prior to the compilation of the book, which was 12 years ago? What does the Injuries Board do? Does it just add an additional inflation charge?

Mr. Maurice Priestley

The book is a guideline. As a result of the nature of personal injury claims, many factors are taken into account for an individual claim, and each case is dealt with on its own merits. There are ranges of damages in the book for different injuries of differing severity. Let us say one has a broken leg. There may be three or four different levels of severity for such an injury, and for each level of severity there is a band of valuation. The assessment is, therefore, based on the particular claim, but the book is a guideline, not a restriction as such, so it takes into account current developments in the levels of damages.

Returning to former Governor Honohan's letter, he made suggestions to the Government in July 2015. He said that the introduction of judicial guidelines in this regard would usefully complement the policy framework in Ireland as it has proved effective abroad. This concerns the Injuries Board and the book of quantum. Does the Injuries Board support that idea, that there should be judicial guidelines? It was said earlier that the Judiciary must have due regard to the book of quantum, but that does not mean it is guided by it. Does the board support judicial guidelines in this area regarding the book of quantum?

Mr. Conor O'Brien

We support anything that will develop consistency of awards across the different systems. Part of the work we did in compiling the current book was to consider other models or books in use in the UK and the North of Ireland. Due to the fact that the Judiciary has had to have regard to the book of quantum, we have also had very constructive engagement with the Judiciary over the summer months on the adoption and use of the book of quantum.

Very good. Regarding claims that are settled, regardless of how we can fix the process or try to enhance the process, there always will be and always should be the right of an individual or indeed an insurance company to pursue a matter through the courts. Is it the board's view that in cases of claims which come before it and are either rejected by the insurance company or by the individual, data on the ultimate level of payout, whether it is on the steps of the court or in court, should be referred to the board? Is that something the board is seeking or would support?

Mr. Conor O'Brien

Yes. Every level of the settlement should refer to the book of quantum because it will maximise the number of cases that are accepted through our model and remove the need for lengthy court cases and the fees associated with them. Therefore, whatever the stage of the cycle through which the case is going, if the book is used as a guideline, it will certainly help.

What about when the book of quantum states that for a certain category of whiplash, for example, the award is €15,000 and somebody appeals that to the Judiciary and gets €45,000? I think in one of the documents I got through a freedom of information request I saw correspondence between the insurance sector and the Department, which were concerned about some newly appointed members of the Judiciary in terms of some of the payouts they would grant. How does the board deal with that? Does it revert to the book of quantum or does it now have to have regard to the new price that has been set by the courts?

Mr. Maurice Priestley

I think it is important that nobody be influenced by cases in isolation. There are always one-off cases in which the level of damages may seem unusual. What we are considering is the general level of damages across the market. The limited number of cases that are going to court now, that actually go to a hearing, are the most difficult cases where, say, the best minds in the Law Library or in the insurance company have been unable to settle. It is, therefore, very important that consideration of this issue not be skewed by individual cases. It is the market rate that needs to be considered. Whatever the market rate is, the board is obliged to award that.

I have two final questions. The first is for the Society of Actuaries in Ireland and concerns a bugbear of many people from whom I hear, namely, those who drive older cars and who are, they argue, very safe on the roads. They argue that they are probably safer on the roads than many others because some of these cars are very old and quite expensive. Perhaps the Injuries Board could also answer this. Have the witnesses seen any trends whereby those driving older cars - some insurance companies refuse even to quote them - are more at risk or have they seen more of a trend compared to the data? Do they have any oversight of that? Could the Society of Actuaries in Ireland explain why it believes that such drivers pose a greater risk than somebody who is driving a new BMW, a new Ford Galaxy or whatever?

Mr. Gary Dunne

Until very recently, I was driving 16 year old car so I was in that category. Like everything, these things are quite complex. This is a general standpoint rather than a specific one because the Society of Actuaries in Ireland does not have access to the data. However, an insurance company might do something on the basis of what is termed "an underwriting reason". Is is trying to underwrite out a particular segment. One particular reason, anecdotally - and I am loath to use that word because we are really pushing for evidence-based decisions here - is that there can tend to be more fraud where people have recently purchased cars that are quite old with the intention of making fraudulent claims.

