Legislation to Control Insurance Claims: Motion.

Mr. Dardis

I move:

That Seanad Éireann calls on the Government to take effective steps to counter the compensation culture which is seriously damaging employment, economic activity and the capacity of Local Authorities and Voluntary Bodies to discharge their duties and, in particular, to bring forward effective legislative proposals:

(1) to discourage fraudulent claims;

(2) to provide for more realistic duties of care for landowners, employers and owners of premises in respect of liability to the public and employees;

(3) to safeguard defendants from nuisance and trivial claims; and

(4) to provide a statutory framework for the calculation of damages.

I apologise to the Minister for detaining him for a short time. I hope you, a Chathaoirligh, will note the time we commenced.

Acting Chairman

Yes, it is 6.08 p.m.

Mr. Dardis

The situation regarding public liability and third party claims is as serious a deterrent to employment as PRSI and the other impediments to enterprise. Furthermore, we believe there has been enough talk on this matter. We have had reports, inter-ministerial group meetings and so on, but the time has come to do something about the situation which confronts us. We debated a similar motion in June and another one prior to that date. This topic arises on a regular basis and the time has now come to move on it. There has been some agreement in this House on the content of the motion and we ask the Government to bring forward new laws in the next session which will deal effectively with the problems encompassed by it.

When we last discussed a motion related to this one, the Minister of State at the Department of Enterprise and Employment, Deputy O'Rourke, underlined the cost to society of insurance claims. She told us that motor and liability claims in 1991 amounted to £661 million or 2.7 per cent of GNP and that employers' liability costs totalled 2.2 per cent of pay roll costs, more than twice the figure for the rest of Europe. These figures show the significance of claims and the fact that these claims are a big drain on the national economy. The time has come to deal with this issue.

My colleague, Senator Honan, has some practical suggestions to make on how we should deal with fraudulent claims which appear to be prevalent at every level in society. We appear to have arrived at the point where falling over in a golf club or falling off a bar stool after a few pints, have become the subject of litigation. It has got to the point where it is almost laughable. There is widespread concern about this.

Regarding the local authorities and their responsibilities, we have almost reached the point where there is a demand that nearly every footpath be like a billiard table and when it is, and somebody slips on it, that is used as grounds for making a claim. In County Kildare, where we adopted the estimates in the past few weeks, it emerged from an examination of the estimates for 1994 that public liability insurance costs to County Kildare is £525,000 and in addition, approximately £100,000 or more has been imposed on the county because the first £5,000 of each claim must be met by the county. The effect of these two figures puts approximately £4 on the commercial rate in County Kildare, which is substantially more than 10 per cent.

That is the practical situation and it brings home the point that society and the taxpayer pays. The money has to be found. This begs the question I raised when we were discussing the estimates: should the county be its own insurance company and carry its own risk? The amount premium is so astonishingly high that the county could recover the cost quite easily over a short period if it were to carry its own risk.

The county manager, in his preamble to the estimates, said that County Kildare had one of the highest claims records in the country. Some people appear to expect a pavement or a footpath will be in a better state of repair than the footpath to their front door. If they fell on the path in front of their front door on claim would arise, but if they fell on the public footpath they would make a claim. That does not make sense. I believe the county should not be liable for some of the claims made against it. In a curious way, if we were to leave things as they are, there might not be a liability, but if we undertake improvements and they were not completed to what some people would regard as an acceptable standard, there is a liability. That does not appear to make sense.

As regards soft tissue injuries and what arises thereform, there should be specific legislation to cut back awards in those areas. I understand the normal award for whiplash is in the area of £10,000 to £20,000. Admittedly some people have been severely injured but in other cases I believe the condition is more a figment of the imagination rather than a physical complaint.

On the question of voluntary bodies, there are many voluntary agencies around the country which want to work on behalf of their community and to this end they organise events, such as field days, agricultural shows and even walks. The first item to be discussed at the initial meeting to organise these events is the cost of insurance and sometimes the cost is so high that these worthy activities cannot be undertaken. That is not right.

I am a trustee of two sporting organisations and every year I go to the annual general meeting and ask one question; what is the status of our insurance policy? I ask this because the trustees are liable under law if there is a claim and, if I remember correctly, there was one famous incident in County Offaly where the trustees were liable.

The RDS Spring Show has disappeared for a number of reasons connected with agricultural society and developments in society generally, but, one of the reasons is the cost of insurance. There was one large claim where, I understand an animal got loose at the Spring Show and somebody was injured and this had a knock on effect on shows all over the country. It came to the point where a local community decided to put furniture into a public park for children to play on but, suddenly, the park had to close because of the possibility of a claim.

These matters should be addressed by law and there should be immunity unless it can be shown that there was gross negligence. If it can be shown that a reasonable standard of care was taken there should be immunity from liability because, as I pointed out earlier, somebody has to pay the premium.

As regards landowners, this is a serious matter. People entering land, that is trespassers, can make a claim against the landowner. It should be the case that people enter land at their own risk and if they are involved in an accident unless it can be shown that there was gross negligence on the part of the landowner, no liability should accure. Would a husband sue his wife or a wife sue her husband if an accident happened on the farm, say, somebody fell over a plough? They would not, but if a trespasser falls he makes a claim. The landowner can be liable if people cross his land to get to national monuments. We are allegedly encouraging tourism, but a landowner or occupier can be liable if they allow people access across their land to visit national monuments. In this context I commend the Dáil amendment to the Merchant Shipping (Salvage and Wreck) Bill, 1993, which ensures that landowners who allow their land to be crossed when people go to salvage wrecks will not be liable in the event of an accident. More of that kind of legislation is required.

On the issue of employers and their liability, people complain about a back injury which is almost like the whiplash and is difficult to define. This should be the subject of special rules and the law needs to be changed. People who lift things have a duty to do so carefully, and that duty should be on their shoulders and not on their employers. Where an employee drops a hammer from a ladder on top of their colleagues, we must again consider whether the employer should be liable or if there should be a contingent liability on the employee on the basis of reasonable care being taken.

In the event of serious injuries, which could result in paralysis, where a fund is established to provide that person with a reasonable quality of life, if it could be so described, if a large award is made and within a short period the beneficiary of the award dies, there should be some way of returning a certain amount of the award to the person who paid it. This appears to me to be sensible. Another person should not be the beneficiary.

Insurance companies are not philantrophic institutions; they assess the risk, they base their premiums on what they are paying out. There is a margin between about which we could argue but those of us who pay premia suffer the costs as private individuals or local authority taxpayers. This problem has become a serious impediment to employment and having a damaging effect on economic growth. Something must be done about it now.

Ms Honan

I second the motion. Irish civil actions for injury account for the largest number of claims and the highest settlement figures in Europe. They pose a formidable problem for businesses and employers in this country. IBEC recently conducted a survey of its members to count the cost of such actions and the survey highlighted worrying trends in both the nature and extent of civil claims for injury.

Why are professional indeminity, public liability and employer accident insurance so prohibitively expensive in Ireland? Is it because we have all suddenly become careless, that more people are falling and being injured? I do not believe it is. Standards of safety in the workplace have never been higher. One of the most important findings in the IBEC survey was that, despite the importance placed on good health and safety practices, they did not necessarily protect employers from excessive claims. The survey showed that 88 per cent of all companies surveyed had detailed safety statements and specific safety training is provided in 60 per cent of them.

The average rate of claims is 12.2 per 1,000 per year. These claims are worrying and should be of great concern to all. Not only is the number of claims increasing, the amounts awarded are also being increased. The hidden effects on employment include absence, disruption in the workplace and the litigious attitude successful claims may engender.

