Dáil Éireann díospóireacht -
Thursday, 27 Nov 2003

Vol. 575 No. 5

Personal Injuries Assessment Board Bill 2003 [ Seanad ] : Second Stage (Resumed).

Question again proposed: "That the Bill be now read a Second Time."

Mr. Hogan

As I said before the suspension of the debate, I was anxious for the Tánaiste to make sense of the fact that reductions in premia arising from fewer cases being taken, fewer fraudulent cases and more moderate awards do not seem to be translating into lower premia for employers' liability cover in the business community.

This is particularly the case when the excesses which apply in regard to liability insurance are far higher than in motor cases and there is such a significant level of self-insurance by companies. I would be horrified to think there might be manipulation of business insurance losses to keep maximum pressure on politicians, given the impact of high insurance costs on employment.

A major problem with insurance in Ireland is the lack of competition in the marketplace. That we have so few general insurance firms providing competition for consumers is the fundamental problem. I am concerned that the existing players in the marketplace might well be contented by the continued absence of competition. It suits them well. Attempts to make the marketplace more attractive are unlikely to be met with universal approval from them. It is for this reason that they must be compelled to make the new reforms work. In the absence of such compulsion the insurance industry must give firm guarantees of reductions, rather than equivocal and mealy-mouthed statements suggesting that they might not be able to pass on any savings made.

On the issue of competition, I was recently alarmed to hear that the general liability business of Eagle Star might be transferred to one of the existing players in the marketplace. I have also been alarmed by attempts by some of the insurers to cynically use the penalty points system as a means of refusing to provide cover. The Tánaiste and the Competition Authority must vigorously pursue any companies which try to restrict competition. It is regrettable that the authority has been so slow and tardy in the completion of its study of competition in the insurance sector. With its considerable powers to search and seize documents and request information, it could have played a meaningful role in getting to the bottom of the insurance crisis. However, it now looks like its report will be available long after the problem has been fixed, if the insurance reforms are implemented and the Tánaiste's objectives are fulfilled. Delay seems to be a persistent problem with the authority, one which the Tánaiste will need to address at some stage.

I broadly welcome the Bill's provisions. However, I note the debate in the Seanad, particularly the concerns raised by Senators from all sides of the House about aspects of the provisions. It seems the Tánaiste has made up her mind in regard to this legislation and is not willing to accept amendments that have not received the imprimatur of the interim PIAB. It is the Houses of the Oireachtas, not the interim board of the PIAB, that make the law in this State. I hope that in the debate in this House the Tánaiste's mind will be more open to genuine concerns and comments made by Members from all sides.

In the debate in the Seanad two key points emerged which received all-party support, including from Fianna Fáil. The first concerns the issue of representation. The Tánaiste seems unable or unwilling to allow people to be represented by solicitors in their dealings with the PIAB. She argues that legal representation is not necessary in dealings before the PIAB because there are no legal issues being considered. She also told the Seanad which the Minister of State has repeated today that, if a person chose to instruct a solicitor to act as his or her agent in dealings with the PIAB, the board would ignore this instruction and continue to deal directly with the claimant.

The Tánaiste needs to be careful. If she allows the impression to be created and sustained that the PIAB is unfair and lacks balance in dealing with claimants, the PIAB will not work. Insurance companies, in their dealings with the PIAB, will have the full resources of actuarial, legal, medical and engineering advisers available to them when assessing which cases it will deal with under the PIAB. Claimants will have no such support. If a person decides to instruct a solicitor to represent him or her in his or her dealings with the PIAB at his or her own expense, it seems churlish, petty and suspicious for the PIAB to ignore that instruction.

Not everyone is as skilled, equipped or talented in dealing with official bodies as the Minister of State. If people require representation in their dealings with the PIAB, it should be facilitated. It is also ridiculous for the Tánaiste to suggest that the PIAB will not be dealing with the legal issues and that solicitors will have no role to play for claimants in dealing directly with the PIAB. I can think of a number of legal issues with which the PIAB will be dealing, including establishing the identity of the respondent, determining the level of contributory negligence involved, assessing whether a claimant is vulnerable and making an assessment of a person's legal entitlement to redress and compensation, presumably in accordance with the legal principles handed down by the courts.

