Concerns about the level of premiums for motor insurance and public liability insurance have caused our Department to examine the factors contributing to the relatively high level of those premiums. This has focused on a number of the key cost elements including the levels of personal injury compensation and the costs associated with settling compensation claims. Concurrent with this examination, efforts are being made to identify measures which both individually and cumulatively could have a moderating effect on insurance costs.
The 1996 Deloitte & Touche report on the economic evaluation of insurance costs found that the main contributory factors to rising premium costs were the high legal costs component of small claim settlements, the faster rate of medical cost inflation and the high level of general damages awards relative to special damages in smaller claims. Following consideration by Government of the consultants' report and recommendations, a special working group was set up to advise on the establishment of a personal injuries tribunal and to examine issues surrounding alternative systems of personal injury compensation in operation in other jurisdictions. The special working group completed the first part of its remit last year and recommended a structure for a voluntary mediation system for occupational injuries which could be operated within the reformed courts system. The group will present its second report shortly. In the light of these reports and after consultations with the new Courts Service, a follow up to the work of this group will be considered.
In addition, I re-established the Motor Insurance Advisory board last year, to provide information and advice on trends in motor insurance costs and with policy recommendations for addressing those costs.