The IBEC survey also showed the average cost of settlement in 1990 was £12,400 when the claim was heard in court and the legal costs amounted to 19 per cent of total costs. When a claim was settled out of court the average settlement was £11,668 with legal costs amounting to 17 per cent of that figure. The average employer liability premium paid by those surveyed amounted to 2.2 per cent of the annual payroll. While IBEC accepted certain types of industry were heavily loaded for insurance premia, the level of premia was generally affected by the claims record of the individual company. Therefore, a history of claims has significant effect on the cost of insurance to business.

In recent years the underwriting loss on employer liability premia was large and is increasing. In 1990 the average underwriting loss was 29 per cent but, by 1991, this had increased to 40 per cent. We must accept there is a great obligation on employers at common law to take care for their employees' safety. Employees are entitled to seek redress when they have suffered injury as a result of an employer's negligence. It is up to the employer to take reasonable care and precautions in relation to their employees and if they are shown to have done so they should not have to accept liability and compensate their employees.

Certain actions are needed to redress this damaging trend. All claimants for personal injury should be required at an early stage to swear an affidavit setting out all pertinent facts relating to the circumstances of their injury, the loss suffered, the nature of their injuries and the names of witnesses known to them at the time of swearing the affidavit. Every plaintiff in a personal injuries claim should, unless the court excuses him or her from doing so, be required to give details of all claims he or she made for personal injury in the previous 15 years, whether or not those claims have come to court or proceedings have commenced.

In this context it is worth nothing that approximately 27 per cent of all claims relate to falls, tripping or slipping and that they were settled at an average cost of £10,500. Manual handling accidents, particularly back injury, was responsible for 12 per cent of claims in the workplace. These were settled at an average cost of £13,000. As my colleagues said, back injury and lifting claims should be subject to special rules. The duty to lift an object carefully should be the responsibility of employees.

A consultative body of the Judiciary should be set up to give advisory directives to achieve uniformity in awards and devise a common policy for personal injury claims. The Judiciary must realise the fund for paying these awards is not a bottomless pit. Huge increases in insurance costs for employers constitute a tax on employment and is as anti-work as the 1 per cent levy. Premia must be paid and come from the profits of businesses.

In this week's Irish Medical News there is an article by Dr. Andrew Rynne. He says: “So you thought the country was being run by the Oireachtas and the Civil Service, did you? Wrong.” He believes that to a large extent the country is run by the legal profession and the Judiciary. He says if one were to set up a small manufacturing plant employing ten people, making plastic clothes pegs, one would receive assistance and support from the IDA in the form of feasability study grants and perhaps free premises. Despite that, one would run into problems with public liability and workers' compensation insurance. He believes it is no wonder there is unemployment as it is so expensive to employ people. Those who consider setting up enterprises would have them fully automated, because machines could not bring actions against them. I agree this is a terrible pity.

Dr. Rynne believes it is now almost a liability to be insured because if it is believed a company is not insured, a potential claimant will realise blood cannot be got from a stone and the employer will be left alone. He also believes the high cost of insurance is destroying enterprise and employment and encouraging the black economy.

Legislation on this issue has been promised for a long time and we were told things would change. However, the time for change has now come. The Ministers, Deputy Brennan and his predecessor Deputy O'Rourke, have at various stages said they are examining this matter. The unemployment problem is so serious that we should do something about it urgently.

Some of the measures I propose have already been mentioned by my colleague so I will not repeat them. One further recommendations is that counsel for the plaintiff and for the defendant should be able to address the court on the amount of damages each believes should be paid. At present this is not possible. We also believe that, in relation to lodgements in court, solvent defendants such as insurance companies should be permitted to engage in a system of sealed offers. They should not be required to lodge the cash in court at the commencement of the case.

We are all familiar with cases taken on a "no foal, no fee" basis. Many of these cases are unreasonable. Where such a case is thrown out of court the solicitor should be liable for the costs of a defendant. If this happened many unreasonable cases would not come before the courts. Will the Minister consider bringing some of the measures we asked for into this House before the end of January? He too must realise the serious consequence this has for employment in Ireland.

Mr. O'Kennedy

I have no difficulty in supporting the broad thrust of this motion and what it attempts to achieve. I have even less difficulty in supporting the general concern it expresses in relation to the escalation of costs in law cases. However, I have some reservations on particular aspects, which I will mention before I get to the main body of my statement.

I have reservations with that element of the motion which refers to the capacity of local authorities and voluntary bodies — I do not associate the two — to discharge their duties in that court decrees are meant to somehow undermine their capacity. In 1961, the Oireachtas passed the Civil Liability Act, which made local authorities liable for non-feasance, in addition to misfeasance; misfeasance being where there was an active intervention on the part of the local authority, non-feasance being when there was a failure on the local authority to take necessary actions, as a consequence of which there was injury. That section was passed and was to come into effect when the Minister of the day made the appropriate order. Some 32 years later, we are still waiting for that ministerial order. We should not start operating on the basis that where local authorities, particularly as a statutory body, fail to do what they should or are guilty of negligence — there are many such cases — we should try to protect them against the consequences of their own failure. I would not be a party to that kind of action.

Sometimes, simplistic solutions are presented to reduce the costs of various insurance claims. We have heard about them and some have already been put in place. The insurance companies lobbied strongly and consistently for the abolition of juries on the grounds that juries who make the decisions are spending other people's moneys. I was in Government when the leader of the party moving this motion abolished juries. It did not have the effect that those who proposed the abolition of juries envisaged because other, more basic matters, had to be taken into account. Other simplistic proposals are now being suggested which are equally inadequate and unsuitable. One might as well say that the press have a good case when they call for a restriction on the right to damages after being brought before a jury for libel or slander. The level of compensation is higher than most people would reasonably agree it should be. We should put out of the reckoning comparisions with other countries where conditions are different, especially places like Spain, Portugal and Greece, — ask any Irish tourists who have been unfortunate enough to have been injured there.

There are two elements in damages in every case. First, there is the element of general damages for pain and suffering. That is, of course, a subject of measurement. I agree that one judge's view may vary from that of another. Now that I am back in that trade myself, I admit that my own judgment of the valuation of a case will vary from that of other counsels from time to time. I have been away from the profession for a while, so obviously I am not up-to-date with current valuations, but I am picking them up quickly. Counsel can disagree, so can judges. There is a need to set certain guidelines, but not, with due deference and respect to the Minister, the kind of approach which he has been heard to suggest recently of putting a cap on awards. Without wearing my other hat as a lawyer, I would say that would run a grave risk of being unconstitutional. I imagine that everyone involved should consider and consult wisely and fully before any such cap was introduced. The role of the court is to administer justice between citizen and citizen and between citizen and the State. It appears, without going into it in great detail, that this approach would run a great risk — if I were advising in law, I would say in all probability — of being struck down as unconstitutional. That said, however, this need still remains. I will suggest some areas that can and should be looked at.

If someone receives a serious injury, compensation is payable for general damages for pain and suffering for the past and future — two different elements are added — and special damages, what we call out of pocket expenses. Out of pocket expenses have to be repaid, but the general damages will include damages for the future in the expectation that the plaintiff will survive for a normal span of life. It often happens that plaintiffs may, through accidents or natural causes, die much earlier than anticipated by the court giving the award. What are the consequences? People who have no claim for damages for injury for pain or suffering——

Mr. Cosgrave

Happy relatives.

Mr. O'Kennedy

——get the benefit of the major award to the plaintiff who would have been entitled to it if they had survived. There is one practical way in which that amount can be reduced and I cannot understand why it has not been done. One should measure, on an annualised basis, compensation payable to the plaintiff to include pain and suffering and special damages or loss of income capacity. I cannot understand why insurance companies do not demand this. I feel it is because it would involve them in actuarial calculations that might be a nuisance for them but it would certainly reduce the overall liability, funding and cost to the citizen.