The PIAB will also have to act within the law in the manner in which it respects the rights of individuals. If claimants wish to be represented in their dealings with the PIAB and pay the cost of representation themselves, without adding any burden of costs, the PIAB should recognise this fact. I gather this is a point that has found favour with a number of the Tánaiste's colleagues, including the Minister for Defence, Deputy Michael Smith, and some Fianna Fáil colleagues in their discussions at constituency level. It may be somewhat different from what happens in Dublin. It has also received cross-party support in the Seanad. I want the Tánaiste and the Minister of State, Deputy Fahey, who represents the Fianna Fáil parliamentary party well at times, to take these views on board.

The second major issue which concerns me about the PIAB is the issue of liability. The PIAB has been sold to the public and politicians on the basis that it will deal with cases where liability is not an issue. The debate In the Seanad confirms that this is a complete hoax. Under the Bill, as presented, an insurer can compel a claimant to go to the PIAB. The claimant can wait for up to 15 months for the PIAB to reach an assessment of the case. If, at the end of that process, the insurer does not like the assessment reached, the claimant can be forced to start again with a full set of proceedings in the courts. In those subsequent proceedings the insurer will be perfectly entitled to deny liability and fully fight the case.

In the light of this, the Tánaiste should stop trying to fool people that the PIAB will deal with cases where liability is not an issue. It will only deal with cases where liability is not an issue for as long as the insurer determines it is not an issue. However, if the insurer does not like the result produced by the PIAB, the claimant faces a full legal case in the courts on the issue of liability and the extent of any damages claimed and will have to do so on the basis that there will have been no order for protection of the site involved, no order covering the material damage associated with the claimant in respect of the machinery or site involved until such time as the case can be dealt with in the courts. The claimant will be at a disadvantage if any effort is made in the meantime, during the 15 month period, to ensure the site is tampered with or machinery where, for example, an accident occurred is interfered with.

I am not alone in my concerns in this regard. I note that speakers from all parties in the Seanad had similar concerns. In particular, I noted the comment by Senator Maurice Hayes, former Ombudsman in Northern Ireland and Chairman of the National Forum on Europe, who stated:

I worry about the possibility that an insurance company might string the matter along, allow the complainant to produce whatever he or she needs to produce and then say "hard luck, we must start again in the courts". This is something which must be avoided either by way of rule of the organisation or rule of procedures, if not by statute.

As I understand the Tánaiste's position on the Bill, she has no intention of avoiding this situation but again places her belief in the promise of good behaviour from the insurance sector. She also argued in the Seanad that it was ludicrous to suggest insurers would ignore an assessment made by the PIAB in an individual case and then take the case to the courts, given that they would be paying for the PIAB. I am afraid this contention does not stand up.

I have no doubt lawyers carry a fair share of the blame for the manner in which the courts system operated, one aspect of the problem of high insurance costs. However, insurers carry an equal element of culpability. The Tánaiste talks regularly of claimants in Ireland having to wait six times longer than in the United Kingdom to receive compensation. While this is no doubt attributable to opportunistic lawyers, greedy plaintiffs and inefficient court procedures, insurers must also bear some share of the responsibility. I am personally aware of many cases where insurers entered a full defence in a case where liability should not have been at issue. Furthermore, many cases are settled at the door of the court which insurers could have settled at an earlier stage of the proceedings. However, there was no incentive for them to do so, given that they have the ultimate discretion of raising premiums to pay for their inefficiencies. The latter is contributing to the lack of competitiveness and higher than usual premiums being charged to customers.

The manner in which many insurers dealt with the court process, refusing to settle at an early stage and stringing claimants along until they reach the doors of the court, does not inspire confidence in terms of changing their approach in dealing with claims before the PIAB. The simple, sad fact the Tánaiste has yet to learn is that insurers will not willingly pass on reductions in premiums unless there is some element of compulsion involved. For this reason, they should not be allowed to contest liability in subsequent court proceedings if they reject an assessment issued by the PIAB. It would perpetuate an extreme injustice on claimants if insurance companies were able to convey the impression, through involvement with the PIAB, that liability was not at issue in a case and then had the freedom to reject an assessment reached by the PIAB and, 15 months later, contest liability. That is a real cause for concern and is a case of having one's cake and eating it.

Unless the Tánaiste addresses this matter in the Bill, she will create major difficulties for the assessment board, businesses and consumers. Insurers will operate the system to suit themselves, not the public. The Tánaiste needs to stop looking at insurers through the rose-tinted glasses provided by the insurance sector and claims managers. I hope she will take account of the points we are making. She needs to face reality in terms of the way she deals with this issue and start to exert pressure to insurers. She must realise that the success of the PIAB will not be down to claimants but more likely will depend on the response of the insurance industry to the initiative. The record to date does not fill me with confidence. The ultimate success or otherwise of the Personal Injuries Assessment Board will depend on whether customers receive lower insurance premiums.