My recent experience, despite having an old car, was that I had no issue renewing. I did not bother going elsewhere because at the time the premium was relatively low. I did not look to see if there was going to be an issue changing insurer. If it is the case, and I am not aware that it is, that insurance companies are refusing in cases where one has had a car with the same company for ten or 15 years, I do not know a reason behind that. It would be unusual because if it is a profitable policy, why would it not want to keep it? I can see an argument for it if there is a recent purchase of a very old car. From an underwriting perspective, one could say one cannot even price for it. That is the only anecdotal explanation I can proffer.

My last question relates to the amended motion that passed through the Dáil asking the finance committee to hold these hearings, which I have been through. This issue is what drives a lot of people crazy. The fact we have seen a 70% increase in insurance premiums is absolutely unforgivable. I believe there is a rip-off culture and a gouging of customers. That is my view but we will hear all the evidence and we will hear from the insurance sector. I am open to being convinced but I think it will fail to convince me. One thing I cannot understand is how certain people who have been insured with a company, who have not had any accidents in the previous 12 months and who have not received any penalty points in the last 12 months are seeing not a 38% or a 40% increase in their premiums but a 200% and 300% increase in their premiums. We, as a State, cannot interfere with the setting of prices by the insurance industry but it has a legal obligation to base those prices on the basis of risk. My understanding from speaking to people within the sector is that the insurance companies simply want these individuals off their books. They have too many 42-year-old women living in rural Ireland on their books and they just need them gone so what they do is spit out a 200% increase. How could that happen? What is happening here?

Mr. Gary Dunne

We can answer the Deputy's question of why everyone has to pay more. The principle of insurance is that it is a big pool of money and everyone pays in and the people who have claims take out. To put it in context, on average around 10% of policies have a claim in any given year. Only 1% of policies have an injury claim so it is even a smaller number with which we are dealing that are actually the crux of the problem. It is actually quite a low number overall. The pot can be divided up into risk segments which I think is what the Deputy is referring to. One can say a particular person is more risky. To give an extreme example, a 17 year old on a provisional licence in a Ferrari will be much worse than a 50-year-old nun driving a Yaris. They are quite different risks. One risk will have a particular profile to it and a particular increase and another risk will have a different increase. Even if neither has had claims, everyone needs to pay more because we do not know who will have the claims. That is the principle of insurance, otherwise the whole system fails so everyone has to pay a bit more. I do not have enough experience, particularly from the society's perspective, to say exactly why there are some very high increases. What I can say and what I have heard on the radio is that when people shop around, they are able to bring that down to a level that is still high but not near the three-figure sum the Deputy referred to. It is a common sense thing to do to shop around to ensure one has the best price for what one is purchasing.

That is not a very satisfactory answer. Mr. Dunne has not enlightened me as to why this is happening. Members of Mr. Dunne's society inform the insurance companies of the risk associated with their policies, the type of person and so on. These are individuals who have been insured by these companies for a number of years. If their premiums were increasing by on average 40% or 50%, that would be in line with what was happening. Even if it was 60%, there might be a riskier profile than for somebody else. That is how averages work. These are individuals, and there is a huge number of people, who are receiving 200% increases in their premium. Is it a case that when an insurer looks at its books and sees an over-concentration of people in the 65 to 70 year age bracket, when it starts to turn the dials to increase their premiums, for that cohort of individuals, it has to turn it a bit further because it needs some of them to come off their books?

Mr. Gary Dunne

It is important to differentiate between the two things which are pricing and underwriting. I know we are getting a bit technical here but in theory, one can price any risk. No matter what it is, one can put a price on it, not just motor insurance but anything. Lloyd's insures satellites and footballers' legs - it insures anything basically. In theory, one can price on that basis but then there is a separate thing which is an underwriting decision. From an underwriting perspective, an insurer can say it chose to play in this type of market and within this framework. It can say it is quite interested in taxi drivers, it is the place in which it wants to play, it is a great area and no one else is doing it. It can choose to play in it or not to do so. One has to differentiate between pricing and underwriting. What the Deputy is referring to are potentially underwriting decisions to be made. If someone decides he or she does not want a 50 year old who drive a Yaris, which tend to be a safe risk in relative terms, that is an underwriting decision rather than a pricing one. That would differentiate between the actuaries involvement which is on the pricing side, not necessarily the underwriting side.