In every case we are introducing statutory provisions for certain elements of contributory negligence. This has been one of the major changes in court since I last practised six years ago. If one gets into a car with a driver who obviously has taken drink more than likely the court will either hold that this will disentitle one to compensation or substantially reduce one's level of damages for contributory negligence. Since one ignored the old maxim of the law of volenti non fit injuria, a person cannot complain about the consequences of their own willing action, a person who is willing cannot complain about injury. If I get into a car with a drunken driver, I cannot complain afterwards if I suffer the natural consequences of that action. That should be put into statutory effect. It is significant that most of the major injuries in accidents occur through excessive rates of speed or reckless driving while under the influence of drink. That is my second point.

My final point relates to employers' liability, and particularly occupiers' liability. I have great sympathy with farmers in this instance. A culture has grown up that if one comes on to a farmer's land for whatever reason, the farmer is at risk. The law in that area, as established in common law, was clear and secure from the occupier's or owner's point of view when I left practice in 1987.

I was amazed to hear that some judicial or jury decisions in the meantime sought to put an onus on people for things they could not have been aware of and for which they should not have been liable. I see no reason we cannot introduce statute law here to leave it beyond doubt that a person can only be liable, particularly an owner occupier, for what he or she could be reasonably held to foresee as being a natural consequences of their failure. That would protect farmers and occupiers generally for something that could not be the reasonable and natural consequence of their failure.

I have only touched on the issue and I hope I have taken a balanced approach. I saw Senator Cosgrave shudder, as I imagine Deputy O'Malley would have in his time when he was a practising solicitor, regarding the principle Senator Dardis suggested — if a solicitor takes on a case on a no foal no fee basis and the case is lost, the solicitor be held liable for the defendant's costs. I do not think the Senator's former leader would have been very enthusiastic about that.

Mr. Dardis

That would have been in his professional capacity rather than his political capacity.

An Leas-Chathaoirleach

Senator O'Kennedy without interruption.

Mr. O'Kennedy

There would be many more solicitors in trouble than perhaps there are at the moment.

Minister of State at the Department of Enterprise and Employment (Mr. S. Brennan)

I thank Senator Dardis and Senator Honan for tabling this motion. I have agreed to accept it as it is worded and not to table any Government amendment. I have no difficulty in agreeing with its contents.

I have taken fully on board what Senator Dardis said about land owners. I understand his point. Senator Honan talked about previous claims, that these should be transparent in a court case and very much on the floor of the court. That makes sense and I will look at it. The duty to take care is obviously something we must also take a close look at. Regarding uniformity of awards, I had little difficulty with what Senator Honan said.

I agree with Senator O'Kennedy that this is not a simplistic matter; it is very complicated and sensitive. His point about for life only awards is interesting and one we should examine. It makes sense. His example about drink driving is also a point I have no difficulty in accepting. He also made a suggestion that legislation should deal with owner occupiers to the extent that one can foresee the damage.

All the suggestions made demonstrate the complexity of the issue. I thank the Senators who have already spoken and those who will speak. I will look closely at every suggestion to see if we can give them effect.

There is no doubt that the present level of motor, employers and public liability insurance costs are now seriously damaging the Irish economy, particularly in terms of employment. My Department estimates that insurance costs to business are now running at about £400 million annually. Another £300 million can be added to that in terms of the rest of society. The cost now of insurance in this small economy is running at about £700 million per annum. That is approximately the amount of premia paid but it is also approximately the amount of awards paid out. This is a figure I would like the opportunity to check and recheck before I go any further, but in so far as I can check it at the moment, if the EC average applied in this country today that £700 million figure would be £300 million.

I take Senator O'Kennedy's warning about countries such as Greece and Portugal. Against that, this is an Internal Market, a Community, and we must compete in it. Am I to ask Irish business to carry additional costs over and above what other countries have to carry?

Mr. O'Kennedy

Make sure you do not get injured in Greece, Spain or Portugal if you are on holiday.

Mr. Cosgrave

Get home quick.

An Leas-Chathaoirleach

The Minister without interruption.

Mr. S. Brennan

I take the Senator's point but it is a matter of what the economy can afford. In comparative terms the fact that insurance costs in Ireland are considerably higher than in other member states does affect Irish firms and our ability to create employment. It moves those jobs elsewhere. The present level of insurance awards makes it much more difficult to tackle the area of unemployment.

Analysis of data available to my Department from a variety of sources indicates that the pain and suffering element of personal injury compensation represents a major component of insurance costs. For example, I note in the material published every year that in 1991 the average cost of public liability was £5,757. Ten years ago, adjusting for inflation to bring the figure up to today, that figure would have been £2,900. There has been a 98 per cent increase in public liability costs in ten years.

I have received thousands of letters since this issue gained prominence but I had a letter this morning from a small firm in Dublin which employs 60 people and has a turnover of £3 million. They wrote to me in despair telling me they had just received a letter from their brokers regarding their public liability and employers liability bill, which was £40,000 last year, but this year they would like a cheque for £80,000. That firm has appealed to me to look at its case but it is not an isolated case. It is repeated over and over again.

I am seriously concerned about how companies in this economy will manage next year. My desk is piled high with letters from small Irish companies which tell me straight out that they simply cannot get public liability insurance. We tackle the insurance companies and they say they quoted them, but the figure was so exorbitant as to keep them out of the market. I would not mind if insurance companies were making money but from the formal data we have it is clear that they are losing money hand over fist. I am no apologist for insurance companies. I deal with the figures as I find them. The figures this year show that the underwriting losses are £57 million; that is the difference between what insurance companies take in and what they pay out. Ten years ago that figure was less than £19 million. It is not that the insurance companies are filling their coffers. From what I can see — and I am very objective about insurance companies — the only way they will stay afloat is by their investment income, lodging the premium long enough to get a few bob in interest and taking it from there.

I would not like anyone to be in doubt about the size of the problem. Motor premia are 98 per cent higher in this country than in the European Community. That information is published by the motor advisory group. I do not invent these statistics, I take them as I find them, but motor claims in this economy are 160 per cent higher than the EC average. I take Senator O'Kennedy's warning, privately and publicly, about taking other economies into account. I have to deal with the European averages because that is our market place now. We are the only country that is paying out more than we are taking in; we are paying out £115 for every £100 we take in.

Another firm came to see me recently and showed me their profit and loss account. They are paying 50 per cent of their payroll in employers' liability and public liability. In other words, if they were paying £100,000 in wages, they were paying £50,000 in employers and public liability insurance. That was a steel company which has particularly high risks. It is an unusual example but it shows the nature of the problem.

An examination of 1,600 High Court cases showed that compensation for pain and suffering amounted to 75 per cent of the total compensation awarded. A recent survey of 385 personal injury claims by the Irish Brokers Association revealed that compensation for pain and suffering comprised 80 per cent of the total compensation paid in respect of these claims. Personal injury compensation in total represents 67 per cent of the claims payout in motor insurance and almost all the claims payout for employers' and public liability insurance. In summary, pain and suffering compensation represents a total penalty on employment of £300 million annually.

The Government is aware of the problems created for employment costs and for the private motorist by a level of insurance costs which policyholders find difficult to pay. Measures identified by the inter-ministerial group on insurance aimed at reducing the frequency of accidents and claims and the administrative, including legal, costs of settling claims, have either been implemented or are being pursued.

I am satisfied these measures, although beneficial, will not result in insurance costs being reduced to levels closer to those in competing economies. The insurance reform unit which I recently established in my Department is examining ways and means of reducing the levels of pain and suffering compensation which, as I have demonstrated, represents a high cost element in the economy.

By its nature, pain and suffering compensation is difficult to quantify. We rely on the courts and court procedures to make awards which are fair and equitable to the plaintiff in the circumstances of each case. It is, however, difficult to accept that the value placed on pain and suffering in this jurisdiction should be consistently higher than the value placed on such compensation in neighbouring jurisdictions, irrespective of their legal systems. I do not agree with Senator O'Kennedy when he points to other economies. This is the community in which we operate and we must take it as we find it.

