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Seanad Éireann debate -
Wednesday, 5 Nov 2003

Vol. 174 No. 9

Insurance Industry Reform: Motion.

I move:

"That Seanad Éireann:

– Acknowledges that the price of insurance is one of the main costs facing both consumers and businesses today;

– Notes that on its return to office in June 2002 the Government set out a comprehensive programme to reform the insurance market and a clear path for the achievement of those reforms;

– Commends the Government for giving such a high priority to insurance reform in its legislative programme;

– Welcomes the fact that the Personal Injuries Assessment Board (PIAB) has been established on an interim basis;

– Notes that in May 2003 the Government approved the priority drafting and general scheme of the Bill to establish the PIAB on a statutory basis and that it is planned to have this Bill enacted before the end of the year ensuring that the PIAB will be operating and hearing cases early in 2004;

– Notes also that another proposal for legislation entitled the Civil Liability and Courts Bill is being prepared by the Minister for Justice, Equality and Law Reform which will reform the law on personal injury actions and give effect to several recommendations of the Motor Insurance Advisory Board;

– Supports the Government's intention to progress the Civil Liability and Courts Bill in parallel with the legislation on the PIAB so that both come into effect at the beginning of 2004;

– Commends the Civil Liability and Courts Bill for containing a number of very significant reforming provisions in particular the provision that will introduce a requirement for a person to swear an affidavit in order to verify their pleadings in a case so that if a person swears falsely they will be guilty of an offence;

– Welcomes the Civil Liability and Courts Bill which will provide that if any element of a claim before a court is made in bad faith the whole claim will fail, subject to appropriate safeguards – this provision represents a determined effort on the part of the Government to crack down on fraudulent claims;

– Acknowledges that this legislation is a commendable effort by the Government designed to eliminate fraud and reduce the costs of dealing with genuine claims;

– Recognises that such legislation must be complemented by vigorous action to reduce the incidence and severity of accidents, particularly road accidents;

– Welcomes the fact that the penalty points system, originally introduced in respect of speeding offences, has been extended and will be progressively extended to cover a very wide range of motoring offences;

– Accepts the penalty point's regime is having an impact on driver behaviour and is helping to reduce accidents, injuries and fatalities on our roads;

– Supports the Government in its further efforts to reform significantly the Irish insurance market and to ensure that the factors giving rise to high premiums are being addressed as there is scope in the market for both premiums to fall and profits to rise; and

– Recognises the importance the Government attaches to the attraction of new entrants into the market and supports the ongoing initiative of the Tánaiste in meeting a number of potential new players in the insurance market during the coming months and to ensure that they are aware of the reforms which are taking place and the impact which they will have on the profitability of the sector."

I welcome the Tánaiste to the House and compliment her on the excellent work to date on the insurance industry. This is an excellent motion and is moved on behalf of the Fianna Fáil party. I hope the House will unanimously agree the motion. Since the Government returned to office in June 2002 it has set out a comprehensive programme and given priority to the insurance industry and significant progress has been achieved. The Tánaiste has given the matter the priority it deserves. One of the most pressing issues is the establishment of the Personal Injuries Assessment Board. This is an innovative development but it has not received great support from the Law Library which has put up a very forceful case against the establishment of the PIAB. The Tánaiste, who is a very determined Minister, will ensure this comes about. Dorothea Dowling, the interim chairman of the PIAB has addressed this issue at the Joint Committee on Enterprise and Small Business. She outlined to the committee the benefits of the Personal Injuries Assessment Board. In the report prepared by the Joint Committee on Enterprise and Small Business and published in July 2003, the committee fully endorsed the establishment of the PIAB. The insurance industry in general also welcomes this development.

There has been significant opposition from the Law Library to the establishment of this board as it believes it will affect its members' involvement in the settlement of claims. Bearing in mind that in many cases 40% of damages in an insurance settlement go directly to the legal profession it is obvious that major improvement can take place. There are significant vested interests involved in this issue and they have mounted a strong rearguard action. I have been lobbied by solicitors in County Roscommon who have put forward a case against the establishment of the PIAB. I believe that in the long run they will accept its establishment which hopefully will take place in January 2004.

I ask the Tánaiste to give the House an outline of progress on the legislation. At a meeting of the Joint Committee on Enterprise and Small Business it was proposed that priority be given to the establishment of this board as quickly as possible on a full and statutory basis. It is hoped the PIAB will extend from personal injuries into the area of motor insurance and claims. We believe it will expedite the settlement of claims in a fair and balanced manner and will ensure the cost of insurance comes down.

We have received many submissions from the insurance industry. Contrary to what was outlined to the committee we discovered that enormous profits were being made by the insurance industry. As the Tánaiste is aware competition in the market is very limited. I hope the development of the PIAB will attract insurance companies from the European Union to the relatively small Irish market. The profits made by the companies trading in this market are very large. I hope the Tánaiste will be in a position to outline, although not necessarily this evening, if there is a possibility that large insurance companies in the EU could provide an on-line service to individuals, without the necessity of them having a physical presence in the State, particularly given the cost of public liability insurance to small industries.

With her background in labour affairs, the Tánaiste is aware of the effect that insurance has on the maintenance and creation of employment. Claims are no longer settled lightly by companies. They now fight back and vigorously contest claims. The Tánaiste's colleague, the Minister for Justice, Equality and Law Reform, Deputy McDowell, proposed changes to the judicial system in regard to the settlement of claims, particularly in regard to perjury. Heretofore there was no follow up when people went to court to make false claims, which amounted to daylight robbery. The Minister for Justice, Equality and Law Reform stated his intention to strengthen the law in this regard. I am confident that he will do so and that the legislation will come forward as quickly as possible. I am anxious that this is done. Although there is a tight schedule between now and the end of term, it is time for the necessary legislative changes to be introduced.

The innovations proposed in regard to the Motor Insurance Advisory Board represent the greatest change in the ethos of the insurance industry in the history of the State. The Tánaiste has been responsible for piloting through these measures. I look forward to the legislation being passed before the end of this term by both Houses of the Oireachtas. I anticipate that both sides of the House will co-operate to assist the Tánaiste in this regard. She is responsible for the progress evident in the reduction in this year's premia by many of the larger companies. This is a significant reduction, bearing in mind the massive increases that have taken place in recent years and I hope it will continue.

People are now more aware of the damage done by fraudulent claims. A campaign has been established to ensure that such claims are fought every step of the way. I am sure that Members on both sides of the House would agree that more has been achieved in the past number of years in terms of tackling the insurance industry as a whole than has ever been done before. It would be encouraging if the House would see fit to unanimously back the motion before us, bearing in mind that the report of the Joint Committee on Enterprise and Small Business—

It breaks my heart to disappoint Senator Leyden.

I am disappointed that Senator Ryan will not support this motion. In the Joint Committee on Enterprise and Small Business, the Senator's colleague, former Minister Deputy Howlin agreed with the report, which is comprehensive and most supportive of the actions taken by the Tánaiste and the Minister for Justice, Equality and Law Reform. Both Ministers came before the committee and spent considerable time outlining the many issues involved in this regard. It would be inconsistent with the approach of the Senator's colleague in the other House if the Labour Party group did not support the motion. It is a reasonable and comprehensive motion and outlines the issues in the name of the Leader of the House, Senator O'Rourke. The amendments put forward to the motion are not of great assistance.

I, again, thank the Tánaiste for coming to the House. I was delighted to serve in Government with her in the past. While I was in the same Department, I did not have responsibility for insurance. The former Minister, Mr. O'Malley, kindly decided he would take responsibility for that area.

Senator Leyden just looked after contracts.

I looked after foreign trade, An Bord Tráchtála, the Irish Trade Board, and everything else. That was enough responsibility at the time. The former Minister, Mr. O'Malley, was extremely interested in the insurance industry. The Tánaiste has made it her political priority in Government to ensure that change is instituted in this sector. I hope she will achieve the desired results in this work, for which she has our full support.

The public views this as a most serious issue. Fraudulent claims are being tackled and a major change is evident. The Tánaiste is responsible for this as she put it at the top of her agenda. I believe she will be successful in her endeavours in this regard and I ask her to ensure that the legislation is brought before the House as quickly as possible. I think I can assure her of the support of this and all sides of the House in bringing it forward as quickly as possible.

I second the motion.

I move amendment No. 1:

To delete all words after " businesses today;" and substitute the following:

– Notes that only 20 of the 67 recommendations of the Motor Insurance Advisory Board have so far been implemented by the Government,

– Notes that all other legislation promised has been delayed in spite of many promises,

– Notes that the Government has so far failed to bring any real competition into the insurance market,

– And, therefore, condemns the Government's failure to respond promptly and effectively to the crisis facing businesses and consumers in the face of rapidly escalating insurance costs.

According to RTE's website, on 20 September 2002, the Tánaiste announced that the reform of the insurance industry was her number one political priority – and so it should be. The problem did not emerge, however, in September 2002. We spent many years before that wondering when the report of the Motor Insurance Advisory Board would be completed. After it had arrived in the Tánaiste's office, we then sought to ascertain when it would be published. I never managed to figure out why it took so long to put it together and then publish it.