The point is that the actuaries' input last year suggested that this individual, with their input, would be paying a premium of €400. With the actuaries' input this year, the individual, who is just one year older but no less safe on the road, has not bought a high powered beamer and is driving the same type of car, is now being charged €1,200. That is a real case example. It is not an underwriting position. Something has driven it. Something has made that happen because it is completely out of kilter with what is happening within the sector as a whole.

Deputy Doherty has made a really valid point. If the increase is 40%, 60% or 70%, the premiums of a particular class of person who has not changed his or her car or address and has not had a claim has gone way out of kilter relative to what a lot of people would regard as pretty outrageous increases in the first place. Is it a situation where it is all the actuaries' call or are there other people-----

Mr. Gary Dunne

It is them.

I am not trying to defend actuaries. With every premium, I telephone or go online. Presumably, there are lots of computer programmes. One telephones and has a row with somebody on the phone and all of a sudden, miraculously, he or she always seems to find €50 or €80. That will not solve a €400 increase but it usually gets something off and one feels that their €180 increase is now €140. One almost feels happy even though one should not be. Are there other people, non-actuaries, saying that they are getting into one model or out of another? Actuaries are very important people in the overall process. Do they get overridden or told that the insurers hear them but are going to make another decision that is nothing to do with them and that they have just made a call?

Mr. Ronan Mulligan

I will take that question. We have a role here. Somebody said no one is taking responsibility for anything. We are here to make a contribution and actuaries have a role in the process. I will try to answer Deputy Doherty's question, although I am not sure I have a more satisfactory answer. We have a role in the process. That role might be described as like setting the recommended retail price for insurance but we are not the exclusive owners of that price or the ultimate arbiters of the price the person will receive. Company strategy, the strength of its market position and the ability to actually secure that price in the market are involved. It will decline or hope to reduce its exposure in other parts of the market. Where brokers are involved, they will be given latitude in certain circumstances to adjust the price as well as they see fit, to try to hit targets, generate revenue and optimise that revenue. Actuaries have a role but not an exclusive one. In terms of some of the prices, 70% in two years, or 30% in the last year is an average number. Some people have not had anything like that while others have had far more.

Actuarial involvement in setting that price tends to try to segment the market into risk profiles that are as homogenous as possible and price for them in that pot. There is a distinction between the individual and the group, in that one cannot price an individual, but one can price groups. My opinion is not entirely fact based, but increases tend to happen in circumstances where there is a strategic underwriting decision about what one wants to target and not target. In terms of risk profiles, many of the large increases are not made in the plain, vanilla, large amounts of data-type instances. Rather, they tend to happen in more marginal cases, those being, very young drivers, very old drivers, perhaps very remote drivers or where circumstances have changed. In those marginal risk profile segments, there tends to be less data. An instance of a claim, in particular a large one, in one of those segments can suddenly cause the perception of that whole segment to change. This is potentially a technical reason for it happening. I am not saying that it is necessarily the reason, though. Insurance companies may be making underwriting decisions independently of this process. I am not sure what the reason is in every individual case, but it is a combination of a strategic decision owing to a desire not to provide cover in certain areas so as to manage the overall risk profile of the book and a technical, recommended retail price instance for marginal cases where there are not many people in a segment and a small change makes a big difference to the total risk.

I thank Mr. Mulligan.

I will allow Senator Conway-Walsh to contribute again after calling those who have not spoken yet. Before that, though, is Mr. Mulligan saying that, if there are only 60 Senators in the country and one has a crash, the other Senators' premiums are liable to increase?

Mr. Ronan Mulligan

I am afraid that, if one is in the Senator book, then yes. One is suddenly considered a-----

I am not afraid to be in it, but that is an example of what Mr. Mulligan mentioned.

Mr. Ronan Mulligan

Yes.

Someone else might be living on a remote island.