It would make sense economically and socially if levels of compensation were related to the ability of the economy and society to pay. In recent months lawyers have asked me not to place a cap on awards because they are fair. I have said they may be fair, but can we afford them? This is an entirely different equation. This small economy can only do what it can afford to do. What is fair is a subjective matter and is a separate issue.

Insurance companies do not fund the current level of awards but rather insurance policyholders. That point has not been made loudly enough. Insurance companies do not pay awards, the public pay them. They simply pass on costs in a tax collection process. It is not possible to recover all the cost, or even a substantial proportion of the cost, of compensation from those who are judged at fault for personal injuries.

The present level of pain and suffering compensation is borne mainly by society at large, including employers, motorists and consumers where business passes its insurance costs on to its customers. The cost is also borne by those who do not have jobs; they might have them if our insurance costs were more in line with those in competing economies.

I suggest that we need to broaden our definition of what is fair and equitable pain and suffering compensation in order to draw a better balance between the common good of society and the legitimate rights of those injured in accidents.

To put it bluntly, pain and suffering compensation should be fair and equitable to those who receive it and to those who fund it. That is a side of the equation which is not often addressed. I am looking at measures to ensure that pain and suffering compensation is related to the extent of the injury, that it is as consistent as possible, that it is paid to third parties with minimum administrative costs, that it is transparent and seen to be fair, that it is reasonably close to European Union figures and that it is capable of adjustment. The achievement of a compensation system which meets the above considerations requires an initiative by Government and the Legislature which would demonstrate that measures introduced are in the common interest and can come close to competing economies.

I suggested publicly on many occasions, and I would like to do so again this evening, that the development of proposals to achieve the objectives I outlined require the Legislature and Government to consider the possibility of introducing a range of measures. I agree with Senator O'Kennedy that this is a complicated issue and that no one measure will deal with the situation but rather that a range of measures is required. These measures might include a schedule of awards incorporating maximum quantums of pain and injury suffering compensation relating to the extent of the injury sustained. I accept Senator O'Kennedy's concerns in this regard, but a number of pieces of legislation set parameters on what judges may do. I will take the best advice from the Office of the Attorney General in regard to constitutional difficulties which may arise. This matter must be seriously considered as a matter of urgency.

A penalty should be imposed for a deliberate or conscious effort to falsify the size of a personal injury claim. We must redraw the duties of care applicable to occupiers so there will be an extra duty on people to take care. A provision to eliminate apparent double compensation in certain circumstances should be implemented. There should be a facility to settle certain personal claims by means of a periodic payment of compensation — this was mentioned by Senator O'Kennedy. In addition, we must look at some solicitors' advertisements in the Golden Pages. These advertisements state: "No foal, no fee", "I can get you as much as I can if you get here quickly" and "No appointment necessary". I do not believe the legal profession want to be part of that Golden Pages type of operation.

Mr. Cosgrave

It is like the manifesto of a certain party.

Mr. S. Brennan

I do not advocate a return to the cosy cartel type operation which existed ten or 20 years ago, there is a middle course. I ask Members to read some of the advertisements and ask themselves whether they encourage unhelpful litigation.

I thank Senators for their contributions. I will take note of what is said throughout the debate. This is a critical situation and evidence available to me confirms this. Although initially it will be a decision for Government, the public will have to consider its options in this regard. Does the public want pay £400 million more than the European average? Is the public happy to load these costs on young drivers and small companies which could affect employment or does the public want to stand by what may be its constitutional right and say the courts are the courts, we cannot interfere with them and tell judges what to award. They must be free to give out what they want. That is their right. It is a choice for society, not only for Ministers. I am not minimising the extent of that choice. If we put an upper limit on what the courts can do, the public will be asked to accept a limitation on their rights for the common good. That is the equation. There are many areas where we accept a curtailment of our individual rights for the common good. This debate will take us into that area.

I thank Senator Dardis and Senator Honan for tabling this motion, it is timely and I will take account of what Senators have said.

Mr. Cosgrave

On behalf of Fine Gael, I support the thrust of the motion. A compensation-claim mentality has developed in this country. At one time if a person slipped in a restaurant, a public house or a shopping centre he or she would get up immediately and hope nobody had seen them. Today people ask how much is this worth? When the issues of compensation and accident claims are being looked at, a differentiation must be made between minor claims and relatively minor injuries and more serious claims. It is difficult to equate something like a relatively minor whiplash or sprained ankle with a much more serious injury like the loss of an eye or limb.

The growth in fraudulent claims must be examined. One judge recently commented on a family, ten or 12 members of which seemed to have experienced bad luck and accidents in one area. The judge expressed concern and said that a certain street should be named after the family in recognition of their difficulties.

One of the most important points in this motion is in regard to not alone discouraging fraudulent claims but pursuing them. How many such claims have been investigated by the Garda fraud squad? One individual alleged to have been involved will not be able to claim for a while, unless it is against the governor of Mountjoy, because he recently received a custodial sentence.

The question of claims and how we deal with them must be looked at. As Senator Dardis said, even getting insurance cover for a field day or a bring-and-buy sale has grown out of all proportion. Various bodies now have to examine ways of running certain events. The way local authorities conduct their business must also be looked at. Some local authorities have toughened up their attitude and are now defending many claims which has resulted in a surprising change of results.

The Minister should investigate the efficiency of insurance companies and how the industry polices itself. It was said some years ago when insurance discs were introduced for cars that the incidence of uninsured cars would fall, but, from what one reads in the papers, many people are still driving uninsured cars. What is being done about it? It is estimated to cost the country at least £25 million a year. We could impound uninsured cars, which was a recommendation in the MacLiam report some years ago.

There is also the question of occupiers' liability. A Bill was introduced in the other House last year by Deputy Deenihan which, although not accepted, was recognised by the Minister as having merit. The Minister should look at it again and I would like to know what timescale he envisages for introducing the necessary legislation.

A compensation mentality has crept into Irish life. Various people can be blamed for it and the legal profession may have some case to answer, although in specific rather than general cases, as Senator O'Kennedy indicated. I would be reluctant to introduce the statutory capping of awards for serious injuries such as the loss of an eye or a limb. Senator O'Kennedy indicated that such capping could, and possibly would, prove unconstitutional. There are areas where a balanced approach is required for a uniformity of awards. There are obvious difficulties and there will be differences of opinion among judges. Some lawyers and doctors make a bigger impression than others on a judge or jury. Some years ago the abolition of juries for such cases was heralded as the panacea for all ills but it was not and the Minister's Department was wrong.

One must examine the possibility of properly structured compensation payments in paraplegic cases to provide an income for the rest of their lives. Such payments would keep the paraplegic in a reasonable manner and allow improvements or changes to be made to a house. Instead of paying a massive amount, an income should be paid for the duration of that person's life with a top-up at the beginning to enable initial expenses to be met. In a case where someone is awarded a massive amount, and dies a few years later, the relatives come out of the woodwork to share the proceeds. Unfortunately, that is the case so certain structural income awards should be looked at.

Mr. O'Kennedy

And the relatives suffered no pain at all, is that not right? Only a lot of pleasure.

Mr. Cotter

They may do as a result.

Mr. Cosgrave

They are certainly compensated in some way.

The administration of cases by the courts must also be looked at. Senator O'Kennedy is aware that many cases take years to come to court. Some aspects can be improved and speeded up. At times cases can be speeded up by agreeing on reports. At the moment, doctors on stand-by command a fee although they may never appear as a witness in a court case. These matters must be looked at. I am not denying that doctors, no more than any other profession, must earn a living, but certain aspects of the administration of cases must be examined.

Insurance companies could look more seriously into settling cases at an earlier stage. If there is a meeting of minds, cases can be agreed which would bring about substantial savings. Will the Minister take a hard look at this question and take on board what Senators said? I agree with Senator Dardis that trivial, nuisance cases should, by and large, be cut out. People who are badly injured should receive proper damages.