I accept the bona fides of the Tánaiste that she takes this matter seriously. What has gone wrong is more a commentary on the way the country and the Government, in particular, does its business because it had the resources to do it differently. Almost 14 months later, only 20 of the 67 recommendations of the Motor Insurance Advisory Board have been implemented. I would hate to see what would have happened if it was not the Tánaiste's number one political priority.

The insurance industry has been very good at diverting attention from itself to everybody else. Some of the diversions are legitimate. The legal costs involved in insurance claims are without doubt outrageous. However, some of the diversion has simply been a diversion from its own way of doing things. We should remember that this is an industry which dumped its own ombudsman and refused to reappoint her because she was too much of a champion of consumers. That was not said but the whole world knows that Pauline Marrinan Quinn was dumped by the insurance companies because she was too vigorous in doing her job. Her appointment was intended to be a public relations exercise, not a real advocate of consumers, and when she turned out to be precisely that, they got rid of her.

This is not a poor and vulnerable industry which was struggling along with marginal profits. It is the nature of the business to have good and bad years. That is why one puts reserves in place. Actuaries get paid so much because they are supposed to work out what reasonable level of reserve is necessary. The notion that exorbitant increases can be explained by the fact that the insurance industry had a bad year due to a great number of storms one winter is a nonsense in terms of the way in which a proper insurance business should run. I will come back to that point.

It is worth recording a few figures although it is not often that I quote IBEC or the Small Firms Association. In a survey of SFA members, 76% said there had been no change in their rate of insurance claims from year to year and 15% recorded a decrease in claims. Only 9% had an increase in claims yet in one year the cost of premiums rose by 100%. The Irish Hotel Federation describes the experience of a hotel with fewer than 100 bedrooms in a provincial city. In 2001 its premium was €50,000, in 2002 it was €200,000 and in 2003 it increased by a further 150%. We all know this is happening and we must ask what can be done about it. It is in answering this question that my good friend Senator Leyden and I part ways.

It is quite clear that a political priority is not being addressed in the way it should. One of the issues that arises regularly relates to fraudulent claims, which are a disgrace. However, it would have helped if the insurance industry had stirred itself years ago to contest every claim it suspected was fraudulent rather than taking the easy route of paying out and passing on the cost to their customers in the form of higher premiums. The industry did that for years, particularly in the cases of public bodies. Local authorities ended up with massive bills for public liability insurance as a result of claims many of which were manifestly fraudulent. Senator Minihan will be aware of a couple of cases in Cork which involved the successful prosecutions of people who were actually telling people where the hole they could fall into was located. They made a sideline out of it but ended up being convicted. The real tragedy is that everybody knew many claims were fraudulent but the best way to have proved it was via the courts. Most insurance companies adopted a policy over many years of not contesting such claims. If small amounts of the order of €2,000 were involved, it was seen as less troublesome and expensive to pay up. Insurance companies entirely forgot the fact that there are a great many honest, decent people in this country. One company has finally offered people a way in which to tell it about fraudulent claims and has received hundreds of calls. When the insurance industry realised what the public thought of it, it finally dawned on its members to ask the public to assist in dealing with fraudulent claims.

This industry claimed to be short of money and to be unprofitable which gave us the impression that it provided a benevolent public service simply because it was concerned about our well-being. I was always a bit sceptical about that position. One picked up the clear impression that the industry was not in business but was running a social service. The lifestyles of those involved in the industry suggest that most of them seemed to do fairly well from this social service. We were told no money was being made, but the truth was that no effort was being made since it was too easy to do things a certain way.

In recent years two issues have arisen. One has been the scandal of the burden of insurance on young drivers. While some of the cost was the result of the driving habits of young people, much of it was the result of the inability of insurance companies to refuse to shoot at a soft target. The Motor Insurance Advisory Board has revealed the reality that more money was being made from young drivers here than in other countries, which is where a good deal although not all of the increased premium came from.

It was suddenly discovered that insurance costs were becoming a major burden on businesses. They are also a major burden on householders. I have not seen any sign of a huge increase in the number of houses being burned down, burgled or flooded. Until recently, the incidence of burglary was decreasing for many years although I gather it has increased lately. While most factors were stable and a decrease was occurring in the incidence of others, domestic premiums went up. My own premium increased again this year despite the fact that I have not made a claim on it in years. The reason is not just the inflated cost of building, it is simply that insurance companies feel they can constantly increase premiums. The most fundamental problem is that there is no longer any real competition. There is pseudo competition in that there are many insurance agencies and middle people offering insurance, but they all deal with one or two companies. That is the fundamental flaw and a major issue.

A smoke screen has been thrown up consisting of peripheral issues of business competitiveness and wages in particular. Nobody believes the country can continue to pay itself more than it earns, but a contrast must be made with the terrifying escalation in premiums and the expansion of areas in which cover is refused. In my own city there is the small but tragic example of a skateboarding rink for youngsters. It has never been sued or had a claim made against it, but there came a year in which no company would give it a quote and it had to close. Insurers are no longer interested in risk. They want certainty. If we all had certainty, we would not need insurance. If insurance companies are not about risk, they should not be in business.

This is not a problem that can wait, which is why I am unhappy with the Government's motion. I read the motion carefully and I agree that the price of insurance is one of the main factors. According to the motion, the Personal Injuries Assessment Board has been established on an interim basis which is good. The Government has approved the priority drafting and general scheme of the Bill to establish the PIAB on a statutory basis and it is planned to enact the legislation before the end of the year. There are about four sitting weeks before the Christmas recess. I would love to be told by the Tánaiste and Minister for Enterprise, Trade and Employment that the Bill will be passed by both Houses of the Oireachtas by then. The motion also notes that a civil liabilities and courts Bill is being prepared by the Minister for Justice, Equality and Law Reform. It is the Government's intention to progress this Bill in parallel with the legislation on the PIAB to ensure that both come into force at the beginning of 2004. A Bill which has not yet been published is to come into force at the start of 2004 according to the Government's own motion. The motion further commends the contents of an unpublished Bill. While the Government has stated intentions, the normal protocol is that we discuss Bills once they have been published. It is not the normal practice for Government to publish the heads of a Bill. The legislation in question is obviously complex, but we are told it will be in force by 1 January 2004.

Unpublished legislation promised but not delivered does not reflect most rational people's understanding of a number one political priority. This is why the Labour Party has moved its amendment. Despite what people might think, I try to be constructive and to suggest alternatives. I suggest that the Tánaiste and Minister for Enterprise, Trade and Employment demonstrates that her number one political priority is as she says it is by immediately publishing the promised legislation. She must also give some indication of the real timescale for its enactment and introduction.

The second issue to be addressed involves competition in the market. The Government is driven by a belief in the market as the best way in which to do everything. The Tánaiste's commitment to the market model is perhaps stronger than that of anyone other than the Minister for Finance and she perhaps understands the market better than him. However, that she understands the problem as well as she does and yet leaves us with something close to a quasi-monopoly, means that no other measures will solve our problem until we re-introduce competition to the marketplace. If that means legislative certainty, which will entice other participants into the marketplace, let us get the legislation published, which we were told would be enacted by the end of the year but which we have not yet seen.

I second the amendment to the motion.

I am delighted to have the opportunity to participate in this debate on one of the most important issues facing the country.

I compliment Senator Ryan on selectively quoting a number of commitments which were made. He did not say, and it is in some of the material from which he read, that the timeframe for the legislation was 18 months. We have always said we would have the legislation in place by the end of this year. It will be published next week and, with the co-operation of this House and the Lower House, it is my determination to have it on the Statute Book this year. Since we published the heads of the Bill, there has been widespread consultation and, notwithstanding what appeared in Sunday newspapers, there is no truth in the rumour that the financial resources will not be available to establish the PIAB next year. Without breaching the secrets of the Book of Estimates, which will also be published next week, the resources for the Personal Injuries Assessment Board will be in the Estimates. It is also not true that the Department of Justice, Equality and Law Reform has taken umbrage and decided not to back it.

In regard to his comments on competition, I hope the Senator is not suggesting the Government should establish an insurance company. Until the reform is in place, we will not attract new players. This is a small market of just 4 million people and I am concerned that there are too few players in some product markets – in one there is just one player quoting in the Irish market. We need a combination of tools to drive down the cost of insurance. We need the reforms, which I am implementing through the PIAB, the Minister for Justice, Equality and Law Reform's civil and courts liability legislation and we need new entrants. We may only need one entrant to substantially drive down insurance costs and I am optimistic we will have that new entrant as soon as the legislation is in place. The indications are that we will have a new entrant, and I believe that will be the case. I will not try to score political points because the issue is way above politics.

Reference was made to my former colleague, former Deputy Desmond O'Malley. When he was Minister for Industry and Commerce between 1977 and 1979 he addressed a meeting I attended in certain party rooms in Leinster House when the idea of setting up some alternative to the courts was discussed as a way of reducing insurance costs. That is over 20 years ago and unfortunately, for all sorts of reasons, it never happened. However, it is about to happen sooner rather than later.