In 1986 there was a great deal of discussion about the abolition of juries from court cases involving compensation claims. The insurance companies promoted such an abolition to the Oireachtas by claiming that they could reduce premia substantially if legislation were enacted. The former Minister, Deputy Howlin, will be aware that the abolition of juries from such cases and the increase in the number of senior and junior barristers who became involved in cases led to the cost of litigation doubling rather than, as originally intended, being reduced by half. That is the background to issues relating to the compensation of people in the event of their making claims. The abolition of juries led to higher rather than lower insurance premia.

The Personal Injuries Assessment Board will be successful if it merely assesses claims and does not become either another layer of bureaucracy or another form of court. It should primarily be established for the purpose of dealing with liability claims initially. I do not believe that we should rush into assessing road traffic accidents or personal injury through any form other than employers' liability until we see that the new system is working well.

Section 56 deals with the composition of the board. The members of the board are already adequately versed in dealing with employers' liability claims. However, when the board proceeds to deal with claims involving personal injury or road traffic accidents, will it be necessary to change the members in order that it will have the relevant expertise available to it to deal with such claims? I would like this issue to be explored further.

As already stated, I am concerned about section 16 and the fundamental issue in law with which it deals. Article 6 of the European Convention on Human Rights explicitly lays down the right of people to seek redress through the courts in a particular jurisdiction.

Section 7 penalises claimants for taking advice by not giving them time to draw up documents or allowing them to obtain whatever advice, whether it be legal, medical or engineering, they may need. They are obliged to serve documents, not just an application form, to the assessment board, but they will have to support it by resorting to the expertise of members of the various professions. They are obliged to pay for such expertise themselves. Insurance companies will pay for whatever expert advice they need but they can pass on that cost in the form of higher insurance premiums to their customers. Respondents and claimants will not have access to the same level of advice. Section 7 should not be a penalty to claimants. Has the Tánaiste obtained legal advice, particularly in respect of constitutional issues, regarding the position vis-à-vis the European Court of Human Rights?

Section 11 deals with the making of applications. As public representatives, we do not want to end up, as we do regularly in other instances, giving people advice in respect of assessment application forms. I hope the helpline will be of assistance to people but I suspect that claimants will seek professional advice rather than relying on that offered by those manning the helpline.

With regard to sections 20 to 22, there is no guarantee that the Personal Injuries Assessment Board will remove cases from the court system. The book of quantum will be made up of settlements apart from court awards. Many settlements are made on the steps of courthouses and, subsequently, the claims are struck off the High Court list. As a result, no one knows the result of such claims. For one reason or another, people like claims to be settled because they do not want to take the stand in courts. We cannot obtain the full details of such settlements and this will affect the accuracy of the book of quantum.

We are being asked to pass this legislation without knowing the rules and regulations attaching to the workings of the Personal Injuries Assessment Board. Section 46 refers to the introduction of rules. The Tánaiste should outline, on Committee Stage, exactly what those rules will be before we approve the system.

Section 50 deals with the time limits attaching to the deliberations of the Personal Injuries Assessment Board in respect of claims. In my view, those limits are somewhat generous and should be reduced rather than extended.

The Personal Injuries Assessment Board represents a major reform in the manner in which compensation claims will be paid. It is a new structure and has the objective of reducing the cost of litigation for respondents and insurance companies. The ultimate objective is a reduction in the cost of insurance premia. We will not be able to adjudicate on the success or otherwise of this scheme until employers' liability is dealt with effectively by the Personal Injuries Assessment Board. Only then will the board be able to extend its influence into other areas. We will ultimately be judged on whether the board has a major impact on reducing the costs of litigation which, in turn, would help reduce the cost of insurance premia to ordinary individuals and the business community.

As stated earlier, I support the Bill in principle. I look forward to Committee Stage on which we will be able to tease out the various sections and be provided with additional information. I hope the Tánaiste will be in a position to ensure that ordinary claimants do not lose out and insurance companies benefit. Balance is required for everybody involved in the process, not least those who will submit claims to the board.