I sum up by quoting the late Mr. Justice McCarthy who wrote, in Dr. John White's book The Irish Law of Damages:

Assessment of general damages for pain and suffering is a most inexact science. The best that a court can do is to try to see that the assessment is within certain bounds having regard to past experience, continuing attitudes and the true value of money. The underlying concept of damages for personal injuries used to be described to a jury as an attempt to put the plaintiff back into the position in which he would have been if the accident and the injury had not occurred. A patently impossible task.

I ask the Minister to respond positively and consider all the points raised. A simple solution cannot be found. The issue must be examined, costs must be reduced and greater efficiency introduced. I support the motion.

Mr. Farrell

I too welcome the motion. Insurance claims form the greatest growth industry at present although I sometimes wonder if an injured person gets all that much money. As Senator Cosgrave said, the procedures take too long. The injured party borrows from a bank. When the claim comes through, after repaying the loan and paying legal fees, he or she has little of the claim left. I have seen cases where people were poorer when the claim was settled and wasted their lives hopping on crutches when they could have been walking if the claim had been settled much earlier.

The Bill should protect people against unreasonable claims. It is ridiculous that if a burglar falls and hurts himself while robbing a house, he can claim against the house owner. Anybody who comes uninvited on to someone else's property, farm or a business, should not be entitled to claim.

A few mornings ago on radio Gay Byrne asked who would want to be in business today after a person was awarded £6,000 having claimed that, while looking at dresses in a drapery shop in Dublin, a garment fell on her, she was hit on the head and damaged by the tag attached to it for security reasons. This is ridiculous. Everybody knows a tag could not cause that much injury. I must be the greatest fool that ever wore shoes. I fell and broke two bones in my back in a mart, was in hospital for three weeks and had to lie on a plank bed for three months but I never claimed a penny. Thank God I am none the worse for it. During a Senate election campaign I fell coming out of a guesthouse in Dundalk and broke my right arm. I was in hospital for a week and had a pin inserted but I did not claim.

Mr. Dardis

That was an extreme method of looking for the sympathy vote.

Mr. Farrell

I did not get the sympathy vote because I lost my seat. Anybody who enters politics or business and hopes to get sympathy is very foolish. There is no sentiment in either field, I assure you.

Our roads are not that dangerous. It amazes me that although thousands of people can walk on a footpath without falling, one person can fall and claim it is dangerous. If it was dangerous, everybody would fall or step out on the road to avoid it. Thousands of people walk on O'Connell Street and other streets in Dublin, Sligo and elsewhere and see nothing wrong whereas one person may fall without being seen by anyone and make a claim. I know of a case where a person tripped on the step of an aluminium door when leaving a restaurant. The person was picked up, looked at and asked if they wanted a doctor. They had no visible injuries except for a little scratch on a knee. However, a week or a fortnight later they sent a solicitor's letter to the restaurant. Such cases always amaze me.

In every town there is a solicitor who is well known for handling claims. They advertise offering free consultation and, as the Minister said, no foal, no fee. However, there can be a danger in this. I know of a lady who took a case against a public body on a no foal, no fee basis. Unfortunately, the case was lost. It cost her a large amount of money because, although her own solicitor did not charge her, she had to pay the defendant's solicitor. I sometimes think the legal profession have agreed on an inbuilt protection. If the claim is not allowed the person making the claim will lose a great deal of money. If no foal, no fee arrangements did not pay solicitors well, such cases would not be continued.

These cases cause a great deal of heartache and will put many firms out of business. I pity people who look for insurance today. I am sure Members received a letter from the AA recently seeking their business and offering attractive quotes. I have been driving for 46 years and never had an accident or made a claim in that time. I am with Norwich Union, which is a very good insurance company, and have no intention of changing. For curiosity I filled out the AA form. About a month later I received a letter from them saying they would prefer not to give me a quote. If I could not get a quote, given my long period of accident free driving, how can people with no record get quotes?

I do not know where people will get insurance in the near future. It is not the insurance companies who pay but the policy holders. A stop must be put to this. I would welcome a cap on the level of awards although I know the legal profession do not want it. We are told the levels of awards in Ireland are not as great as those in Europe. If we are looking for parity with the rest of Europe in other areas, we should also have parity in this area. However, we want all the benefits of EU membership, when it suits us, but we do not want any of the drawbacks, when it does not suit us. Many businesses cannot continue to pay high insurance premiums. When I started in business in 1964 my public liability insurance for a garage and petrol pumps was £20. My daughter is now paying £560. I hate to think of what this would be in the event of a claim. This situation will put many people out of work.

Claims of the order of £0.5 million or £1 million should not be paid. An annual or monthly sum should be paid to ensure the injured person can live comfortably for the rest of their life rather than a lump sum. Very often the family, friends and relatives benefit from such large payments. Like many people who have won the lotto, people who are awarded large lump sums may not have a penny after nine or ten years. I have always maintained there are two things in this world which require careful handling, brains and money. Some of our most brilliant people are working behind bars and counters. Like the lighthouse in the bog, they are brilliant but useless. The same thing happens to people when they get a large amount of money. They do not know how to handle it. It is a case of "easy come easy go".

I know an itinerant who was awarded a large amount as a result of an accident in Sligo about 30 years ago. Shortly afterwards he was back at the crossroads where I lived, he was on the road again. Somebody asked him if he was back on the road again — he had a house in Sligo — despite all the money he got. He replied that the money had not lasted long because it was shared between a good few people. This is what happens to compensation, people get it, think there is no tomorrow and then it is gone. I would prefer to see it capped and weekly payments made. The practice of acting on a no foal, no fee basis is encouraging.

The insurance companies are to blame for much of this. They started this system of settling claims under £10,000 out of court. That opened the floodgates because they would settle any kind of case. We were told that headrests were put on car seats to prevent whiplash. However, while every car now has those headrests, the problem of whiplash has not been solved. Measures taken do not solve the problem. I am delighted this motion is before the House and I thank Senator Dardis for tabling it. It something we all have to think about because all of us who pay insurance pay a portion of those claims.

Dr. Henry

May I share my time with Senator Quinn?

An Leas-Chathaoirleach

Is that agreed? Agreed.

Dr. Henry

I welcome the Minister to the House. I also welcome the motion which is similar to one Senator Quinn and I put down some time ago. I would like to address the issue, which Senator Cosgrave brought up, of professional witnesses. About two years ago, the Bar Council, the Incorporated Law Society and the Insurance Federation of Ireland set up a joint committee to look at the situation regarding professional witnesses. They submitted their findings and suggestions to the Attorney General and to the committee of the courts. However, both felt the suggestions would require legislation so they were sent to the Department of Justice but nothing happened since.

A great deal of savings could be made in this area. I speak mainly from the point of view of professional medical witnesses but there are other professional witnesses too. A great deal of money is spent to little avail to the public good. For example, actuaries' findings are usually mathematical so they are rarely cross-examined in court. It costs a lot of money to bring these witnesses to court and it costs them a lot of money to be there. Architects and engineers generally bring plans and maps which could probably be far better dealt with if they were looked at before the case. It is important to remember that it not only involves the cost of bringing witnesses to court, but the cost of them going to court, because they are away from their practices.

The Fair Trade Commission report on court cases concluded that a quarter of the costs were incurred in summoning professional witnesses to court and that this cost could be cut in half if account was taken of the professional witnesses' work. They should come to court only in cases where there were disputes between professional witnesses from both sides.

In Great Britain all medical negligence claims must be accompanied by a medical report before they can be submitted but here a person can make a statement of claim without any medical report. A large number of medical negligence and personal injury cases are dismissed because the medical evidence does not follow up. The medical defence companies and other insurances waste a great deal of time and money looking at cases which are not pursued because there was no original medical claim with them.