The cost of insurance is now a serious issue for virtually all sectors of society. It is not just that spiralling insurance costs are eroding business margins and damaging companies' ability to expand. In some cases, people are being forced out of business altogether because they cannot afford the ever – increasing premiums for employer liability, while many voluntary organisations are having to curtail their activities so as to avoid higher public liability insurance. In these circumstances, the status quo is not an option.

The Government is in the process of implementing a radical programme of measures to tackle the high cost of insurance. The emphasis is on a co-ordinated set of actions across a range of Departments which will ensure that Ireland has a functioning insurance market in which vigorous competition will ensure a fair deal for policy holders. A fair deal for policy holders will not involve any diminution in the rights of, or the compensation available to, legitimate claimants. Rather, the measures are aimed at reducing costs by reducing the incidence and severity of accidents, reducing the cost of delivering compensation and eliminating fraud.

A ministerial committee which I chair meets regularly to oversee the implementation of the insurance reform programme. The committee consists of the Minister for Transport, the Minister for Justice, Equality and Law Reform, the chairperson of the Motor Insurance Advisory Board and the interim Personal Injuries Assessment Board and senior officials from the relevant Departments. Representatives from key organisations such as the Irish Insurance Federation, the Law Society, the Irish Financial Services Regulatory Authority and others have been invited to attend on occasion. This ministerial team is action-focused and is delivering progress on several fronts.

The report of the Motor Insurance Advisory Board was published on 17 April 2002. It is the most comprehensive study and analysis of the Irish motor insurance industry ever undertaken and provides a sound basis for addressing the problems we are experiencing in the insurance industry. The analysis, conclusions and recommendations extend to other areas of liability insurance. The report contains 67 recommendations covering a broad spectrum of activities which impact on the insurance market.

The MIAB action plan includes measures aimed at improving the law in regard to personal injuries, changing procedures governing advertising by solicitors, providing greater transparency and protection to consumers, advocating greater competition in the industry, providing greater information to the consumer, implementing and enforcing the Road Traffic Acts, establishing a Personal Injuries Assessment Board and drawing up a book of quantum to help the PIAB make assessments and encourage negotiated settlements.

I am pleased to report the following progress on implementation of the recommendations in the MIAB action plan. Of the 67 MIAB recommendations, 23 have been implemented, three have been partially implemented and 28 are being actively progressed. One cannot be further implemented at present and 12 are under consideration. I wish to set out recommendations of the MIAB which have already being implemented. The Motor Insurance Regulations 2002 deal with a minimum period of notice for renewing motor insurance policies and the format of the no claims bonus certificate, which must be furnished to policy-holders at renewal time. The IFSRA legislation includes the regulatory mechanism to balance the legitimate concerns of consumers with requirements for effective solvency supervision. The Competition Authority has incorporated the principle of acting against the public interest in the Competition Bill 2001. It has also taken on the responsibility, from 1 January 2003, to review all further insurance mergers in the interests of the economy with appropriate reference to the IFSRA and that the process of consultation seeks to protect the interests of specific policyholder groups. To date no mergers requiring review have taken place. The Irish Insurance Federation is at an advanced stage in the implementation of the recommendations relating to it through its codes of practice, which will be published shortly. These recommendations relate to such matters as giving reasons in writing for refusing a quotation, recognising the driving experience of retired drivers who have a record on their employer's fleets, rating policies based on accident free driving rather than risks based solely on age, desisting from the practice of requiring collateral insurance business to be placed with the company before supplying a motor quotation, clearly stating the identity of the insurance group to which the insurer belongs, reducing the number of refusals required under the declined cases committee from five to three, including on the declined cases committee an external representative who will report to the IFSRA and compliance with the provisions of the Equal Status Act 2000.

The IIF and IBEC have agreed and published claims settlement guidelines. The Department of Justice, Equality and Law Reform and the Incorporated Law Society of Ireland have amended the Law Society rules to require that all advertisements by its members should state that a lawyer is not permitted to seek a percentage of a claimant's compensation.

The implementation process is not a numbers game. While all but a handful of the recommendations are being actively progressed, the focus is clearly on the earliest possible implementation of those measures which will have a significant impact on costs and, therefore, on premiums. One of the major recommendations which refers to my Department is the setting up of the Personal Injuries Assessment Board on a statutory basis. In connection with the cost of delivering compensation, I refer to the figures contained in the report of the Motor Insurance Advisory Board.

The board found that motor third party personal injury non-compensation costs as a percentage of compensation costs was 39.5%. Non-compensation costs for employer's liability as a percentage of compensation was 45.9% and public liability non-compensation costs as a percentage of compensation was 56.4% in 2000. These levels are clearly not sustainable and the objective of the PIAB and reforms of court procedures is designed to substantially reduce them.

The Government is fully committed to the establishment of the PIAB, which is already established on an interim basis. On 27 May 2003, the Government approved the priority drafting and publication of the general scheme of the Bill to establish the board on a statutory basis. It is intended to publish the Bill in a few days and introduce it to the Houses this month. This will allow the PIAB to be operational next year.

The Personal Injuries Assessment Board will process uncontested claims and make awards as appropriate. In the first instance, it will deal with employer liability claims with an extension as soon as possible to public liability and motor. Large numbers of claims will be kept out of the courts system altogether. This will make for a much faster and more efficient system which will cut the cost of delivering compensation to the benefit of all consumers. A book of quantum is being prepared that will assist in the assessment of awards. Work is continuing on the logistics for the operation of the board. A chief executive officer will be appointed in the next few weeks and interviews will be held over the next ten days or so. Premises are being procured. The request for tender for the main IT systems required to support PIAB has been drawn up and published in the Official Journal of the European Union.

By eliminating the need for litigation costs where legal issues are not in dispute, the PIAB will significantly reduce the cost of delivering compensation. The PIAB will also offer speedier assessments to the benefit of genuine claimants. Independent research has shown that claimants in Ireland wait six times longer than in the UK for negotiations to commence on personal injury claims. Some claims will still end up in court and reform of courts legislation is another major area for Government action.

The Minister for Justice, Equality and Law Reform published the general scheme of the Civil Liability and Courts Bill in July 2003. This legislation will reform the law on personal injury actions and effect a number of the recommendations of the Motor Insurance Advisory Board. It will include measures to tackle fraudulent claims. The Bill includes a requirement for a person to swear an affidavit in order to verify their pleadings in a case. If the person swears falsely, he or she will be guilty of an offence. It includes a requirement that pleadings be full and detailed and set out all relevant information. It will provide for the loss of compensation in the event of fraudulent claims. There will be a provision that if any element of a claim before a court is made in bad faith, the whole claim will fail, subject to appropriate safeguards. It will provide for exclusion from the determination of damages of any income which was not declared for tax purposes. It will take into account all insurance benefits paid to a claimant in assessing damages to be awarded in personal injury claims. It will provide for the reduction of the limitation period for personal injury actions from three years to one to ensure claims are brought forward without delay. Additional powers are to be given to the courts to direct mediation and-or case conferences at any stage, to direct that the net issues in a claim be identified by means of a pre-trial hearing and to direct that a court-appointed medical expert examine the plaintiff.

The above actions are designed to eliminate fraud and reduce the cost of delivery to genuine claimants. The Minister's aim is to publish this Bill this session and he hopes it will be enacted by the end of the year. The provisions in the PIAB Bill and those in the Civil Liability and Courts Bill must be complemented by vigorous action to reduce the incidence and severity of accidents.

The Minister for Transport, Deputy Brennan, will publish a new road safety strategy programme in the next few weeks. As part of the existing road safety strategy, he has introduced penalty points for speeding offences, lack of insurance and not wearing seat belts. Initial indications are that these are having a very positive effect. Ensuring that the penalty points system will result in reduced costs for non-offending motorists is central to the discussions between the Minister and the insurance companies about access to penalty points data.

The Department of Enterprise, Trade and Employment and the Competition Authority are jointly undertaking a study into insurance which is examining all aspects of the industry. Issues relating to rivalry between companies and barriers to entry are being examined. If the study discovers anti-competitive practices, it will highlight them so that they can be dealt with effectively. Furthermore, when the above reform measures are being implemented, it is my intention to undertake a campaign to actively encourage more insurance companies to enter the Irish market.

This comprehensive and co-ordinated approach shows how serious the Government is about the whole insurance issue. Initial indications are that the reform programme is having a real effect. A number of companies have announced major reductions in motor premia rates and more reductions are expected. Reductions in employer's liability and public liability insurance costs, which currently represent a significant burden for business in Ireland, are also expected. An Automobile Association survey published recently shows that the cost of motor insurance has fallen by up to 32% for some drivers between April and October this year. According to the Irish Insurance Federation there was an average 15% drop in premium levels up to September this year.

There is a clear need to keep up the pressure and ensure that the critical reforms set out in the Government's programme are implemented as quickly as possible. I look forward to working constructively with this House in the weeks ahead to ensure the legislative proposals to which we are committed are implemented.

I wish to share my time with Senator McCarthy. I thank the Tánaiste for her comprehensive statement.

Perhaps Senator Ryan will apologise to the Tánaiste for his statement and withdraw the amendment.