Two members wish to contribute, but I want to address something that no one has yet, although it was referenced slightly during Mr. Conor Faughnan's appearance. He wore two hats, that of the Automobile Association, AA, and that of a broker. The AA's official title for it is an intermediary. We do not want to mention individual companies, as it would be unfair to ask people to discuss previous employers, but what of brokers' fees? I am not asking the Injuries Board, as the fees are not part of its remit, but I presume that actuaries have full sight of data if they are working in the insurance industry. Brokers argue that they face competition, negotiate bulk deals and get extra information, but what are the typical broker's fees? If the motor insurance market pays €1 billion, what do brokers get out of that?

Mr. Gary Dunne

It depends on how much is direct and how much is brokers'. Brokerage commissions vary from business to business.

Mr. Gary Dunne

For motor insurance, the expected average is 7.5%. There might be overriders, for example, volume overriders, in that the commission is higher if a broker brings in more business. If a business is more profitable, the commission can also be higher.

I wish to ask the Society of Actuaries in Ireland about the Setanta Insurance case, which has often been discussed in this regard. The insurance industry has assessed that it will incur a cost of €90 million if the Supreme Court case is carried through. It seems to be causing reputational damage in the eyes of foreign companies that are considering moving into Ireland. Qatar bucked the trend on 31 August when it announced its intention to come to Ireland, but how much has this case affected the level of uncertainty in the system? Professor Philip Lane is on record as saying that a lottery system is operating throughout Europe in terms of regulation. Setanta Insurance was registered in Malta, yet there appear to be unclear lines of responsibility where a company has a passport for providing insurance services in the EU. Will the witnesses comment on this point?

There is a major argument about the lack of data that insurance companies use to assess risk. This will affect foreign companies entering the market. How do we tackle this issue? Is there an unwillingness within the insurance sector to share information and data? Should there be a national claims register?

The State-backed Insurance Compensation Fund, ICF, applied a 2% levy to account for the cost of PMPA and Quinn Insurance. If the Supreme Court holds that the Motor Insurers Bureau of Ireland is not only responsible for picking up the tab for untraced and uninsured drivers, but also for policyholders and premiums where a company fails or becomes insolvent, how will that affect the insurance industry and people's premiums?

Mr. Ronan Mulligan

I will address the Setanta Insurance case first. The Deputy is correct, in that the decision has introduced a great deal of uncertainty because new entrants to the market are considering whether, if they play in the Irish market, they will end up underwriting its weakest participant. To some extent, it socialises the potential insolvency of anyone else operating in the market. As to the cost of Setanta Insurance, €90 million is approximately the correct number. I am not sure how to translate that into a cost per policy, as it is a one-off and Setanta Insurance is effectively paid for, but it is a question of taking into account the potential cost of other failures when pricing.

Regarding the Central Bank Governor's comment about a lottery system in the regulation of insurance companies, there is a common standard across Europe, Solvency II, which was intended to harmonise the regulation of insurance companies. While that was welcome, is good and has improved the risk assessment and management of insurance companies, its implementation and-or application will naturally vary across jurisdictions. From a consumer's point of view, it is important to be cognisant of where an insurance company is regulated and to make a decision on same.

I will take the question on the ICF. The Motor Insurers Bureau of Ireland, MIBI, will end up underwriting the failure of insurance companies, but it is funded by a levy on the insurance industry, which is a member of MIBI. That is the mechanism that will be used, in that the levy to MIBI will increase. If one's annual levy to MIBI increases, one will pass that on to the policyholder.

Will Mr. Dunne address the lack of data?

Mr. Gary Dunne

I would be happy to do so. The more transparency there is, the easier it is for foreign or new entrants to assess whether they want to enter the market. In a market where there are reported losses, one is less likely to enter. If the market is profitable, one is more likely to enter. Reverting to an earlier point, eight major players would have a high market share. One could name many other players, but the eight in question comprise a large percentage of the industry. Of those eight, only one is a domestic insurer. The rest are parts of foreign groups. The availability of more data about profitability would make it much easier for companies to enter our market. It is the same in every sector. If one knows that something is profitable, one is more likely to make a good risk assessment of whether and when to enter. This is the society's position.

There is an unhealthy lack of competition.

I wish to elaborate on two other points. Should the European Insurance and Occupational Pensions Authority, EIOPA, be taking the lead role in achieving a consensus on regulation throughout Europe? The Governor of the Central Bank has responsibility for regulating the insurance sector in Ireland, but how can a consensus be achieved across Europe in respect of companies that are registered in other countries? Should we build the consensus through the EIOPA?

