Dáil Éireann díospóireacht -
Wednesday, 13 Jun 2001

Vol. 538 No. 1

Written Answers. - Insurance Costs.

Bernard J. Durkan

Ceist:

79 Mr. Durkan asked the Tánaiste and Minister for Enterprise, Trade and Employment the extent to which she proposes to bring motor insurance and other insurance costs into line with other EU member states; and if she will make a statement on the matter. [17300/01]

Minister of State at the Department of Enterprise, Trade and Employment (Mr. Treacy)

Making accurate comparisons between motor insurance costs in Ireland and other European countries is difficult because of variations in the type of insurance cover, age groups, types of vehicles and even regional differences within countries. Most significantly, there are differences in how compensation for personal injuries is paid in these countries.

Countries such as France, Germany, the Netherlands, Denmark and Sweden provide compensation benefits almost exclusively through the medium of social security benefits with a high level of earnings related income support. Ireland, on the other hand, effectively operates two parallel systems of compensation provision, that is, a social security scheme of occupational injury benefits, paid on a flat rate basis with increases for qualified dependants, while allowing unrestricted access to tort liability claims for compensation for loss of earnings and pain and suffering. A similar system operates in the United Kingdom.

For this and other complex reasons, claims paid through insurance are more costly in Ireland than in other EU member states. This Government has taken a number of initiatives, for example, in the areas of road safety and licensing and testing of drivers, to reduce the number of accidents and, therefore, claims costs. In our Department's area of responsibility, the main initiative arises from the second report of the special working group on a personal injury tribunal. The Government has decided to adopt the principal recommend ation of the group and establish a personal injuries assessment board to reduce the costs of delivering compensation to injured parties. These costs can account for as much as 40% of the total cost of settling a claim. Indeed, at some levels, it can exceed the amount of compensation paid to the injured party. For instance, to pay £10,000 in compensation can cost up to an additional £15,000 in legal fees, fees to medical experts and insurance administration costs. It is expected that, once the board is operational, it will reduce the costs of settling claims and have a consequent favourable effect on insurance costs in Ireland.