The Tánaiste has delivered a comprehensive statement to the House, which is welcome. It puts on the record exactly where the Government currently stands on the matter and is very useful, as is tonight's debate. I do not doubt for a moment the Tánaiste's commitment to bringing forward legislation. I welcome her announcement that her part of the arrangement will be honoured next week with the publication of legislation. We would welcome the legislation in this House should she choose to introduce it here. It will be a hard slog to get the legislation through both Houses before Christmas but I commend the Tánaiste on her efforts.

The Tánaiste stated that it is the Minister's intention to publish before Christmas the Civil Liability and Courts Bill and get it through the Houses in this session. I doubt that will happen. It is very comprehensive and important legislation. A key part of the whole programme is to reduce insurance costs, otherwise the scheme and programme of action will not work. It must be given the time required to go through the Houses of the Oireachtas; it should not be rushed and should be given the consideration it needs.

This issue did not crop up overnight but it has become worse in recent times. The dust had hardly settled on the 11 September 2001 disaster when it appeared the insurance companies began to tot up its cost. Suddenly at local authority meetings we were hearing that insurance costs had doubled, even trebled in some cases, because of the 11 September terrorist attack. The effect has been extraordinary. People have spoken about the effect on business. We have seen the effect on communities also. Last week I was involved in an arts festival where our biggest cost was insurance. Some festivals, such as St. Patrick's Day festivals, did not go ahead this year because of insurance costs. Community groups are hugely hit. While they are doing excellent work in the community, their insurance costs have become totally prohibitive.

I do not know why this is the case. The Tánaiste spoke about competition but I am not sure what she said is correct. My colleague, Senator McCarthy, will deal with motor insurance, particularly insurance for younger drivers. This issue, which is having an appalling effect, must be tackled. I wish the Government well in this regard because what we have experienced in recent years is rip-off Ireland. It is as if one sector saw an opportunity to pass on costs. It appears that at every level costs were passed on, they were also added to. By the time it came to community groups, festivals or individual consumers, the costs were increased. Until we tackle that culture, no amount of legislation will significantly alter the position.

I welcome the Minister of State, Deputy Aylward, to the House. I thank the Tánaiste in her absence for attending the debate and Senator O'Meara for sharing her time with me. The House debated this issue in March when the Independent Senators tabled a motion calling for an urgent reduction in insurance premiums, particularly for young drivers. The issue has been debated at great length here. Unfortunately, the level of progress at Government level since then, in regard to motor insurance for young people, has not been at a pace that suggests the campaign is working. While I accept the Tánaiste's commitments in this regard, we are not seeing action fast enough.

The Motor Insurance Advisory Board report produced 67 recommendations. At that time we were told full implementation would result in low cost insurance all round. Driving is a necessity in rural Ireland. Unfortunately, we do not have the same access to the DART, rail, taxis and buses as our counterparts in urban areas. Therefore, it is necessary for the young male or female to purchase a car, obtain insurance and drive to their place of work. However, in many respects, insurance companies quote figures which are beyond belief. I was in a house recently where I was shown a quote from an insurance company which was in excess of €3,000. That was an average quote. The driver in this case was able to pay it, but some of his friends had been quoted almost double that amount. That is disgraceful. In other cases the insurance companies do not bother to quote.

When I bought my first car at 20 years of age, I was told my insurance would be cheaper when I was 21. When I reached 21, I was told it would be cheaper at age 22. At age 26 I am now paying as much as I paid at 20 years of age. My insurance still has not come down to a level which would be reasonably affordable. It is not the case that when one reaches a certain age, it levels off and one pays in line with much older persons. The insurance companies are disingenuous, to say the least, when they give commitments to young persons about their next birthday, or two or three years hence, in terms of cheaper insurance. That is not happening.

The press reception for the Tánaiste held to announce details of the establishment of the Personal Injuries Assessment Board was attended by many vested interests, including representatives from the insurance industry and the insurance federation. In outlining the strategy, the Tánaiste took questions and answers. Following the Tánaiste's announcement, the representatives from the insurance industry said they could not guarantee insurance premiums would fall and were still speaking about profit. In a submission to the Tánaiste's Department, following an invitation to make submissions, they said also that a cost of €500 million per annum was needed for payouts in claims. When this was put to them by those of us and others who had access to the figures and the data produced in the Motor Insurance Advisory Board's report, the insurance companies did not say there was a huge discrepancy in the figures. Dorothea Dowling and her team had established that the figure was a certain amount, but the insurance companies told us it was a different amount, €500 million. The discrepancy was huge. The response was that they were paying into a fund just in case there would be a certain amount of claims. The figure of €500 million was not spent on payouts.

If we are serious about reducing the cost of motor insurance to young persons we have to take on the vested interests – insurance companies, solicitors and the Government because of the 2% levy which the Tánaiste has already said it will not drop. We must ensure everyone who has a responsibility in this area is brought to order so that insurance costs for young persons are brought to an affordable level.

I compliment the Tánaiste on her contribution in which she outlined the strategy in place to tackle the issue of insurance. It is true that she set it out as one of her political priorities. I am pleased she is fulfilling that commitment in the way she is moving forward.

I am delighted to support this comprehensive motion which clearly outlines the initiatives taking place. Yet the Labour Party tabled an amendment noting and condemning points, but proposing nothing. One can note and condemn all day, but one is not taking action. The reality is that the Government is taking a clear and comprehensive list of actions, as outlined, and the benefits, as the Tánaiste explained, are already being seen and will be seen further in the coming years. It is interesting to note there are consistent calls from our Fine Gael colleagues for debates on insurance and the cost of this and that, but there are no proposals from that side of the House either.

Read the amendment.

It gives me great pleasure to speak on the motion. I have a business and I fully understand the great increase in insurance costs in recent years. I have witnessed small businesses closing as a result. There has to be a proper approach to correcting this problem. The establishment of the PIAB by the Government is one strong measure in addressing the wrongs and the spiralling costs of recent years.

I wish to refer briefly to the culture that has developed in Irish society of fraudulent claims. We all watched the "Prime Time" special. Whereas we may have heard of such fraudulent claims previously, it was astounding to see them and witness what was going on. This is a cultural problem for society. If people are comfortable behaving in this manner, we have a serious problem. People have to take personal responsibility for their actions, which result in greater costs to the community in which they live because of their irresponsible behaviour. RTE deserves plaudits for screening that programme.

The issue of spiralling insurance costs is a real problem for business. We have heard from the Labour Party that nothing is being done about it. The reality is that many things are being done about it. It is welcome that the PIAB will be in a position to deal with and process uncontested claims and make awards as appropriate. Initially, the PIAB will deal with employer liability claims and move on to public liability and motor insurance claims. That will happen in the short term and will not be prolonged and protracted.

The statistical evidence available shows that a large number of claims will be kept out of the courts system as a result of the PIAB. This will result in a much faster and more efficient system that will cut the cost of delivering compensation to the benefit of all consumers. Statistics show also that litigation adds in excess of 40% to the cost of compensation and that this has contributed to the high cost of insurance claims. It is fair to conclude that by eliminating the need for litigation costs, where legal issues are not in dispute, the PIAB will significantly reduce the cost of delivering compensation despite the views of certain elements within the Law Library. The PIAB will offer faster assessment to the benefit of genuine claimants. Independent research has shown that claimants in Ireland wait up to six times longer to commence settlement of claims than our counterparts in the UK. I welcome the process undertaken by the interim board to prepare the book of quantum. It is getting the work done and when legislation is enacted, as the Tánaiste committed here this evening, that board will be in a position to move forward and settle claims where legal liability issues are not disputed.

Regardless of the PIAB, some claims will still end up in the courts. That is the reason there are three pillars to insurance reform. The Department of Enterprise, Trade and Employment looks after the industry, the Minister for Justice, Equality and Law Reform looks after reform in the courts and the Minister for Transport has responsibility, and has already taken action with the introduction of penalty points, to try to improve the area of road safety. The Minister for Justice, Equality and Law Reform has outlined his intention to progress the Civil Liability and Courts Bill which will reform the law on personal injury action and give effect to the further recommendations contained in the advisory board report.

I welcome the legislation proposed by the Minister for Justice, Equality and Law Reform to deal with fraudulent claims. This issue must be addressed. To make it an act punishable as an offence of perjury, where one will have to swear an affidavit in advance of setting out a claim, is welcome. The initiatives being taken by this Government, as clearly outlined and which will be implemented over an 18-month period as promised, are visible. We have had confirmation of this from the Tánaiste this evening. I congratulate the Government and hope it will be supported in this action by all sides of the House. Rather than add insult to injury, the Labour Party should withdraw its amendment and support this Government motion.

I take it that I am in order to speak to our amendment without moving it.

An Leas-Chathaoirleach

That is correct.

I welcome the Minister of State at the Department of Agriculture and Food, Deputy Aylward, to the House and thank the Tánaiste for her speech earlier. While we may disagree on some issues, we wish her well for the remainder of the programme to be implemented.