If the Supreme Court holds that the MIBI is responsible for repaying the policyholders of insolvent insurers, will the ICF no longer be fit for purpose or should it continue? Will the whole responsibility be passed on to the insurance sector? Has Mr. Mulligan or the society any view on how that might affect the sector?

Mr. Ronan Mulligan

The EIOPA would probably say it is trying to deliver consensus and consistent application of standards across all the regulatory bodies through the colleges of supervisors and the other regulatory mechanisms it has. I am not sure whether the society has a strong view on whether that could be improved through the EIOPA, or whether the Central Bank has more of a role to play in terms of considering the application of the regulations in other jurisdictions. I think the insurance compensation fund will pay 65% of the value of claims. The issue is whether MIBI will pick up the tab for the other 35%. It is not that the decision would make the ICF defunct in some way - it is just that the balance of the 35% would essentially be picked up by MIBI. I think both-----

If that is the case, it is going to have an increased cost on policyholders as we go forward.

Mr. Ronan Mulligan

Previously, 65% of the cost was being funded by a 2% levy. Now another 35% has to be funded from somewhere. The ICF is funded by a levy on policyholders, who pay it as part of their premiums. The MIBI levy is paid by the insurance companies, which naturally pass the cost on to policyholders.

Perhaps Mr. Mulligan will be unable to answer my next question because I am unaware of the current position. Are we still paying the tab, through the ICF, for insurance companies like Quinn Insurance that have left the marketplace? Does the ICF fully cover the cost of insurance companies that have failed? Is the fund healthy or is it under pressure in terms of how it operates?

Mr. Ronan Mulligan

I cannot answer that question because I am not familiar with the funding status of the ICF.

That is fine. I would like to ask the representatives of the Injuries Board about the process that is followed when individuals put applications through the board. It was supposed to be a lawyer-free zone, but issues arose with the Constitution. I understand a case was taken soon after the inception of the board to rectify that. It was originally supposed to be a DIY institution. It was supposed to be easy for claimants to bring claims before the board. How difficult is it for an individual who does not go to a solicitor to process a claim through the Injuries Board? Is it a difficult process? How easy is it to use? How user-friendly is it?

Mr. Conor O'Brien

As the process was set up for direct applicants, it is perfectly viable for individuals to come to us directly without using a solicitor. I would like to clarify that the board was not set up to be a "lawyer-free zone" per se. People can choose whether to use a solicitor or to come to us directly. It is perfectly viable for people to go through the process. The form they have to fill out is not complicated. We have very good processes in place to allow people to go through the entire process quite simply.

I would like to clarify what was the case originally. As I recall it, a case was taken by the Law Society after the inception of the board.

Mr. Conor O'Brien

That is correct. That case related to representation. The expression "lawyer-free zone" was not in our ambit.

It was intended that people would not be represented by solicitors when they were going through this process.

Mr. Conor O'Brien

It was intended when the board was being set up that people would be able to come directly to us. If they needed to use a solicitor, that was fine, but it would be on their own account.

Mr. Stephen Watkins

It was conceived as an administrative process rather than a legal process.

Mr. Conor O'Brien

Exactly.

We have been trying to get information on direct settlements. I note that the word "unknown" is used under each category in the Injuries Board's presentation. Is there anything we can do, or any of the services can do, to try to ensure we can get data on them? I know it is very difficult. It presents difficulties. Is there anything that the Injuries Board feels we could do to get more data, or any data, on such claims?

Mr. Conor O'Brien

The establishment of a national claims register would certainly help with this. Instant transparency on claims - what is happening, what channel they are going through, what the settlement amounts are and what the fees are - would be provided from the inception of such a register. It would lead to other benefits. For example, revisions to the book of quantum could be done on a more regular and easier basis. This kind of register would help with investigating the root case of accidents. It would enable people to track more information about car accidents, for example relating to passengers and locations etc. This might help to try to reduce the number of overall accidents. An initiative like that would have a huge number of benefits.

Obviously, that would assist other companies coming into the marketplace and assessing risk, etc. If a person is unhappy with an award that is given through the board and decides to go through the courts for further redress, is it the case that he or she is required to foot his or her own legal bills if the initial award is not exceeded?