We should follow the practice in Great Britain where after the defence has put forward its case, a time is set for handing down judgment. Within ten weeks, the protagonists must submit the names of their expert witnesses and what they will say. Unless there is a long delay in the trial these submissions cannot be changed. This seems to have led to savings in Great Britain and it would be worthwhile trying it here rather than having expert witnesses arriving in the High Court and the case being concluded on the steps of the courts. It would be a great step forward in helping to reduce the costs of court cases to which Senator Dardis referred.

Mr. Quinn

I thank Senator Henry for allowing me to share her time. It is only six months since we debated this matter in this House and the situation has worsened since then. At the time I talked about the fact that each household is paying £26 per week in costs, the cost of compensation in various forms, regardless of whether cases have been settled out of court. I welcome this debate. I am delighted Senators Dardis and Honan put down this motion, which we must support.

My concern — not only about the whole legal profession but particularly about the attitude of the Judiciary — is that a standard is not being maintained. I will relate to the House three short incidents from my own experience which happened in our stores.

In the first case a customer came into a store in the whole of her health and left with a broken toe because one of the supermarket trolleys had been knocked over on her foot. Afterwards, I asked friends how much they thought she should have been awarded. Everybody agreed on a figure between £1,000 and £3,000. I explained that she had not been awarded one penny because she had not been able to prove negligence. The judge said he could not find any cause of negligence because the trolley was intact. The barrister acting for the defendant said that if the jury found that having a trolley which can be knocked over is negligent, then they must find every parent of a baby in a pram guilty of negligence. The jury and the judge found that the defendant — us in that case — was not negligent. This woman who had entered the store in the whole of her health and left with a broken toe received nothing.

Another case involved a customer who came into one of our stores and slipped on the floor. She left, having hurt herself, and went to a solicitor who encouraged her to take action. She took action and went to considerable expense but received nothing because she was not able to prove negligence. She had gone to considerable trouble because she had not, as Senator Farrell spoke about, done it on a no foal, no fee basis.

The third story involved a customer who went into one of our stores where a packet of cornflakes fell on her. She was advised to take action which she did on a no foal, no fee basis. She went to considerable trouble and cost and lost the case. She came back to me saying she could not believe that she was down £2,000 and asked if I could help her out. She did not understand that there was an unfairness because she had been led to believe that if one gets hurt on a premises one is entitled to recompense even if the defendant is not negligent.

In those three cases the judge advised and found that we were not negligent. These people, who had been coaxed and encouraged to take cases lost a considerable sum of money. I am only taking those three examples because there are many other stories where people have taken similar cases and were awarded considerable sums of money. My point is that the Judiciary is not balanced, it seems to act on a whim. However, the law seems to say, as far as we can see, that if one claims for an injury one must claim negligence on the part of the person responsible. Some judges seem to understand that but other judges and juries believe that if a burglar falls in one's house, as Senator Farrell spoke about, he has a right to sue. It seems that some decisions are made as outrageously as that.

I repeated those stories because I felt that rather than cover the ground already covered, perhaps it is wise to concentrate on how we solve this problem. I do not know the solution but the first step is a change of attitude and this is why I do not fully support the part of the motion which seems to call on the Government to do something. I am not sure it is all that easy for the Government to do something to solve this. We, as a nation, have to do it by changing our attitude to the whole area of compensation. We should recognise that if somebody is negligent, they should pay and if they are not negligent, they should not pay.

We must recognise that our attitude needs to change. If we do that, we will reduce costs, that was my main motive when Senator Henry and I put down a similar motion last June. The motive then was to see if we can make Ireland more competitive. In this area we are making ourselves outrageously uncompetitive and that puts us at a disadvantage. We have one hand tied behind our back when we try to create jobs.

I am pleased that this motion was put forward today because it gives us an opportunity to make, once again, the case for a change of attitude. I know the Minister of State at the Department of Enterprise and Employment, Deputy Brennan, has already put forward proposals in this area. They are all steps in the right direction but the fault lies with us. We must take action and we should ensure that we do so in the coming year.

Mr. Maloney

I wish to share my time with Senator Crowley.

An Leas-Chathaoirleach

Is that agreed? Agreed.

Mr. Maloney

I welcome the Minister to the House and compliment Senator Dardis on his motion. There is no doubt that a compensation culture prevails at present which is particularly obvious to those working in the local authorities and the health boards. My interest is in the area of local authorities.

As a member of Donegal County Council, I see that for the year 1993, public liability insurance, which covers more than the area we are discussing, was in the region of £227,000. It is expected that the excess at the end of the year will be about £75,000. On that basis public liability insurance will be much higher and money will be taken from the funds raised by water and commercial rates and so on. At the end of the day the taxpayer will pay.

At present people take a case to court at the drop of a hat. More cases should be contested because there are far too many fraudulent claims. It is becoming a growth industry. I received some figures from Northern Ireland, it is worse there and the British are seriously examining the situation arising from the number of fraudulent claims and contesting more of these cases.

There are genuine cases and these people need to be helped. People fall and have to be compensated because it may be the fault of someone who owns a shop where the floor was wet. Those cases must be supported but lawyers and barristers should not encourage people to take every case under the sun.

I recently saw a case where a gentleman was injured. The county council were working on the road next to his house and had an agreement with him to replace a gate. He was not happy with the gate, he wanted a wrought iron gate. As he was not satisfied with that when it was put up they took it away. When they were changing it, his child ran on to the street. He ran after the child, fell on the street and broke a limb. He took the case to the court on the ground that if the county council had the gate up, he would not have had to run after the child. He received compensation of £10,000.

The motion is a good one. The cost at the end of the day is being borne by the general public and the taxpayer. I welcome the motion and legislation should be enacted to discourage many of the cases taken.

Mr. Crowley

I thank Senator Maloney for sharing his time with me. This issue has raised emotions in the hearts and minds of many people. It represents something that goes to the very core of the moral and ethical reasons for the law of tort. The majority of speakers welcomed this motion and called for legislation arising from cases they outlined. There have been fraudulent claims and people have been unjustly enriched in some circumstances. However, if somebody is injured, they are entitled to have that wrong put to right.

There are parts of the motion proposed by Senator Dardis with which I agree, such as the discouragement of fraudulent claims. There is no problem there. The provision of more realistic duties of care for landowners, employers and owners of premises is quite easy to implement. The safeguarding of defendants from nuisance and trivial claims is also easy to enforce. The courts do it every day; one does not even have to legislate for it.

I would have a difficulty with the concept of a statutory framework for the calculation of damages. A situation is created where the loss of a leg may be worth £10,000 while the loss of a leg from the knee down is worth £8,000 and so on for the loss of an arm or an eye. One cannot calculate the continued hardship an injured person will suffer. Actuaries can assess loss of income and potential extra expenditure arising from an injury or disability but the courts must have sufficient leeway to ensure people are adequately catered for in future life.

Having had an accident, suffered an injury and gone through a legal case, I know exactly what it took to readjust my life as well as the continuing expense involved and extra expenses likely to arise due to my injuries on an ongoing basis. It may be ten years before I need to make that expenditure but it is 99 per cent certain that it will happen. Various individuals will incur different levels of expense.

We are fortunate that our legal system and Judiciary have taken a compassionate view in the majority of cases. As some people said, at times they have been slightly off track and over compensated some people and under compensated others. However, removing the human element from personal injuries cases is really interfering with basic natural rights which are superior to any positive law we may enact here. One should not interfere with the right to claim damages for personal injuries and any legislation enacted to do so could be struck down on grounds of unconstitutionality.

Through the years, insurance companies have said that high insurance premia and the cost of insurance is due to the high level of claims. The claims may have some relevance to the premium one pays. Insurance companies fought for many years for the abolition of juries in personal injury cases. Many political people objected but eventually the Government of the day decided to get rid of juries in personal injury cases and leave it to the judges. The insurance companies were happy with that arrangement, but now say the judges are giving too much money, they do not know how to assess a claim and that we have to put a cap on the amount of damages a person can receive for personal injuries.

