I want to thank you for allowing me to raise this matter. Insurance costs are too high. Insurance is a heavy burden for motorists, especially young drivers. It is even more serious for employment as many firms find the cost of employers' and public liability insurance prohibitive. Recent increases in insurance rates were prompted by an increase in the number of road accidents and the resulting claims, an increase in the cost of car repairs and spare parts, higher levels of damages awarded and the readjustment to compensate for excessive rate reductions to the competitive pressures over the past two years.
It cannot be stated often enough that insurance premiums are directly and inextricably linked to claims. In large part it is action by the individual, a firm, or even the community itself which will bring about a reduction in insurance costs ultimately.
The features in the insurance industry that need to be addressed include cost, availability of insurance, competition and safe practices. Contributing to the high and escalating costs of insurance is the high level of uninsured driving, legal costs, vehicle defects, the claim consciousness of the Irish public and compensation levels. We are told that the frequency of whiplash claims here exceeds that of the UK several times over. In the Republic of Ireland in the past year or so the number of people making whiplash claims as a result of accidents has increased by 15 per cent. We are fast acquiring a reputation as the greatest claim conscious State in Europe.
The Minister for Industry and Commerce recently reacted erratically to the increasing level of insurance costs. First, he singled out the Bar Council of Ireland, then the courts and recently he spoke about changing the system of paying compensation. This haphazard and uncoordinated approach to the problem in my view, is not the solution. The Minister has had time to bring forward his radical plans to reduce insurance costs, but as he undoubtedly realises, it will take a concerted action by many Government Departments to bring about a reduction in motor insurance premiums over a period.
It is disappointing that the abolition of trial by jury in High Court personal injury actions has not brought the anticipated reduction in claim costs. It appears that the new system of trial by judge alone has led to an increase in the level of damages being awarded. I suppose much will depend on the outcome of the cases now before the Supreme Court, and the attitude that court will take to levels of compensation will signal the way compensation claims will go in future. The increase in the cost of claims coupled with the appreciable rise in the number of claims has forced many companies to increase premiums in recent months. There is no doubt that we are generous in the manner in which we compensate accident victims. The public will have to accept that changes in compensation, particularly for minor or less serious claims, will have to be made in order to reduce premiums, otherwise the consumer must be content to pay the high level of insurance premiums required to fund such generous levels of compensation.
We already know the reasons for the high cost of motor insurance: our high accident rate, the high cost of settling claims under our present legal system, and the high incidence of uninsured driving. I am calling on the Minister to take a major initiative to reduce the level of road accidents. This would contribute enormously to a reduction in motor insurance costs and I ask the Minister to enter into discussions with his colleague, the Minister for the Environment, to do so. In fact, he has only to examine the number of hospital beds occupied by road accident victims to know the huge deployment of State resources to deal with road accidents. The following could contribute to a reduction in road accidents: a special Garda traffic squad to strictly enforce road traffic regulations; the elimination of accident black spots around the country; compulsory testing of vehicles over four years old; and a minimum standard of driving for provisional licence holders. The implementation of these measures would contribute to a reduction in insurance premiums.
There could be a reduction in claims if we had major reforms of court practices and procedures to reduce the level of fees to the legal profession, particularly since the abolition of the three counsel rule. Indeed, it has come to my notice that in spite of the abolition of the three counsel rule, the level of fees continues to remain as high as ever. It is for the Minister to initiate legislation to set the correct amount of fees which should be levied in this case.
The Garda Síochána have insufficient powers and they should have considerably more powers to impound all uninsured vehicles to eliminate uninsured driving. Payments for less serious claims, which are much higher than in the UK, should be agreed outside court, and this would make it less expensive. I am particularly alarmed that there seems to be no light at the end of the tunnel in the amelioration of the present financial problems of the insurance industry. Various insurance companies have made substantial losses in 1989.
I am involved in the insurance business and I have a vested interest which I declare this evening in so far as I have been engaged in the insurance business for many years. The Guardian Royal Exchange Insurance Company had a policy in giving full open driving insurance and this opened the floodgates for provisional licence holders and young drivers who had little or no experience and the company have experienced many difficulties as a result of that policy. They have now restricted the cover they had prior to 1989 and it is now very difficult to get insurance cover for young drivers; indeed, if they can get cover, it is very expensive. Other companies have put restrictions on policy holders, and it is now difficult to get public liability insurance cheaply. The Minister will be aware that some businesses find the cost of appropriate public liability insurance to maintain their existing staff levels let alone increase staff to keep the business going, prohibitive.
Some ill informed commentators anticipate that premiums for policy holders will be reduced after the completion of the Internal Market. However, nothing could be further from the truth, when one considers that 75 per cent of the Irish insurance market is operated by foreign companies. The Government, insurers and policy holders have a role to play in bringing about a reduction in the number and cost of claims, thus reducing premium levels. I am calling on the Minister to urgently launch a concerted initiative so that consumers can expect to get a reduction in insurance premiums in the future.