Mr. Howlin

I join my Fine Gael colleague in welcoming the Bill, which is an extremely important element of the range of issues that must be addressed if we are to tackle the high cost of insurance. I will obviously have an opportunity during my contribution to outline a more broad attitude to the Bill, but I wish to state that the Labour Party will be supporting it on Second Stage. We will do so for one reason, namely, that we are convinced a range of measures is required in order to bring about a fundamental change in the insurance market.

The cost of insurance is an extraordinary barrier to business. Members of the House will have attended public meetings throughout the country and will have talked to businessmen and women who have struggled to keep their businesses afloat, not because of the intrinsic profitability of those businesses but because of the unpredictability of the rises with which they are faced, monthly and yearly, in their insurance premiums. It is a barrier to the maintenance of business, the expansion of employment and the mobility of the individual. Those who depend on cars to travel because of our inadequate public transport system find they are unable to afford insurance. This is particularly the case for young drivers. A consensus has been building for years that action is required. Finally, we have a concrete example of action in the form of this legislation, the first in a series of actions.

The Minister of State thanked his former colleague, Dessie O'Malley, for his involvement in the preparation of the legislation. With respect to this former senior politician, it is a long time since he held office. Credit was also given to my colleague, Deputy Rabbitte, a former Minister of State in the Department, because this Bill was drafted while he was in office a number of years ago.

The Bill has had a long gestation and, in the meantime, businesses and citizens have paid through the nose for insurance and have found it impossible to obtain affordable insurance. The Oireachtas Joint Committee on Enterprise and Small Business, of which I am a member, could not accurately quantify the number of jobs lost because of the high cost of insurance. It is second only to wages as the most significant cost faced by businesses and this burden has sent many under.

Earlier this week I had recourse to the Insurance Industry Federation to obtain insurance for a small company employing four people in my constituency. The company contacted seven different insurance companies and brokers. Six would not quote the company and the other quote was not affordable in terms of maintaining the viability of the business. That is the backdrop to the legislation.

Effective work has been done by two groups in this regard. The Motor Insurance Advisory Board produced a valuable report outlining in detail a serious of concrete proposals, which all interests should be required to implement. In addition, I refer to the work of the Oireachtas Joint Committee on Enterprise and Small Business, ably chaired by Deputy Cassidy. He has driven insurance reform to the top of our priority list. He initiated a series of public hearings, which meant the committee was in session until the early weeks of August before producing an interim report that outlined 40 proposals, one of which was the establishment of the Personal Injuries Assessment Board on a statutory basis. It would be wrong of the House or the public to look on the establishment of the PIAB, following the enactment of the legislation, as a solitary measure to substantially reduce insurance costs. The setting up the board is part of a coherent strategy, which must be put in place if the insurance industry is to be radically reformed.

The joint committee is convinced the PIAB is an important part of the overall solution. The board is a clearing house for cases where liability is not contested. The objective is to award proper and appropriate compensation to persons who suffer personal injuries and who sue others for liability as fairly and efficiently as possible. The board is purported to be a clearing house for cases in which liability is not an issue and where it is in a position to award proper and appropriate compensation. A process that has become extremely cumbersome and slow over many years is being fundamentally streamlined but, in doing so, injured parties must not be treated unfairly. The Oireachtas needs to underscore that issue in this debate.

Those who have recourse to the PIAB must do so in the confidence that they will be treated fairly and their award will be proper and appropriate. Justice must be seen to be done from the outset. I have had discussions with a vast array of interested parties. Few Bills have generated as much lobbying of Members as this Bill because there are many vested interests, some of whom will be adversely affected and I am conscious of that. However, while people may have a vested interest, that does not mean what they say should be discounted.

Many people, including Ministers, have commented during the preparation of the legislation that its purpose is the creation of "a lawyer free zone". There is concern at legal and other professional costs. It was difficult for the joint committee to get a handle on them but most of us were convinced that 42% of the cost of a claim is attributable to lawyers and other professionals. That burden is carried by those who pay the insurance premium and this must be addressed.

However, in attacking those whom we believe are exploiting the system or gaining too much from the system, it is critical that we are clear regarding our intention, which is the establishment of a fast, fair compensation system with a minimum of fuss that protects everybody's rights and, as far as is practicable, uses a standardised reference point, normally referred to as a book of quantum for injuries suffered. The system must not trample on people's rights if they feel aggrieved by this process so that they have recourse to the courts, as is their constitutional right. This process must be consistent throughout the State so that the compensation an individual receives is not determined by a specific judge who is perceived to be claimant friendly or another who is perceived to be unsympathetic to claimants. The establishment of a book of quantum for that purpose will, in my view, be an important part of this whole process. Every case will be unique and the PIAB, once established, will have to have regard to the specific circumstances of every case on which it deliberates. It is hoped to have the board established on a statutory basis from next January, dealing initially with employers' liability claims and, shortly thereafter – within six months or so – dealing with public liability and motor accident cases.

