Written Answers. - Personal Injury Compensation.
Eamon Gilmore
Ceist:
43
Mr. Gilmore
asked the
Minister for Enterprise and Employment
if he is considering measures to limit the amount of compensation a court can award in personal injury cases; the reason he considers that the courts are not the most appropriate body to assess the level of compensation in such cases; and if he will make a statement on the matter.
Michael Finucane
Ceist:
58
Mr. Finucane
asked the
Minister for Enterprise and Employment
when he will present proposals to Dáil Éireann on the capping of pain and suffering in insurance awards; and if he will make a statement on the matter.
Charles Flanagan
Ceist:
81
Mr. Flanagan
asked the
Minister for Enterprise and Employment
when he will present proposals to Dáil Éireann on the capping of pain and suffering in insurance awards; and if he will make a statement on the matter.
Eamon Walsh
Ceist:
126
Mr. E. Walsh
asked the
Minister for Enterprise and Employment
if, with reference to the social categories used by the Central Statistics Office, his attention has been drawn to the distribution of successful claimants for compensation for personal injury among these social categories; and if so, he will furnish this information.
I propose to take Questions Nos. 43, 58, 81 and 126 together.
The cost of motor, employers' and public liability insurance in this country is considerably higher than in competing economies. The current level of insurance costs in Ireland is a major cost penalty on Irish-based firms. The premia charged by insurers for motor and liability insurance are determined by the frequency and cost of selling claims which is higher in Ireland than in other European countries. Ultimately, claims costs are met by insurance policyholders, that is business and private consumers.
In recent years the Inter-Ministerial Group on Insurance made a series of proposals aimed at reducing the frequency of motor insurance claims by strengthening road traffic legislation, increasing enforcement of the road traffic laws, and reducing the legal and other costs associated with settling personal injury claims. Some of these proposals have already been implemented, others are in the course of implementation — mainly by the Minister for Justice, the Garda and the Minister for the Environment.
Personal injury compensation represented 67 per cent of the cost of motor insurance claims in 1991; almost all the compensation costs in employers' and public liability claims would be for personal injury. My Department estimates that the cost to business of personal injury compensation is of the order of £300 million per annum.
In an attempt to assist in the further improvement of the environment for insurance I have recently established an Insurance Reform Unit within the Insurance Division of my Department to consider proposals to reduce the level of personal injury compensation.
In particular, I am considering a proposal to allow me to have a function in relation to one particular and important aspect of insurance costs — i.e. the cost of pain and suffering compensation in personal injury claims. Proposals to reduce such costs would require Government approval.
From data on 1,600 High Court awards available to my Department, it is estimated that up to 75 per cent of the compensation awarded in personal injury actions is attributed to general damages. Indeed, it has been estimated that the level of general damages in Ireland would need to be reduced by an average of 70 per cent to bring them in line with the average in all other EC states and by 48 per cent to match those in the United Kingdom. Furthermore, a recent survey by the Irish Brokers' Association of 358 personal injury claims shows that pain and suffering compensation represented 80 per cent of the compensation paid to claimants.
I am not suggesting that there should not be recourse to the courts for those personal injury claims which cannot be resolved between the parties involved. But I do think that the reduction of the cost of pain and suffering compensation requires an initiative by the Legislature, particularly if we are to ensure a substantial reduction in the cost and also ensure that the benefits are passed on to insurance policyholders. I would like to stress that I would not favour proceeding with an initiative unless it can be demonstrated that reductions in claims costs can and will be passed on to insurance consumers.
I am conscious that it is in the area of small to medium size claims that the substantial bulk of compensation costs arise. Therefore, it is in this area of small and medium-sized claims that we particularly need as a society to take a choice — less pain and suffering compensation and lower insurance costs, or retain the present regime of compensation that is higher than in other EC member states and, thus, our current high level of insurance costs. I would add that I do not have details of the distribution of compensation for personal injuries across social categories. However, it would seem to me that the adverse impact of our high personal injury compensation levels and the resulting high insurance impacts broadly across all sectors of our society, particularly in terms of employment costs.
I have not finalised my conclusions as of yet. But I have commenced a public debate on the very complex issues involved with a view to taking necessary action as soon as possible.