This motion is like the long version of the Government election slogan, "A lot done, more to do", which we discussed briefly earlier in another forum. One of the Minister of State's colleagues said this is the lingering influence of de Valera. Some achievements may have been made but much more remains to be done.

In public statements, all Government spokespersons have set out insurance reform as a leading priority. We all subscribe to that. It has been suggested that the Government will leave no stone unturned in tackling high insurance costs and in creating a type of environment that will make it attractive to new entrants to come into the market in Ireland. We hope that will happen.

There is no doubt that consumers and business, particularly small businesses, have been savaged by high insurance costs. Consumers have been faced with extremely high household and motor premiums while businesses have been faced with massive hikes in insurance which have caused serious difficulties for many of them throughout the State. Unfortunately, we probably all know examples of businesses which had to fold. Weekly, we hear of businesses, particularly in the manufacturing sector, facing closure or a reduction in their activities because of an increase in the cost of their employer or public liability insurance.

For an issue which has been flagged as the Government's number one political priority, I do not accept that the Government's progress on this matter is commendable, as the motion suggests. We are faced with a situation where the majority of the MIAB report recommendations have yet to be implemented. Instead of having an increased presence of insurers in the market, we now face the apparent departure of one of the main market operators in the country. Instead of creating a competitive and vibrant market for insurance business, it now seems that the market for insurance will become even more concentrated. Recent media reports which suggest that Eagle Star may leave the Irish market are deeply alarming. The Tánaiste should make it clear to the Competition Authority that she is opposed to Eagle Star being acquired by any existing player in the Irish market. It is not in the interest of consumers or business to see one less player operating in this market.

What has happened on this issue, which has become the number one political priority for Government? As I said earlier, the Government has been tardy in implementing the recommendations of the MIAB. It has also been unable to tackle the vested interests involved in the insurance and legal professions. There is no doubt that the legal profession has a clear culpability for urging a claims culture that has resulted in high legal costs and excessive premiums for both householders and business. However, the insurance industry is not without blame in this matter either.

As a member of the Oireachtas Joint Committee on Enterprise and Small Business I sat through evidence from the various insurance companies telling us how difficult it was to make money in the Irish market. In their presentations they described the Irish market as unprofitable and unattractive. Yet, just a short while before the publication of the committee's interim report, to which Senator Leyden referred, the insurers suggested that they had made record profits from their activities in most areas of their business in Ireland.

Many of us fear that there has been a high level of regulatory capture between the Department and the insurance sector over the years. In the same way as problems arose with the banking sector, the Department seems more concerned with prevention issues governing the operation of insurance companies, rather than recognising the consumer interest and welfare. It is a classic case of the consumer coming second to prudential concerns. This is unacceptable and I hope the new regulator for the insurance industry will exercise a more probing and exhaustive assessment of claims, analysis and statistics produced by the insurance sector.

The simple and sad reality of the Government's actions on insurance is that nearly two years after the significant public focus on this issue, not a single substantive legislative measure has been introduced to give rise to the concerns expressed in the MIAB report. Similarly, not one substantive report on competition in the insurance sector has been produced by the Competition Authority. Saddest of all, premiums have not come down.

Profits have increased, but premiums have remained at unacceptably high levels. It is vital that any measures the Government introduces to assist the insurance sector are met with reductions secured directly as a result of savings the insurance companies enjoyed through a reformed market. The Tánaiste has failed to get bankable guarantees from the insurance sector that the reforms being introduced will result in lower premiums. The sector seems unwilling or unable to commit to such a course. This is unacceptable.

I read in the Sunday newspapers with interest and alarm that there seem to be some differences at Government level over the proposed Personal Injuries Assessment Board. Perhaps, from what the Tánaiste said this evening, these have been overcome. I welcome the establishment of this board and hope it will play an effective and important role in helping to minimise costs. It is vitally important that the PIAB operates effectively and fairly and does not become an additional layer of bureaucracy, nor an additional burden on policyholders. I look forward to seeing the PIAB in action. The Government has spoken of the need for such a board time and again and I know that the Department is dealing with the issue. However, today 18 months after the MIAB report, no such board exists. Again, the Tánaiste signalled that we will have legislation in a week or two.

The true test of the Government's resolve and commitment to this issue will be whether the premiums for business and consumers are reduced over the course of the next six to 12 months. If premiums do not fall, the resulting consumer anger will be visited at the door of the Government. On its record to date, I remain to be convinced that it has the resolve and the ability to secure the savings that are so badly needed in this area. While that is how I feel, I wish the Tánaiste and Government well in bringing about the much needed reforms.

The Tánaiste's contribution on the issue of insurance legislation was like a breath of fresh air. Most people, including everyone in this Chamber, realise we have a serious problem. It is like a blight on innovation, industry and community activity. What struck me about the Tánaiste's contribution and her awareness of what is happening in the legislative area is how comprehensive and multi-pronged is the Government approach. There was no other way of doing this because any cosmetic effort would not be welcomed by the general public. There had to be a root and branch approach to this problem as it stood. I always felt particularly aggrieved in the post 11 September 2001 era by how the insurance industry seized on that terrible tragedy to ensure that its particular base would not only prosper, but improve. A voluntary, community organisation with which I am connected, which prior to 11 September 2001 was paying a public liability policy of £50,000, is now paying €130,000. This is only one example; everybody in this House can give examples.

I know of many cases where the directors of small industries decided to break up their staff structures and do independent work because they could not possibly afford the premiums that were being charged. In the past these small or cottage industries, employing up to ten people, were safe areas of employment. One seldom saw small industries or businesses going to the wall. The big conglomerates always suffered from world developments and world markets, but now, in every area of the country, small industries are threatened. In the past, they were prepared to absorb certain financial difficulties which came their way. However, the level of increases in premiums they have to bear means that is no longer possible. That is why I am glad the legislative proposals are very comprehensive.

We have all received submissions from the legal profession. Some 14 different firms of solicitors have already written to me. I welcome the submissions – I see nothing wrong with it. I am not one of those people who indulges in bashing a particular profession because I believe that some other agenda is present when people head down that road. By and large, I hold the legal profession in the highest regard and it is right to put its case. As far as I am concerned, this is beyond any particular sectoral interest.

The insurance companies who were prepared to honour claims in the past on the basis of paying out nuisance money, rather than entering a large claims situation, contributed in many ways to the type of climate that now exists. I remember listening some time ago to Gay Byrne's radio show which, if I recall correctly, broadcast the name of a person who had taken 11 different cases against Dublin Corporation in two and a half years. In each case, £1,500 or £2,000 nuisance money was paid out. This is fine if it only involves one person but if one multiplies that by thousands throughout the country, it is bound to have a degenerative effect on the whole insurance climate.

In the past, because the amount of money involved seemed small, we were prepared to accept and condone that practice. I do not believe that is correct. Where fraud is involved, it should be exposed for what it is and I cannot see how anybody could tot up 11 different cases against Dublin Corporation. It was generally the same manhole involved each time. If people are milking the system, they are passing on the cost to the next person, who has to pick up the tab and pay the money. In the final analysis, it is hitting all our pockets and the very heart of our economy.

It is not part of this debate, but I have often wondered if we should have researched and investigated the possibility of a State-run insurance company. In the same way as we pay tax on our cars, there should have been some method for funding such a company. People might argue that is extreme or would go against the industry. However, as even the Opposition spokesperson said, the industry did not react in time. As a result, it has brought much of this on itself. There is no reason that a marker should not be put down which stipulates that unless it gives a fair service for a fair price, largely where a monopoly exists, the State can step in to ensure that something is done.

Community activity – this is particularly true of rural Ireland as most people here already know – has been eroded down to the bone. This is for the simple reason that most parishes will not allow use of their halls unless there is individual public liability cover for each use of the halls. Due to the cost and difficulties involved, the halls are closed and are not being used. We should note all the other activities in the community where people will not risk their own assets. For example, they will not risk their own homes or their own money.

We can all recall the infamous case in County Offaly which involved Muintir na Tíre many years ago. A game of cards was being held in a hall. Unfortunately, an oil heater overturned and there was a fire, but there was no insurance. The first three wealthy people were picked out on that occasion and they happened to be from the farming community. That is one of the classic cases we all remember. I cited that case at a meeting recently and a young lady came up to me afterwards and said she was glad that I had referred to it. She told me her father was one of the people selected at that time. That case was a caution for us all about our involvement in community activity and its inherent danger.

I welcome the ideas behind the legislation, but there is no choice. I again appeal to the Labour Party and the Opposition to go along with it because, in our hearts, we know something radical has to be done. We also know that if we do not do it, we are letting down the ordinary decent citizen and eroding and undermining community service, the value of which is priceless.

I welcome the Minister of State, Deputy Aylward, to the House. I also welcome the contribution of the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, particularly her promise to act as early as next week on this case. I wish to declare an interest which will clearly show which side I am on as far as insurance is concerned. It also relates to what is happening here because I concur with Senator Ó Murchú in hoping that the Labour Party will withdraw its amendment.

I am a member of the Alliance for Insurance Reform, a grouping of 1,800 business interests affected by the out of control costs of insurance cover in this country. We are the victims in this situation but that understates the position because, as others said, every man, woman and child is a victim as far as insurance is concerned.