This is an insurance scam, not in the sense that someone is trying to defraud the insurance company but in the sense that the insurance companies are defrauding the consumer. I feel they have been allowed to get away with it for too long.

This motion is anathema to me and to my way of thinking. I have had many discussions with the Minister, Deputy Brennan, about reforming this area, and all our discussions have ended in disagreement because we hold opposite viewpoints. My fear is that people who suffer a personal injury and are left incapacitated and needing constant care — perhaps paraplegic, quadriplegic or even with severe brain damage — will not be catered for. Senator O'Kennedy commented on this and his view is similar to mine. He said that a framework should be set up whereby the damages could be paid on an annual basis so that people would have the income as they need it and they would not have a chance to spend the full award when they get it. That is the angle we should be taking on it.

To put a cap on any award is wrong. It interferes with natural justice and with people's personal rights to set up a statutory framework saying that a leg is worth a certain amount. Today my leg is worth, maybe £50 to me. In reality there is no use for my leg at the moment, but what is the soccer player, Niall Quinn's, leg worth to him?

Mr. Norris

About £25 at the moment, I should think.

Mr. Crowley

If you enact legislation on the basis of a book with different amounts for each different type of injury huge injustice will be done. This system would not allow the courts the flexibility to decide when more or less should be given. The courts have that discretion at the moment and despite what people say, they do not always give the full amounts. Senator Quinn pointed out three cases that failed. The insurance companies would say that every one of those cases succeeded because the judge found in their favour. Senator Quinn said there were juries involved in two of these cases, so getting rid of the juries was probably the biggest mistake the insurance companies ever made. With those few words, a Chathaoirligh, I will conclude. I thank Senator Maloney again for sharing his time with me.

An Cathaoirleach

You went over your time but you were very interesting.

Mr. Cotter

This is one of the most topical discussions we have had in this House and the fact that we discussed it six months ago does not take from the debate tonight because it is well known that we still pay too much for insurance of all sorts — car insurance, employers liability and public liability insurance.

Of course there is a paranoia among all sorts of groups and voluntary bodies who want to get the public to come to their functions but are afraid they will be hit with a huge insurance claim which they will not be able to handle. That is a widespread problem. However, there is the other side of the coin. Everybody is aware that they can make insurance claims.

Advertising has been mentioned. I do not know whether it is possible to stop people advertising because a lot of the time our citizens are not aware of their rights. Some people might say that a number of solicitors' advertisements made spurious promises. I am not sure if that is so. In America solicitors advertise on books of matches — 0800 lawsuit is the number used. Advertising there has been taken to an incredible degree and I imagine that is what will happen here in the future.

Anything that makes people aware of their rights cannot be bad. However, there is a negative side to this. Some solicitors probably go over the top a bit on the no foal, no fee business. It is leading to difficulties for insurance companies. I ran a campaign on this about three years ago. As the Minister, Deputy Brennan, said, he is getting many letters from all over the country about it. I got mail from people all over Ireland and the things I learned at that time led me to believe that insurance companies were very negligent in the way they ran their businesses.

I was told about the following practice. A person buys a crashed vehicle on which an insurance claim has been paid and insures it with a different insurance company. Some time later he telephones the insurance company, says there has been an accident and makes another substantial claim on the basis of the original accident which happened when the car was somebody else's property. That practice was widespread according to the information I got at the time.

Thankfully as a result of my campaign the position has improved and the insurance companies now cross-reference claims, and not before time. We still see cases in the paper where individuals are using cars for all sorts of reasons. Cars are not bought just for driving, they can be used to provide an income. A person buys a fairly modern car in bad condition and makes sure that somebody crashes into it. He will have three passengers with him and the other driver will also have three passengers. Not alone will there be eight personal injuries claims but there will be insurance claims for the cars which would not be sustainable if the quality and condition of the car were known beforehand.

There is a lot of fraud in the system and I suppose it is hard to make an honest pound in Ireland today. Many people find it very hard to survive and turn therefore to crime. The more unemployment there is, the more crime there will be. Because the graphs of unemployment and crime climb together it is very hard to control this fraud but the Minister is promising to make a good effort. I hope he suceeds. In the middle of my campaign an inter-ministerial group was set up and they made changes which helped.

There is a certain stability now in the cost of car insurance for young drivers, although it has stabilised at a very high level. There is a ludicrous situation where a young man buys a small car, eight or nine years old, in fairly good condition and pays £900 for it. Then he insures it and if he is under 25, he can pay up to £2,000 a year. I know the insurance companies have their ways of setting the fees and much of it has to do with the fact that young lads tend to be more accident prone than young lassies, and young people in general tend to be more accident prone than their elders, however, insurance costs are incredible.

I was interested to hear Senator Henry talking about professional witnesses and when she started I wondered to which group she was referring. In fact she was referring to the true professionals, doctors and other expert witnesses, but there are many professional witnesses who get away with it much of the time. We can all call to mind a story where two cars bang into one another on a lonely country road, with only a driver in each car, and no witnesses. A dispute arises and when the case comes to court there is a witness for one party who says that he or she was in a field when it happened. No one saw the witness but he or she was there. There are professional witnesses of that kind around the country as well. Fraud is widespread and we all know it. The Government must tackle this problem.

In the last couple of years claims have not been going through the courts as easily as they had and some of these gangsters are being caught. Not before time, because for a certain period these people made a lot of money and we were paying through the nose. Some of the judges are picking up on this now, some of the Garda are looking into the background of people who are making claims and some solicitors are being more careful. Now the gangster is caught and the fellow making the £10,000 or £15,000 claim is not getting away with it.

This is a huge problem and the figures the Minister gave us are genuine. A sum of £400 million is a colossal amount to be divided between those who pay insurance every year. It is a huge cost to bear. It is costing us jobs and this situation cannot be sustained. We are all aware of the difficulties. However, there are two sides to the argument when we talk about capping claims and it is an argument that will continue. We can expect people to have an attitude that is wholesome and good; we can try to create an ethos which is good, but that is difficult to achieve in the present climate. There is not a lot of respect for truth or honesty these days. I do not know how we will achieve that since many insurance claims are questionable.

I received letters from people involved in car accidents — if they could be called that — where they would have touched the car in front. The impact would have been enough to break the tail light but would not have done any structural damage to the car. The persons involved agreed to replace the tail light and went on their way. Two weeks later they got a letter from a solicitor indicating that there was a personal injury claim from the driver of the other car who had suffered whiplash. I had many such letters when I was in the middle of my campaign. One did not have to be an engineer to look at the damage and see that whiplash could not have resulted. Intellectual whiplash yes, but physical whiplash no. Cases came before the court and awards of £10,000 or £12,000 were made. That was a disservice to society because a couple of successful cases bring hundreds of others.

I hope the Minister can make some progress on this matter but if he has not made progress within the next six months, we will have to discuss this again. The more we discuss it the more we will change attitudes, and if we are honest about the way we present our thoughts here and if our voices are heard, we may bring to people's attention the fact that they are paying these claims and if their neighbours are trying to rob them they should try to stop it.

Mr. Norris

I welcome the motion but I am a little diffident about the contentious language, and when I see a phrase such as "the compensation culture" it reminds me of phrases like "the condom mentality."

Mr. Dardis

Withdraw that remark.

Mr. Norris

It can be too easily used to dismiss an entire group of people.