Mr. Conor O'Brien

That is correct. The 2003 Act was amended in 2007 to provide for such a requirement.

Those who say that legal fees, awards or claims have increased do not tend to take account of the fact that the respective jurisdictions of the District Court and the Circuit Court have also increased. I think we have to consider the fact that data can be presented incorrectly through the media. I think we need to tackle wider problems in this industry, such as data and reputational damage.

I thank Deputy Burke and call Senator Mulherin.

The 2014 data for insurance company income and for personal injury, motor and liability claims provide the stark bigger picture. We can talk about fraudulent claims and so on, but the figures in question show that insurance company income on the motor and liability side was €1.4 billion in 2014. The court records show that €169 million was paid out in court awards and €166 million was paid out through the Injuries Board. We need to allow for administrative costs and for the fact that the State does not have to take out insurance. If I am suing the State, I am aware that it is self-insured. The figures that arise when someone trips on county council property or whatever do not enter into this equation. If we allow for administration costs, that brings the total on one side to approximately €400 million. This means that insurance companies have income of €1 billion net of claims that might be taken against them. I think we have to begin there. I know there has been some discussion in relation to the model. This is gravely serious. A small pub with a late licence is being absolutely crucified when it comes to public liability. I know that lots of cases have been cited here. Every good motorist is carrying a burden. For restaurants and many other premises, it is more than 70% in the case of public liability on account of claims.

The Senator has made a valid point about public liability and employer liability insurance. I made the same point at the first meeting of this committee last week. At the moment, the joint committee is charged with dealing with motor insurance only. Therefore, I ask the Senator to refrain from discussing other areas of insurance for now.

Okay. I will move on from that. I recall that the establishment of the Personal Injuries Assessment Board in 2003 was highly controversial with lawyers. It was heralded as a way to reduce insurance claims and costs in this country, but it has failed in that respect. Aside from some benefits that have been shown over a period of time, it is clear that it is going to fail on the basis of the figures I have cited, which show that the claim amounts and levels of compensation paid are very small by comparison with the income levels of insurance companies. I suppose the point I am making is that if, as it would seem, 60% of claims are settled through the Injuries Board when people accept the amount that is assessed, it could easily be argued on the basis of the involvement of lawyers and insurance companies that 60% of claims could be settled outside of court without requiring any litigation at all. I understand the point that we should have a system that is a less adversarial and, as Mr. Priestly pointed out, more administrative in nature. Is it really working? Has the establishment of another Government body been justified?

It seems to me, based on my experience as someone who has practised as a solicitor in this area for some time, that in many instances this system encourages people with spurious claims. It makes it a lot easier. It is not as intimidating as having to pursue a claim in court. It costs €45 to lodge a claim. It costs a certain amount for medical reports as well. The person who is responding to the claim has to find €600. While there are legitimate claims and there are legitimate people involved, I wonder what function this structure is serving at the moment.

What it was being praised for, and what was meant to come about as a result, is not happening now. I agree that compensation claims are just a component of the make-up of premiums and what is being charged. I am at a loss about this. In many ways this operates as a gateway; many of the cases being settled might have been settled anyway. I will pose that question.

I have a question for the actuary, Mr. Dunne. How many underwriters are based in or work in Ireland? If there are not many, is it an issue? It seems many underwriters are in the United Kingdom, so how does this affect our position? I also note that the UK does not have an injuries board but we do. That is not meant as a sign of disrespect to anybody working with the Injuries Board, but when one considers what it is supposed to do, one can see it is not working. It may not be the fault of the witnesses, but is it now defunct?

On the same topic, we have had many references to the quantum of figures, volume of cases and so on. Is it fair to say that of the number of motor insurance claims that arise on an annual basis, 70% or 71% are being settled, with 20% being settled by the Injuries Board, as opposed to being assessed? The 70% figure includes the 14,000 cases involving non-liability and those that get lost on the system. Approximately 10% end up in the courts. Is it the case that 70% of settlements are before or after the involvement of the board or initial assessment? We know 20% are dealt with and finalised by the board, with 10% going to the courts. I presume the 70% figure relates to the €1 billion referred to by Senator Mulherin as a kind of surplus. Is that fair to say?