Big business is in the front line in the sense that it has been hit by the greatest increase in premiums over the past number of years. For many businesses, the increase in their insurance costs has been the difference between them being able to keep trading or going to the wall. For many businesses today, the cost of insurance is a life or death issue. For the economy in general, the high cost of insurance compared to other countries is a significant drag on our international competitiveness, an issue we discussed earlier.

Did we?

I spoke about it this afternoon. By a happy coincidence, the Alliance for Insurance Reform, AIR, today launched a major nationwide campaign to support the Government reforms of the insurance industry and to ensure that the reforms promised for next January go through on schedule. The Tánaiste told us that if she moves on it as early as next week, we will get it through before January.

This campaign will use all possible bells and whistles to press home the point. It will continue until the two pieces of legislation that are in the works at present have passed through the Houses of the Oireachtas and are enacted. The AIR is mounting this campaign because it is clear that as the prospect of legislation looms over them, the vested interests are girding their loins for one last desperate throw of the dice. The villains of this particular piece come from two directions. One is the insurance industry itself and the other is the legal profession. Rather like Senator Ó Murchú I do not like to single out anybody, but in this case I am prepared to single out those two areas. Both sets of villains have done very well out of the rest of us for a very long time. Now that the game is up, neither party is ready to give in without a fight. The legal profession in particular has reacted to the setting up of the Personal Injuries Assessment Board with a ferocity that reminds me of the publicans' opposition to the smoking ban. Senator Bohan is not here tonight to have a go at me on that one.

Did the Senators hear the claim this week that the PIAB is unconstitutional? I have no doubt that there will be a constitutional challenge to it before long. That is all the more reason to make haste in bringing the legislation onto the Statute Book. I would love to see it brought before this House next week, as the Minister has promised. Let us continue to remind her of that promise. If there is to be a constitutional challenge, the sooner it happens and is dealt with, the better for us all and for the nation as a whole.

Launching its campaign, the chairman of the Alliance for Insurance Reform, Gerard McCaughey, warned that one should not underestimate the legal profession's power or its ability to thwart the wishes of our legislators. He added, however, that the alliance is encouraged by the Government's determination, particularly that of the Minister for Enterprise, Trade and Employment, Deputy Harney and of the Minister for Justice, Equality and Law Reform, Deputy McDowell, to press ahead despite these powerful lobbies. They are strong words but merited in this case. This is another instance of the legal profession acting in the interests of its own members at the expense of the wider national interest. Sooner or later we have to stand up to it and now is the time to do so.

The insurance industry is no better than the legal eagles. It cries the poor mouth as we heard tonight, while at the same time revealing record profits. If ever an industry needed more competition, this is one. Let me give an example that somebody handed me today when she heard this Bill was coming up. It is a letter from AA insurance thanking her for her recent instruction to adjust her policy. The instruction was a change of address, the person in question has moved to a house a few kilometres from where she had previously lived. The AA added that there was an additional premium of €92 due to allow it to clear the item from her account. It requested payment by return of post and noted that the adjustment was a change of address. The customer has moved house and for that the insurer is charging her €92. This is an example of the need for competition.

We are slowly moving towards a situation in which new players will be attracted into the Irish insurance market. In the long run, we will pay a proper price for insurance only when the companies have to chase the customers for their business instead of the other way around. We have heard instances tonight of people having to chase insurance companies to get the business rather than the other way around. I want them to be chasing us and looking for our business. I cannot wait for that day.

One of the ways in which the insurance industry has acted against the national interest has been its attitude to settling claims. We have talked about this tonight, Senator Ryan particularly addressed this point. The industry has always taken the very shortsighted view that it is cheaper to settle even a fraudulent claim than to pursue the rights and wrongs all the way. This attitude has been a major contributor to the "compo culture" that has become almost a cancer in our national life. Small wonder that people have come to regard insurance companies as a soft touch. That is exactly what they are.

The easy settlements are incorrect in many cases. One has to prove negligence but it seems that in many of these cases, there is no negligence involved. If someone falls in one's shop or on one's premises, one is deemed negligent and the insurance claim is settled. I have many instances from the past when the judge found against the plaintiff and in favour of the business that was being sued because it had not been found to be negligent.

It is hardly surprising that the State finally decided that it could no longer afford to tolerate the growth of this culture when it was decided to turn over the handling of all claims against it to the National Treasury Management Agency. It will take a long time to destroy the compo culture that has been created. For that reason, I welcome the provision in the proposed legislation that will force people to face up to the consequences of making a false claim. We have no option but to take that approach to counter the signal people have been receiving for too long that it is no harm to chance one's arm. I support this motion and encourage the Government to persevere with the promised legislation and to do so speedily, without delay and hopefully within the next week. It will speed the day when Irish business and people in general can at last throw that yoke off their backs.

I welcome the Minister of State. The speech made by the Tánaiste and Minister for Enterprise, Trade and Employment on behalf of the Government tonight was one of the most important made in this House since I came in here 18 months ago. It is far reaching, affects every system and should be applauded by all sides of this House instead of being condemned and noted by members of the Labour Party who have withdrawn tonight.

Young drivers, all motorists, householders, and business people especially have been dreading the day when their premium renewal notices drop through their letterboxes. As a business person, I know that the insurance premium is the next highest bill after the wages bill. Over the past two or three years when the economic boom took off and insurance premiums increased dramatically, many companies had to close because they could see no way to continue paying wages and insurance costs. That is why I welcome the contribution of the Tánaiste and Minister for Enterprise, Trade and Employment. I am delighted to hear that this Bill will be brought before this House again within a week and that time will be made in the schedule to ensure it is enacted before Christmas in order that we will see real reforms within the next 12 months.

I was surprised to hear a Fine Gael Senator state that reforms are taking place, without accepting what the Government is doing. The Minister for Transport, Deputy Brennan, has implemented the penalty points system bringing about massive reductions in premiums over the last six months. Anyone denying that premium reductions are taking place is not living in the real world or is not telling the truth. Premium reductions are a reality in the market place. In a community centre with which I am involved there has been a 50% reduction in public liability insurance this year because we shopped around. The Tánaiste and Minister for Enterprise, Trade and Employment was criticised recently for saying that consumers should shop around but that is the best way to get a price, apart from going back to one's previous supplier. If people shop around, they will get better value. For far too long, the insurance companies sent out their notices too late to allow one to shop around but the new Bill will ensure that people are given notice.

There have been no new entrants into the market recently because any entrant from the UK or further afield would see what has been going on here and refuse to enter a market with that level of compensation and legal costs. With the reforms now taking place, we will very shortly have a Bank of Scotland-Ireland type of operation coming into the insurance market that will fundamentally change what is happening. Then, as Senator Quinn said, insurance companies will be chasing us rather than us chasing them and pleading for a premium. The Government's response, and the comprehensive Fianna Fáil motion here tonight, demonstrate the radical approach and proactive nature of the activities on which the Government is embarking.

For far too long we have heard that many issues affecting this economy are global and that consequently the Government can do very little. This is an issue on which the Government can act and is acting. It must be welcomed, not just in this House but throughout the country. I hope there will be all-party support for the Fianna Fáil motion brought before the House to allow us put on record the great work that has been done over the last 16 months and continues to be done to bring us to where we are. Senator Quinn mentioned the alliance for insurance reform. It is a resounding success that the alliance, having been critical over the last 12 months and which claimed that action was not fast enough, is supporting this initiative and will ring all the right bells to see it is activated. The Opposition is out of touch as the main lobby business group in the country representing 1,800 large employers is in favour of what the Government is doing. It is time the Opposition listened and welcomed what is taking place.

One wonders what Labour Party members were doing when the Tánaiste read her speech because it must have come as a shock to them. She is determined to ensure the legislation is enacted before Christmas. For anyone to criticise that and say it is not action and will not lead to reform and further competition is absurd. We have seen what competition has done in the airline and telecoms markets. We will shortly see the dramatic effect of this new insurance reform Bill, together with what is being done by the Minister for Justice, Equality and Law Reform, Deputy McDowell, and the Minister for Transport, Deputy Brennan, on the penalty points system, on falling insurance premiums. For that reason I am delighted to support the Fianna Fáil motion.

I do not believe it is fair to say the Opposition is against the Government on this issue. I believe we are all in favour of it. However, we are concerned about certain aspects of it. That is our job in the Opposition. We are concerned at the perceived slow pace of progress in this area. It is welcome news to hear the Tánaiste intends to publish the Bill early this month. However, there is still no guarantee that it will get through both Houses. As Senators know, Bills are not coming through because there is a massive logjam in the other House. Even if the Bill comes through this House next week or in two weeks time, there could be a massive delay in the Dáil. Even if it goes through there will be a period of time after the board comes into operation when it will not be able to process claims. I admire Senator Minihan for having the foresight to be able to predict how the PIAB will perform, because there is a danger that it could create another layer of bureaucracy. I do not think it will, but we will not know until it is set up.

