asked the Minister for Industry, Trade, Commerce and Tourism if he is aware: (1) of the considerable increases in premium costs in both employers and public liability insurance; (2) that these insurance costs are growing at a faster rate in Ireland that the equivalent abroad; and (3) that many employers are not able to meet these insurance costs with the result of loss of competitiveness and loss of employment; and the steps he proposes taking to bring about a system of liability insurance in this country that will be both fair and efficient.
Ceisteanna—Questions. Oral Answers. - Employers and Public Liability Insurance.
6.
I have answered these concerns fully in reply to similar questions in January last. I, too, am concerned, as are the Government, at the cost of liability insurance. The Deputy will be aware that since my last replies, the Government decided to modify the right of access to decisions by jury on the extent of damages for personal injuries, and that the Minister for Justice will be bringing detailed proposals before the Government on the matter in the near future. However, as I have also stated, improved safety precautions on the part of employers are also an important factor if we want to contain claim costs.
As regards the availability of insurance cover, I have arranged with the representative body of insurers an agreed procedure for handling any case where a company or organisation have difficulty in obtaining cover. However, I must stress that while all such cases of difficulty are investigated and pursued, my Department cannot perform the role of insurance broker. My primary role as Minister in charge of the insurance sector is to ensure that insurers meet their legal solvency and reserving requirements. The premiums charged by insurers must reflect the claims incurred and provide funds to meet these requirements.
The Minister does not address himself to the question. This is just a repeat of a reply to a question of a similar kind. Is the Minister aware that in the woodworking industry alone, for every £100 of wages paid up to £20 of insurance has to be paid on each individual. In the case of steelworkers up to 25 per cent of the wage bill has to be paid out in insurance. In the farming sector the cost of insurance in the liability area has risen by some 500 per cent. There are other areas such as the hotel industry where there has been an increase of £1,000 per cent.
The Deputy should ask a question.
If the Minister is aware of these savage increases, has he made any arrangements with the insures to provide a more realistic type of cover for industries generally?
I have not questioned the source of the Deputy's allegations. I do, however, accept that the cost of insurance is higher in Ireland than in England. It is more difficult to compare our level with that in Europe because of the different type of system there. Underwriting losses in this area increased sixfold during the period 1979-1983, rising from £5.94 million in 1979 to £35.87 million in 1983. Therefore it will be obvious to anyone that the insurance industry in this sector has had an unfortunate and deteriorating underwriting experience. A number of factors have been mentioned such as the high level of jury awards and the increased incidence and frequency of claims. It has been suggested that the level of Irish awards can be between two and four times higher than the level in England. I stated in my reply that the Government are to consider the right of juries to hear personal liability claims. Two other important points must be stressed. The employers have a responsibility in this area as well. The report of the Commission of Inquiry on Safety, Health and Welfare at work made that point quite clearly and was critical of the employers' role in this regard. I am pleased to note that the Minister for Labour has stated his intention to introduce legislation in this area as soon as necessary consultations have been completed. The second point is that for a number of years there has been undercutting in the market place which has exacerbated the underwriting losses and the increased level of premiums is perhaps a reflection of a more realistic premium level which is needed if serious underwriting losses are to be eliminated.
The Minister referred to the Government's intention to restrict jury awards. What steps do they propose to take to ensure that as a result of interfering with the jury award system the premiums will fall?
That is a very interesting question. In the first instance I cannot give assurances that if, for instance, juries were abolished and a matter was heard and decided on by a justice the level of award would fall. I cannot guarantee that. I do not like answering hypothetical questions. If the level of awards arising from court actions were to fall generally, then I would take that factor into consideration when dealing with applications for price increases in the light of the underwriting losses then occurring. If there were to be a fall in awards if would come to my attention in the normal processing of price applications.
The Minister concedes that there is a difficulty in PL and EL cover. Is he aware that 18 per cent of total claims paid goes on legal fees, inclusive of the 23 per cent VAT on the fees of solicitors and barristers? The Minister lists the factors which help to make premium costs so high. Will he now confirm that what he might have in mind in changing the jury system is out of line with what the Department of Justice have in mind and that this is the reason no proposals are being put forward to change the jury system in any way?
The insurance industry is a complex area. The House will understand that the legal system is also complex but it is not an area under my jurisdiction. It is a matter for the Minister for Justice.
In relation to jury awards, the Minister has admitted that changes in the system will not guarantee lower awards. Therefore the case has not been proven. Agreeing to the wild lobby demanding the ending of jury awards is simply a face saving effort.
I simply made a statement based on logic that I cannot guarantee the outcome of a change in the hearing of liability cases. No matter what system is adopted — for instance, a justice might advise a jury; a justice might act alone or there might be some form of judicial tribunal to hear liability cases — I cannot give any assurance as to the level of settlements. I should like to see awards which would be equitable from everybody's point of view.
If anybody holds another view, I should like to hear it. For instance, two recent awards made in Northern Ireland under a non-jury system were rather high but is anybody saying that they were not justified in view of the injuries suffered by the people concerned? I cannot be definite in regard to this matter, I am merely stating that, no matter what system is used in adjudicating on liability cases, awards must be equitable and I cannot indicate if they would be lower if a justice was dealing by himself with the case or indeed under any system.
When will this matter be debated in the House?
It is certainly not appropriate to debate it here as we have been doing for some time.
It is being talked about at present by Ministers at every crossroads.
It is a complex issue and continually exercises my mind.