Mr. Conor O'Brien

In terms of our role and settlements, as Mr. Priestly mentioned earlier, the number of cases we settle directly does not indicate the absolute picture in terms of the Injuries Board model.

It is approximately 20% of the total.

Mr. Conor O'Brien

It is approximately 20% of the total, but we do not know the total of personal injury claims in the State. We only know how many we are processing.

I presume not every motor insurance claim involves a personal injury. There are tips to bumpers. We all know, anecdotally, that a bus could get a tip and all of a sudden there might have been 400 people on it. We hear these stories. I presume there are plenty of bumps and tips, with people reversing into pillars and other small stuff. These people probably do not even go to an insurance company in some cases and when they do, the settlement is €400 or €500 in damage and no personal injury claim. The cost of insurance claims is very much related to personal injury rather than material damage.

Mr. Conor O'Brien

The important point is that it is not that we should be involved with every personal injury claim, as that would not work either. Our model facilitates early settlements by insurers and the problem is a lack of transparency in terms of what is going on in those early settlements and the contribution to costs and overall claims. In an ideal world, there would not be any need for a process as they would all be settled early.

Before getting to the board at all.

Mr. Conor O'Brien

Absolutely. We are the gateway before a party goes to court. I would not necessarily agree that we have failed. One might look at the record over the past 12 years, the 100,000 awards we made and the €2 billion in compensation. These were for people who did not have to go to court. These are also people who had their cases resolved in seven months, as opposed to having to spend three or three and a half years waiting to clear this issue from their lives and get on with it. Some people have been incredibly badly affected by the accidents in which they were involved. The board has a very important role and it has made a very significant contribution to lowering the cost of claims and bettering the outcomes for the claimants and people who use the process.

Senator Mulherin made a point that Mr. Dunne might answer.

Mr. Gary Dunne

I will answer the query about underwriters. I do not know how many underwriters are in Ireland as there are no statistics on that. We refer to the top eight having approximately 90% of the market share, with six of those companies having many people on the ground. They are not branches, I suppose, but entities. There are two that are branches of UK companies but there is a legal distinction in how the passporting works. There are six based here with underwriters here, as far as I am aware. With the other two, they may have underwriters here but I simply do not know.

Mr. Ronan Mulligan

There is a UK equivalent of the Injuries Board, the Claims Portal, which allows people to manage and process their claims in exactly the same way as the Injuries Board. It is a low-cost model that has been established for two or three years.

I know Mr. O'Brien's contention is there is a better outcome for claimants, but in fairness, there has been over 90% involvement in cases by lawyers. One might argue that it is a contributing factor to the good outcomes.

Is there an actuarial rationale for the non-recognition of no-claims bonuses for people returning from other countries?

Mr. Gary Dunne

In the first instance that would be an underwriting rather than actuarial decision. Actuaries work based on actual data and that is our job. With people returning from other countries, one may analyse statistics and say they are better or worse risks; an actuary may allow for that, but there can be underwriting decisions and reasons for it.

There is no actuarial reason for it.

With regard to the witness's multinational experience with Zurich, it should be easy for any insurance company to access information on whether somebody's no-claims bonus is bona fide.

Mr. Gary Dunne

I will not speak about my previous employer, as that is not fair either on me or on it. I can imagine there might be data protection issues. It can be quite difficult for information to go across countries sometimes, even under the same European Union band. I simply do not know, but I can imagine that being a consideration, and it might be more difficult.

I have some final questions. Are there sufficient actuaries in the country? One might say they should be everywhere, but we seem to have a shortage of nurses, doctors and consultants. There was anecdotal evidence that the Central Bank was having difficulty retaining actuaries. I am not sure if that is a matter of what it was willing to pay versus the market rate or rather that the State does not have sufficient numbers of actuaries.

Mr. Gary Dunne

It is fair to say there is a high demand for actuaries from a number of areas, not just industry and consultancies but regulators as well. Certainly, the complexity of insurance is increasing rather than decreasing, so that lends itself towards actuarial analysis. There is definitely a higher demand for actuaries at this point.

Is it fair to say there is a shortage of them? Would companies like to have more than they do?