There is a real danger, in effect, that if people do not accept out of court settlements, they will go to court. Then, instead of court cases being shortened, they will be lengthened. Unfortunately we will not know that until such time as the board is set up. That is why the Opposition is frustrated, because we feel the Government is moving far too slowly. It is worth reminding some of the Members opposite that this report came out in April last year, nearly a year and a half ago. They are still talking about bringing in legislation. This side of the House will certainly support the Government if it brings forward legislation, as planned, but the sooner the better.

Young people are being crippled with insurance premiums. They are also being forced to drive substandard cars. Instead of putting money into a half decent car with air bags and seatbelts in the back, they are being forced to downgrade their vehicles and pay the money towards insurance, putting their own and other lives at risk. We cannot talk about competition in the market until we introduce reform and until such time as we allow fixed costs for different injuries and cases are speeded up instead of taking the normal three years. I am a party at the moment to litigation involving a car crash. Three years on no progress has been made. It is very frustrating both for me and the other person involved.

The news that Eagle Star is considering leaving this very small market is worrying. It means we will have four insurance companies instead of five, which would be devastating. Consumers feel very frustrated. A constituent of mine was extremely upset the other day when his wife, who had stopped her car at a junction, crashed on taking off into the back of the car in front. She was literally going at no more than five miles per hour, because both cars had been stopped at the time and were just taking off. My constituent discovered the insurance company had settled up with the lady in question in the other car and had paid out nearly €12,000 in a so-called whiplash compensation claim, which defied all belief. The solicitor in that case got €3,000.

There should be an onus on people to prove their injuries. It is totally unfair that someone can claim for a so-called whiplash injury and there is no onus on them to prove it. There should be an onus on people to prove they are genuinely injured and by all means, if they are, they should be compensated. This would eliminate fraudulent claims. As Senator Ó Murchú correctly pointed out, such people are defrauding every one of us and adding hundreds of euro to everyone's annual premiums.

Young Fine Gael is very concerned with this issue. Males under 30, in particular, are being crucified in terms of car insurance. Many companies will not even quote them. The idea of being innocent until proven guilty does not apply in terms of insurance companies. Once they are asked to quote for a male under 30, they do not want to know. They have not time to say goodbye, so anxious are they to hang up the telephone. Hopefully that can all change. We should be doing everything possible to reward safe driving and provide incentives.

The MIAB report has 57 key recommendations. I acknowledge the Government has made progress on some of the recommendations, but on others they have not. I am concerned that the stamp duty on insurance premiums is 2%. Recommendation 58 of the report said that should be removed. Nothing has happened in that regard. There was no mention of it in the Tánaiste's speech so far as I could see. The legislation needed to tackle fraudulent and exaggerated claims has so far not been introduced. We await it in the near future, but we will hold our fire until we see it, hopefully sooner rather than later. The road safety and driver education syllabus in schools, which is another major recommendation, has not been implemented. Members have raised the whole question of variation in driving tests, failure rates and the appropriateness of driving tests. Overtaking, for example, is not part of the driving test. Unfortunately many car crashes happen when people are overtaking. That is probably the most likely time to have a crash. Neither is driving at night-time part of the driving test, a time when there are also many car crashes. We should therefore question the relevance of the driving test and the huge difference in pass-fail statistics, for example the divergence between figures in Shannon and Cavan and Carlow. I am not sure what the figures say about the people in those counties, or is it a comment on examiners?

Fine Gael also calls on the Irish Financial Services Regulatory Authority to publish regular surveys on the premiums charged by different insurers to ensure consumers are properly informed and to encourage competition. To date no comprehensive name and shame data has been published and customers are still being forced to shop around, as the Tánaiste recommended. There should, as well, be an onus on insurers who refuse to offer cover to explain in writing why they are doing so, which is currently not the case. This is one prime area for equality legislation. The whole equality issue has gone full circle and in my view young males under 30 in particular are the current victims of discrimination in motor insurance.

I wish the Government well on this issue. It is of massive concern to the whole country in terms of public liability. Many voluntary organisations have had to cancel community based events because they are unable to get public liability cover for the day. People right across the board are being crippled by insurance costs. The Minister should examine the idea of insurance companies informing people who are in the middle of a litigation case of their rights. The insurance companies should not be allowed to act totally on their own behalf, without keeping all parties informed at all times.

I welcome the Minister of State to the House and thank the Tánaiste for the presentation she made. I would also like to mention the work done by the Joint Committee on Enterprise and Small Business on the problems with insurance. The Opposition doubts the commitment on this side of the House to enact the measures contained in this proposal, but my colleagues and I would spend Christmas Day here if I thought we could enact these proposals even an hour sooner.

Motor insurance is not a luxury for young people in rural parts of the State. These young people are fortunate enough to have jobs now and they need transport to get to work. They have no DART, taxis or buses so the only way they can get to work is by car but the way insurance companies have treated them is a disgrace. The companies said they were losing money on motor insurance, particularly with young drivers, but the Motor Insurance Advisory Board showed in its report that these companies were telling lies and were making profits at the expense of young people.

I compliment Quinn Direct, the insurance company that placed an advertisement in every national Sunday newspaper detailing the cost of insurance for young people aged from 18 to 25 years of age. That is the first time I have seen an insurance company in this State producing figures and giving an opportunity to young people to get insurance. The company deserves credit for taking that initiative. Previously, a young person would ring one company and be quoted a price of €3,000 and the next would quote a price of €4,500. There is no set figure. I do not understand why a 19 year old who owns a car of a certain size can receive quotations that are so different. That must be addressed and I welcome every proposal put forward by the Tánaiste tonight.

I am concerned about the provision, however, that a person must claim within one year. There is no doubt that the fraudulent will have their claims in within a year but decent people who might be involved in an accident might not notice the injury caused by the accident for two or three years. That should be considered because it would be wrong to rule such decent people out if they have a genuine claim for compensation for an injury that was not immediately recognisable.

With the penalty points system, the Government is doing everything it can to reduce the number of accidents in the State. The insurance companies should not be let off the hook by being handed the names of those who have earned penalty points without a deal being done. Insurance has come down in the last eight months but only by 20% while the insurance companies forget that they increased their premia by 150% in the previous 18 months.

I had a telephone call yesterday from a public representative in Drumkeerin who is involved in a community enterprise centre. He deals with a person who employs two people who must close down this Friday because he cannot afford insurance. I am involved in a community group in Ballymote that is providing a children's playground. The playground is built to the highest specifications and the equipment is state of the art. The area is properly fenced and there are lights and cameras. We asked for an insurance quotation and one company quoted us €15,000 for the year on condition that we were responsible for the first €25,000 of a claim. We told them to forget about it.

Anything that can be done to reduce the cost of insurance is welcome and I commend the Tánaiste on the motion before the House tonight.

Everyone agrees with any measures the Tánaiste or anyone else can take to reduce the cost of insurance. Senators have continually expressed concerns on the Order of Business about the rising cost of insurance. It is a matter of great concern to everyone – young drivers, people in business, those with public liability insurance, farmers and builders. Over the last two years, all these groups have experienced huge increases in the cost of insurance.

The Tánaiste has given assurances this evening and we will support her in anything she can do to reduce the cost of insurance. She stated, however, that she will introduce competition and I would like her to elaborate on that. The Tánaiste, over the last 12 months, has introduced regulations that have penalised small brokerages throughout the State. Each small brokerage must now produce seven or eight pages of regulations and post them to people with whom they are doing business, creating a paper mountain. The majority of these small brokerages are going out of business leading to cartels operating in the industry. Insurance companies now refuse to give quotations to certain classes – if that is not a cartel, what is it? The Tánaiste must outline how she will introduce competition because small insurance brokers are labouring under stringent regulations introduced by her in the last two years and are going out of business.

The majority of small builders are now going without insurance because they cannot afford the increased costs. The Tánaiste said premia had fallen by 30% but that is hard to believe because all I hear is people complaining about increases. I know from my business there has been a huge increase in business, car and public liability insurance costs. I cannot see how the Tanáiste can come up with a figure of an over 30% decrease in insurance premia.

Whatever she does to tackle this issue, we will give her all the support we can. However, a lot more needs to be done. The cartels need to be taken on. I would like to know from where the Tanáiste sees the competition that she intends to bring into the market coming and how it will be introduced. The rising insurance costs are a grave concern to young people and business people. There is great hardship facing some of these people. In the past, many business people faced hardship in paying increased business rents. Now, it is insurance costs. When small businesses have to borrow large amounts at the beginning of the year to pay insurance premia, it places a great burden on them. Many small businesses will not be able to pay these large premia and will be left with no choice but to go out of business.

Different types of business are being affected. Over the years, the small brokerages provided a great service to people. They are now fading away into oblivion and being taken over by the big cartels and insurance brokerages. This has much to do with the stringent controls that have been placed on them. The Tanáiste must look at this too. These were the people who would shop around for small business people and car owners for the best deal for their customers. If they go out of business, is the onus going to be on the private individual to shop around when he might have only one or two companies to choose from? Will the Minister of State ask the Tanáiste to look at the issue of small brokerages fading away one by one and being taken over by the larger groups and plcs in some cases?