I was interested and moved to hear what Senator Crowley said because he is in a position to speak from direct personal experience of the necessity to have proper compensation and I would not wish to do away with that. Of course we should discourage fraudulent claims: there are fraudulent claims and everybody knows it. I have seen it in the courts and reported in the media where the same people appear as witnesses. One well known criminal was apparently organising a clinic where he provided services for people who wanted witnesses organised so that they could get compensation. There are people who repeatedly have the same kind of accidents; they carefully and conveniently fall into small holes left by Dublin Corporation. There is also the question of aggressive advertising by solicitors which can help create an appetite since people are given the impression that it is easy to get compensation. There is the old Dublin saying, when you have an accident lie there and wait for compensation to set in.

I speak from both sides of the fence because I have taken successful action against Dublin Corporation, and I could have taken successful actions against individuals and shop owners but did not do so because I did not feel the injuries warranted it, although I made it my business to warn the people involved of the dangers on their premises. The reason I took an action against Dublin Corporation was that they have a habit of leaving unlighted, unpainted tar barrels where children could move them into the middle of the road and they have a practice of no longer paying watchpersons to keep their eye on these miscreants. I had the misfortune to come around a curve in a road and smack into one of these barrels which was full of cement and was virtually immovable. Luckily, I was not going too fast and was wearing my safety belt but I rearranged my nose.

I will not stretch the credulity of the House by suggesting that I thereby reduced my marriage prospects, but I did not improve my appearance and it caused me considerable alarm and concern and left a permanent scar. I would have taken the £500 or £600 which is all my car was worth if the corporation had said that it was sorry and would do something about it, but it delayed and put matters on the long finger and had to be summonsed and subpoenaed and all manner of legal steps had to be taken in order to get the corporation to come up with documentation and so on. Its own engineer admitted to me that it was extremely dangerous when added to the practice of removing watchmen, which had been done — and this was said unofficially but directly to me — because it was cheaper to pay the damages than to pay the wages of the watchmen. That is outrageous, and since that accident I repeatedly noticed these dangerous roadworks.

I have no sympathy for the local authorities when they are in breach of their responsibilities. The corporation appealed my case; my original award was for £11,000 and it was reduced to £6,000. I was pleased with that. The corporation won a section of the case because the liability was reduced to 75 per cent, but they were foolish because I fought the case tooth and nail and by going to the High Court established a precedent in law which means that local authorities are now responsible, as they should be. If they place the welfare and lives of the public at risk they should be taught a lesson. I believe the practice of putting off and delaying claims is wrong.

My car was worth £500. I have never had a claim against the insurance company but my insurance Bill this year is £475. That is idiotic. Not having had a claim against the insurers and having a no claims bonus, I have to pay almost the same amount as the cost of the car. I have to admit one fault; I was done for drunken parking some years ago outside my house. I was just rearranging the car. I was rather unfortunate but it was a fair cop. I presume that might have had some impact on my premium but it did not for the first couple of years so I do not see why it should suddenly rocket now. There is a case for looking at the insurance industry and reviewing it.

House premiums also need scrutiny. They continually increase and I do not know what I am paying, my house has not been broken into nor has it burst into flames. However, the insurers are always wanting to poke around and try to force me to put in extra fire protection that would destroy its 18th century character. It is a constant battle with the insurance company and it might be no harm to look at the whole insurance industry rather than specifically targeting the victims, although there are clearly cases of fraudulent claims.

It is not always just the lower orders who take these claims and the claims are not always maliciously taken. I laughed like a drain when I read in the paper of a well heeled lad in a golf club wearing his spiked shoes, who fell and broke his wrist and he said in court that it had improved his golf swing and he had gone from a handicap of 13 to one of 11. Yet he sued the golf club for something which he knew was idiotic and which improved his golf performance. That is laughable. I hope he had the same good humour that the judge showed in throwing out that case.

Mr. Dardis

The thought of people poking around in Senator Norris's home has fascinating connotations. I thank the Minister for accepting this motion and for the way he addressed it. I also thank the House for accepting the motion.

It can be said with some certainty that there is a widespread consensus about this matter. The Minister has given us quite a few pointers as to what might be in the legislation. I hope our contributions provided additional pointers for the legislation. I accept there are practical difficulties in framing such legislation but that is true of most legislation that comes before the House. It can be complex and difficult but that is not a reason to avoid it. We have discussed and analysed this matter on several occasions and it should now be possible to arrive at definite conclusions and introduce legislation early in the new year.

I can assure Senator Crowley that it is not the intention of the motion to cap awards. The motion says there should be a statutory framework which would provide some degree of regulation in the matter. I accept that Senator Crowley's personal experience is very telling and we must bow to it. However, I think he would accept that there is a question of degree and balance. It is for legislation to establish the degree of balance to ensure that some of the malpractices which occur at present can, to the extent that is possible, be regulated. If people go into court and perjure themselves I am not sure it would matter what legislation was introduced, although there would be penalties to deal with that.

Everybody has recounted some personal experiences. My personal experience this year occurred when I was walking down Clonliffe Road after the All Ireland hurling final. There was the usual mill of people. A car was progressing down the road at about two miles per hour and one of the supporters brushed against it. I was a witness to this event and I also witnessed the compensation syndrome take hold of the supporter as time went on. He started off not being seriously injured and wound up taking off his shoe and his sock to show the driver the extent of the damage which had been caused to him. I could see the process taking over——

Mr. Crowley

The injuries were sure to increase.

Mr. Dardis

Yes. It may have been due to the fact that they were from different counties.

I accept that there are practical difficulties in framing the legislation but that is not a good enough reason for not introducing it. The Minister referred to several bodies which we have set up, including the inter-ministerial group, the insurance reform unit and others. We get to the point where we institute another body which produces a report which moulders in the vaults of the relevant Departments and nothing is done. Something must be done.

Senator O'Kennedy referred to solicitors. It is a fact that there are solicitors who seem to if not trawl the roads in search of claimants then trawl the columns of the local papers and approach claimants. We have heard of their advertisements in the media. We have recommended that where the solicitor is conniving — if we can use that word — in a claim which is frivolous or a nuisance and that claim is unsuccessful in court, the costs should be exacted from the person who is responsible for bringing the claim, who may be the solicitor rather than the plaintiff.

There are many other relevant areas which should be tackled. Many excellent community facilities cannot be made available; and schools, for example, cannot be used after school hours because of insurance problems. The seizure of cars was mentioned by Senator Cosgrave and I agree we should look at the case of uninsured motorists.

The Minister has accepted the thrust of my argument and I thank him for that. However, my thanks are modified by my plea that he tackle the problem through legislation. He has spoken about the economic consequences for the country which are significant in terms of what we must pay in premia and what the local authorities and rate payers are asked to pay. We must address those problems, apart altogether from the equity of the situation. The Minister made a reasonable point when he said that the legislation should be fair and equitable and that the insurance industry should be fair and equitable to those who must pay. I agree and I look forward to him introducing the legislation at an early stage. While accepting the complexities involved, many practical proposals have been made this evening which could be incorporated into the legislation.

I would not like Senator O'Kennedy to believe — as I think he did — that I suggested that the local authority would be almost exempt from its responsibilities in respect of injuries to third parties and personal injuries. I do not suggest that. Of course the local authority has responsibility to have due care and to people who are injured. I accept Senator Crowley's point that if people suffer serious injuries, society has a responsibility to look them so that they live in comfort. That is not in dispute. However, with regard to the very large awards of a capital sum which is meant to provide an annual income to keep somebody in a reasonable degree of comfort, it would be much better if that were an annual payment rather than a capital sum which, in the event of the death of the person who is given the award, passes on to people who never needed it and who should not get it. There should be a mechanism to avoid that happening. This compensation should be paid on an annual basis.

Senator Quinn referred to the lack of consistency in awards made by the Judiciary. A consultative body should be established to give advisory direction so that we can achieve uniformity in how the Judiciary handle these cases.

Question put and agreed to.

An Cathaoirleach

When is it proposed to sit again?

Mr. McGowan

It is proposed to sit at 10.30 a.m. on Thursday, 2 December 1993.

Seanad Éireann debate - Wednesday, 1 Dec 1993