I have listened, with some sympathy, to the point made by Deputy Hogan about ensuring we do not rush our fences or simply broaden the scope of the work of the PIAB for the sake of "notching off" certain matters, as it were. He suggested we should wait until we are certain the board is in a position to deal fairly with those new types of cases before we consider expansion. That is a point well made and worth considering.

Those of us in the House who are dealing with this Bill have received submissions from a range of groups, including the Bar Council and the Incorporated Law Society. The latter body, through its various branches and individual members, has reinforced its case. I believe none of us is unimpressed by the society's ability to lobby as it does. The fact that the profession has a vested interest should not preclude us from giving its submissions the consideration they deserve, as I have tried to do.

The principle of establishing the PIAB is not a matter for disagreement in this House, as far as I am aware. It is certainly the case that all parties involved in the discussion and detailed analysis of the plight of people seeking insurance in the Irish market have agreed that, in principle, the establishment of the PIAB is a key part of the solution to providing affordable insurance. Accordingly, the issue is not about the principle of establishing the PIAB but, rather, the detail and form of the board. While the specifics will be best teased out on Committee Stage, rather than under the time constraints of Second Stage, in welcoming the broad principles, I wish to alert the Minister of State to some of my concerns and to indicate my views and those of the Labour Party with regard to this legislation.

The scope of the Bill, in legal terms, should be clear rather than general. I will propose amendments on Committee Stage which I hope will assist the objective of clarity as to the steps to be taken, the timeframes involved, the expectations of claimants and the rights of all parties in this process. There is need for some changes in order to bring about that reassurance. I draw the attention of the Minister of State and, through him, the Tánaiste and Minister for Enterprise, Trade and Employment, to the fact that the provisions of this Bill will fall or succeed on the basis of how it is perceived by the various parties who will use it in future, including claimants, their advisers and respondents.

No matter how well we craft this legislation, it will not succeed if the perception goes abroad that it is unfair or that claimants will be treated in an unfair way. Not only have we a duty to make the process as effective, simple and efficient as possible, we also have ensure that it is perceived as fair and transparent. For that reason, I join Deputy Hogan in a genuine expectation and hope that the Minister or Minister of State who takes the Committee Stage will be open to accepting amendments.

It was very disappointing that the Bill should go through the other House without any amendment being accepted, even though I understand there was a consensus on a number of issues. That is not the way to deal with an issue such as this which has been a long time in gestation, as it were, having come to the House through a process of consensus via the Joint Committee on Enterprise and Small Business. If there is some tweaking required, Ministers should be open to hearing the arguments, rather than believing their first draft is so perfect that it is not capable of improvement.

I wish to refer to some particular sections of the Bill, as Deputy Hogan did in his contribution. In section 11, which covers applications to the board for assessment, I wish to ensure that claimants are only required to furnish medical reports on which they intend to rely, as would be the case in court proceedings. The Minister of State referred to this and I am aware that the issue was raised in the other House. I am not convinced by his presentation in that regard. I believe it is possible for the board to have independent medical examination and evidence. However, I do not believe there should be a legal requirement on a claimant to furnish documentation on which he or she does not intend to submit evidence and which is not part of the claim.

With regard to section 13, there should be a specific timeframe for notification of respondents of claims, to ensure speedy action. The current phrase in the section, "as soon as is practicable", is patently unspecific and far too vague. We should lay out, in concrete terms, the timeframe for the operation of this process if the objectives are speed and efficiency, linked always to fairness. Like Deputy Hogan and many speakers in the other House, I have a genuine difficulty with sections 14 and 16, which deal with the issue of accepting liability. The role of the PIAB is to provide a clearing house for non-contested liability cases, where the only matters to be determined are the degree of injury and the extent of compensation which should accrue.

The process is most important. Having considered this issue at some length, my original thoughts on the matter were the same as those the Minister of State outlined in his introduction to this debate. In the PIAB process, if either party is not content with its findings, they can bring the matter to court, with a blank sheet in the sense that there are no consequences from what has taken place previously. I believed that was a fair position, which I also had accepted. However, practitioners in this field have made the case that this can result in an injustice and we must have regard to that view.