I support the Tanáiste in the work she plans to do in this area. However, I cannot see how premia have been reduced over the last number of months.

I welcome the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Michael Ahern, and pay compliment to the Minister of State at the Department of Agriculture and Food, Deputy Aylward, and the Tanáiste for being with us this evening. The way in which she has been tackling the difficulties that people have been facing with insurance costs is commendable.

When we look at the buzzwords over the last number of years, the main ones have centred on the problems of young drivers and car insurance. We welcome the statement by the Tanáiste about the matter. I have spoken to many young people who informed me that there are no problems in getting car insurance now. Insurance quotes are now certainly less than they were in the past. I understand the increases were substantial over the last few years, so there is much room for the insurance companies to reduce premia.

Public liability cover is a problem for playgrounds, town parks and community halls. However, they are now able to get insurance and we welcome that development. Some committees for community groups were looking at serious difficulties in obtaining insurance. They are now looking at a situation where they will be able to continue. Community organisations which would have been looking at ceasing activities in towns and villages will now see the opportunity to develop and expand. This will afford them the opportunity to provide facilities for young people who require them so badly.

When things were going well, many people paid their insurance in many cases by standing order. They did not realise until after payment was made how much they were paying. Public liability has been a problem for small builders and tradespeople who are giving valuable employment and doing an excellent job when the construction business is booming. They were under pressure in this matter. It has to be recognised that this problem has been faced down and insurance premia are affordable and coming back on side.

There has been great work done by the Health and Safety Authority which ensures proper procedures are in place in the workplace. A safer work environment for people helps reduce the number of claims.

In Offaly County Council, we asked the county manager to publish the list of insurance claims against the council and the amounts that were paid out over the last number of years. It was surprising the number of people who took claims, even in my town, that no one knew about. There was a list of people allegedly falling in footpaths and receiving substantial claims. While the claims were one aspect, the legal fees were at least as much. Unfortunately, this was putting major financial strains on local authorities when finances were not too plentiful. The settling of claims outside court will reduce this burden on local authorities and other bodies. If people are genuinely hurt in a fall, they are entitled to their compensation. In my regional gun club, the committee had to set up a compensation fund to ensure members were covered. They now have a substantial fund in hand.

We must also recognise the importance of the penalty points system and pay compliment to the Minister for Transport, Deputy Brennan on that. Driver behaviour has certainly improved since its introduction. We must also pay compliment to the Garda and all concerned in its implementation. The NCT also ensures there is a better quality of car on the road. People complained about the tests becoming more stringent, but so they should be because no car should be on the road unless it is road worthy. If it is not, it should be taken off the road. I pay compliment to those concerned in its implementation. Senators commented on driving tests in daylight and not at night. However, the driving test for lorries takes no consideration of the type of load the lorry is carrying. The test is done in a simple articulated truck with no test on the type or securing of the carried load which is crucial for the safety of other road users. The Department of Transport must examine this and ensure that insurance cover is in order to look after the interests of other users.

Safety statements are important and necessary in the workplace. However, there are a number of workplace locations, particularly farms, where there must be more adherence to safety. Teagasc should be urged to ensure safety statements are in place on all farms, where many people work and many accidents take place resulting in many claims.

I thank the Minister of State, Deputy Michael Ahern, for his presence. I also thank the Minister of State at the Department of Agriculture and Food, Deputy Aylward, and the Tánaiste both of whom were here earlier. The Tánaiste advised me that she had another commitment this evening, otherwise she would have been interested in hearing the contributions from all sides of the House on this important issue.

I have some sympathy for the Opposition parties considering the amendments they tabled. I appeal to them to withdraw these as they are not really relevant. The Labour Party amendment states that only 20 of the 67 recommendations of the Motor Insurance Advisory Board have so far been implemented by the Government. Of the 67 recommendations, 23 have been implemented, three have been partially implemented, 28 are being actively progressed and the implementation of at least a further 12 is under consideration.

At the start of her speech, the Tánaiste made a very clear statement to the House on the progress of the Bill. She stated clearly that this Bill would be enacted before December 2003. It is important that this be enacted and that the Personal Injuries Assessment Board, PIAB, be fully operational by January 2004. Contrary to the article in one of the Sunday newspapers, there is no difficulty in the Cabinet, nor is there a problem with the funding of the PIAB by the Minister for Finance, who has enthusiastically supported the reform measures proposed by the Tánaiste and supported by the Cabinet.

What about the Senator's name and shame list?

We will reinstate that in due course as a name and fame list. We want to compliment those who provide good prices, particularly those in the Senator's area in Castlebar.

I compliment the makers of the "Prime Time" exposé of fraudulent insurance claims. They have given the State some service in producing a very detailed and well-researched programme, which exposed the many fraudulent cases where compensation was sought. I presume all those cases have been thrown out and I hope prosecutions will follow. I respectfully suggest that RTE should have a follow up programme to show the legislative progress that has been made on the PIAB and another Bill, which will be enacted this year by the Minister for Justice, Equality and Law Reform.

It was very difficult to frame amendments to such a well presented motion, which was tabled by the Leader of the House, Senator O'Rourke, on behalf of the Fianna Fáil group.

I received help with that.

The Senator is very generous. In the circumstances, the Opposition parties should withdraw their amendments pending the progress of the legislation, which will be before the House by the end of the year. I know it is very difficult for Senator Ryan as a prospective Deputy—

Prospective MEP.

A bit like Senator Leyden himself.

It is very difficult when the Opposition is facing a Government that is so innovative and progressive in introducing legislation. I am sorry – am I provoking the Opposition?

The Senator is provoking me.

I would be more concerned about provoking the Leader than the Opposition. There is very little opposition in this House, but we have to live with what we have.

The Senator will need to take out insurance on some of those statements.

I compliment the Tánaiste for giving this matter such priority. Along with her colleague, the Minister of State, Deputy Michael Ahern, she has shown very clear intent to progress the legislation. She gave a very definite commitment by stating in the House that in the Book of Estimates to be published next week, provision has been made for the establishment of the PIAB. I welcome this clear statement. I have no doubt that the Leader of the House will co-operate fully in dealing with the legislation to ensure it is enacted before the end of the year.

I hope the House will unanimously support the motion and give encouragement to the work done by the Tánaiste.

Amendment put.

Bradford, Paul.Browne, Fergal.Burke, Paddy.Burke, Ulick.Coghlan, Paul.Coonan, Noel.Feighan, Frank.Finucane, Michael.Higgins, Jim.

McCarthy, Michael.McDowell, Derek.McHugh, Joe.O'Meara, Kathleen.Phelan, John.Ross, Shane.Ryan, Brendan.Terry, Sheila.

Níl

Bohan, Eddie.Brady, Cyprian.Brennan, Michael.Callanan, Peter.Dooley, Timmy.Feeney, Geraldine.Glynn, Camillus.Hanafin, John.Kenneally, Brendan.Kett, Tony.Kitt, Michael P.Leyden, Terry.Lydon, Donal J.Mansergh, Martin.

Minihan, John.Mooney, Paschal C.Morrissey, Tom.Moylan, Pat.O'Brien, Francis.O'Rourke, Mary.Ó Murchú, Labhrás.Ormonde, Ann.Phelan, Kieran.Scanlon, Eamon.Walsh, Jim.Walsh, Kate.White, Mary M.Wilson, Diarmuid.

Tellers: Tá, Senators O'Meara and Ryan; Níl, Senators Minihan and Moylan.
Amendment declared lost.

I move amendment No. 2:

To delete all words after "reforms," and substitute the following:

calls on the Government to implement urgently the recommendations of the Motor Insurance Advisory Board; to implement legislation to tackle fraudulent claims; to implement a comprehensive road safety programme and to introduce more competition in the general insurance market by adopting a common EU compensation scheme that will ensure the full benefits of single market in respect of general insurance products.

I second the amendment.

Amendment put.

Bradford, Paul.Browne, Fergal.Burke, Paddy.Burke, Ulick.Coghlan, Paul.Coonan, Noel.Feighan, Frank.Finucane, Michael.Higgins, Jim.

McCarthy, Michael.McDowell, Derek.McHugh, Joe.O'Meara, Kathleen.Phelan, John.Ross, Shane.Ryan, Brendan.Terry, Sheila.

Níl

Bohan, Eddie.Brady, Cyprian.Brennan, Michael.Callanan, Peter.Dooley, Timmy.Feeney, Geraldine.Glynn, Camillus.Hanafin, John.Kenneally, Brendan.Kett, Tony.Kitt, Michael P.Leyden, Terry.Lydon, Donal J.Mansergh, Martin.

Minihan, John.Mooney, Paschal C.Morrissey, Tom.Moylan, Pat.O'Brien, Francis.O'Rourke, Mary.Ormonde, Ann.Phelan, Kieran.Scanlon, Eamon.Walsh, Jim.Walsh, Kate.White, Mary M.Wilson, Diarmuid.

Tellers: Tá, Senators U. Burke and Coghlan; Níl, Senators Minihan and Moylan.
Amendment declared lost.
Motion put and agreed to.

When is it proposed to sit again?

At 10.30 a.m. tomorrow.

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