The leading editorial in the Irish Independent today is titled “The ‘compo’ mentality”. It states:“... we are looking at a scandal which is almost aided and abetted by the want of strong law on the subject.” The news analysis section of the newspaper has a special article on the compensation culture, which is titled “Legal loopholes make it a swindler's paradise.”
At present Dublin Corporation has payments of compensation of £20 million outstanding. In 1994 the Office of Public Works paid in excess of £281,000 and Telecom Éireann paid £7 million in the last five years. Ireland is one of the most litigious countries in Europe. The compensation culture is a cancer eating into society. It costs the State in excess of £600 million per year and thousands of jobs.
The system acts against the best interests of the genuine claimant, who may have to wait many years for the resolution of his or her claim with consequent distress, uncertainty about the level of compensation appropriate, and to an extent this discourages rehabilitation and the return to work.
The insurance costs are creating complications for employers, businesses, motorists, public authorities and voluntary and sporting organisations. No area has been spared the paralysis that has accompanied the escalation in litigation. Teachers can no longer send their students to the local shop for a box of matches. Public houses, supermarkets, clubs, hotels and local authorities are in open season for claims. The claims epidemic is destroying the ordinary person's enjoyment of society. The playgrounds where for decades young people enjoyed themselves on swings and slides are becoming an entertainment of the past. It is almost impossible to get insurance for these facilities.
Motor insurance premia in Ireland are 98 per cent higher than the EU average. A male aged 17 to 21 years with a full driving licence must pay an average of £1,790 to insure a Ford Fiesta. One cannot justify such prohibitive costs and the situation must change. The enactment of the Occupiers' Liability Act, 1994, is an indication of what can be done. It represents a fundamental and radical change in this area of law.
Personal injury compensation represents 67 per cent of the claims payout in motor insurance and almost all claims paid out for employers' and public liability insurance. Ireland, to its competitive disadvantage, has the highest personal injury awards of the EU member states. Irish claim frequencies and award levels are more than twice those of the UK. Part of the problem resides with the legal system and the courts appear to take a lenient attitude to claims, often holding employers responsible no matter what the circumstances. Only one in nine claims which go to court is dismissed. It appears as if the defendant in such cases is guilty until proven innocent.
Insurance companies settle many cases out of court. The average cost of public liability claims settled out of court is £6,989 and awarded by the court is £15,058. The practice of settling out of court encouraged the escalation of claims. The trauma for the claimant of giving evidence, whatever its content, is not a deterrent and opportunistic claims are encouraged. The uncertainty as to the level of award appropriate to a particular claim is also a factor. There is an urgent need for a schedule of awards to give guidance on appropriate levels. In one case an employee suffering from a blistered hand received £1,200.
The Law Reform Commission should bring forward proposals to bring the Irish frequency and quantity of awards and, consequently, insurance premia levels, in line with our EU competitors. The New Zealand system of self-insurance should be considered. IBEC has identified key elements in the approach to these issues. First, the establishment of statutory guidelines on awards for more frequent injuries — this would have the effect of reducing and limiting awards and making them more predictable. Second, measures to tackle the problem of fraudulent and unnecessarily inflated claims. Third, reform of the duty of care so that, among other things, the concept of contributory negligence is taken into account and so that a breach of a statutory duty is not a case of action on its own account. Fourth, measures to simplify court procedures and, in particular, to provide for the sharing of a disclosure of information on medical matters, pay, social welfare and financial loss and, fifth, measures to restrict legal costs.