Mr. Gary Dunne

It is supply and demand and the price one is willing to pay. If somebody is willing to pay €10,000 for an actuary, there will not be many looking for the work. There is a shortage to some extent, one could argue, as people want more actuaries.

Mr. Ronan Mulligan

On a per capita basis we have a very high number of actuaries and they practice in many areas. Sometimes there may be a shortage in a particular area as a result, meaning demand goes up. I am not sure we have a real shortage as such. With the Central Bank there was a period after the financial crisis when there were issues at the bank relating to compensation, pension entitlements etc. The bank lost some actuaries in that period. It has recently staffed up again on the actuarial side and it has quite a healthy complement of actuaries working there now.

However, the Central Bank would be in a better position to state what it needs.

While it probably will be less relevant in this scenario, I have put the following question to quite a number of delegations. Were the witnesses in the committee's position, what questions would they put to Insurance Ireland? I am not sure the question is as relevant in this case, because both delegations have more or less stated they have relatively good relationships with or involvement with the insurance industry. When dealing with groups such as the Irish Road Haulage Association, Age Action Ireland, young drivers and so on, they clearly have a lot of issues on behalf of their members. Is it fair to state the witnesses have not experienced enormous difficulty in dealing with the insurance industry? Obviously, a sharing of data as to the reasons regarding the 14,000 people and so on might be helpful to the Injuries Board. I will ask the question. Were Mr. O'Brien sitting as a member of this committee tomorrow, what questions would he put to Insurance Ireland? It is all about data sharing and transparency to a certain extent, but what else?

Mr. Conor O'Brien

That would be the one question. It would be whether Insurance Ireland could publish those four particular items of information.

Can Mr. O'Brien state precisely what four items?

Mr. Conor O'Brien

The number of personal injury claims, the average settlement amount and closed settlement amount, the length of time it is taking to process the case and the fees that are being paid. It would be to see that-----

When Mr. O'Brien mentions fees, does he mean medical and legal fees, as well as fees for brokers and everybody?

Mr. Conor O'Brien

Yes, ideally. Moreover, they would be broken down over the past couple of years to enable us to identify what has grown and what has not.

Would another helpful piece of information be a breakdown as to why 14,000 cases that come through the Injuries Board are not being consented to?

Mr. Conor O'Brien

It would and if we could get reasons-----

It could improve the Injuries Board's processes. I do not suggest its processes are bad but there obviously are reasons. Everyone wants insurance companies to reject fraudulent claims and to refuse to pay out on them. Equally, there are liability issues but it would be helpful to know whether the incidence of fraud was 10% or 90%, whether the incidence of liability issues was 10% or 90% or whatever.

Mr. Conor O'Brien

Yes. Similarly, if cases are being rejected, it also would be useful to know whether the industry knows why they are being rejected.

When Mr. O'Brien refers to being rejected-----

Mr. Conor O'Brien

I mean the award that-----

Yes, but that only happens in approximately 10% of cases on the industry's part.

Mr. Conor O'Brien

Yes, but we still would like to know whether it was that there was a continuing investigation or whatever.

All right. I will ask Mr. Gary Dunne the same question.

Mr. Gary Dunne

From our perspective, unfortunately, it simply is a question of access to data. The only additional thing for which we possibly could ask would be for ways to make sure that the competition concerns are considered because that is the obstacle the society faced. We obviously would very much like for it to be the case that there were no obstacles and that we could find a way around that. However, that is the only thing from our perspective.

I thank Mr. Dunne. On behalf of the joint committee and myself as Acting Chairman, I thank Mr. Stephen Watkins, Mr. Conor O'Brien, Mr. Maurice Priestley, Mr. Gary Dunne and Mr. Ronan Mulligan for their contributions, their papers submitted in advance, their open and honest opening statements and their highly involved discussions with all the joint committee's members. Equally, I thank all the members who were present earlier and Senator Conway-Walsh who has remained here with me right to the end. At almost two and three quarter hours, this possibly has been the longest continuous session members have had. This is a credit to the witnesses, the amount of information they possess and their knowledge of their areas. The other members and I certainly appreciate it and I again thank the witnesses. That concludes the hearings for today and the joint committee is adjourned until 11 a.m. tomorrow.

The joint committee adjourned at 1.45 p.m. until 11 a.m. on Thursday, 15 September 2016.