If we believe there might be an injustice, bearing in mind that one injustice arising early in the process could kill off the process, we need to ensure this matter is not simply swept aside, as the Minister of State indicated his intention of doing. As the Bill is currently drafted, an insurance company is not required to come swiftly to grips with a claim by deciding, from the beginning, whether to accept liability. They can simply keep their powder dry, let the process run and at the end of it fight it in the courts and contest liability. On the face of it, is that a bad thing? It is, if one is the claimant and one's chance to capture all the evidence supporting one's claim has disappeared in the 15 to 17 months that have elapsed during which one was led to believe that liability was not an issue. When a person seeks to capture evidence to support liability, he or she might find that the person who had worked with him or her has changed employment or that the physical evidence he or she needs to prove liability – be it the chair that collapsed, the piece of machinery involved or the shield that was broken – is no longer there, which leaves the person at a major disadvantage. If people perceive that will be the norm, or if they get advice from their union representative or from anybody else that such will be the norm, they will be reluctant to accept the Personal Injuries Assessment Board. We must have regard to that issue. I will seek to table suitable amendments to the relevant sections on Committee Stage and I hope the Minister will be open to accepting what I propose.

Even if he is convinced that the blank sheet option is the better one, the perception of the operation of the board will be critical to its success. If the perception goes abroad that this is an unfair system that disadvantages claimants, and there are many vested interests who would like that perception to go abroad, the board and this initiative will be a failure. Therefore, this is an important issue for us to get right in our deliberations. This measure is but one of the many actions that need to be taken, but it is an important one.

The issue of legal representation in this lawyer free zone is not something about which we can be absolute. I understand that the Minister's Department has begun to prepare a user friendly guide to the operation of the PIAB, of which I was given an early draft. Such a user friendly guide will be given to a person who might be injured and who might not be used to reading, much less filling in, forms. I read it only once but did not find it the most user friendly guide I have ever read. It clearly underscores this mechanism is not simple or straightforward. I believe most people will feel they require advice on this process. Should a person wish to seek the advice of a solicitor, he or she should not be debarred from doing that. The Minister is not suggesting that the person concerned should be debarred from doing so, but there should be a compulsion on the PIAB to communicate with the solicitor involved and not simply take such a solicitor out of the equation, as the Bill currently proposes.

We must make this mechanism as user friendly as we can. We must build in the necessary assurances – I readily accept that we do not want to demolish the board as an effective entity by loading in lawyers and advisers – to ensure we do not achieve the objective of cheaper assurance at the cost of disadvantaging claimants who are given less compensation than that to which they are entitled and less than what is fair and proper. I make that point strongly and I will seek by way of amendment on Committee Stage to make it even stronger.

We have gone into all the other measures that are required to deal with the issue of what was described by some who came before the Oireachtas committee as a dysfunctional insurance market. I hope the example of the introduction of this legislation will be matched by the zeal with which the Department pushes all the other reform mechanisms, the 40 the committee has listed, and that we will have advances on all fronts on this matter. I agree with others who said that we must concretise our objectives in this regard. It is not good enough simply to say these are the reforms we will bring about without knowing, in specific terms, what is the objective in providing reduced premia to policy holders. Since many of these reforms are requests from the insurance industry, there should be a specific commitment from that industry in terms of its response so that it is not simply clawing in profits to more than compensate for the losses it has incurred in a few bad years.

I believe this measure will have the desired result of reducing the cost of insurance and providing for the fair treatment of all, if the amendments that will be proposed are accepted and the issues being addressed by the Opposition are properly taken on board by the Government. However, this proposal will have to be carefully monitored. It may not achieve its objective, which is a possibility bearing in mind that Deputy Hogan instanced promises made in the past when we were advised if we no longer had juries and reduced the number of senior counsel there would be a dramatic impact on the cost of insurance, none of which came to pass. We need to specifically monitor this mechanism and make sure it achieves the objectives that this House sets for it. If it does not, we should be willing to review the legislation in a year's time and make what changes are deemed appropriate and necessary.

The Oireachtas committee is determined to bring about change. We are determined to ensure that all participants play their part in this task. The first set of submissions on insurance costs that we, as an Oireachtas committee, received is encouraging. Other measures, particularly the introduction of penalty points, seem to have been an extremely important contributor in reducing the number of motor accidents and fatalities. If we are to accept the base figures given to us by a number of insurance companies, there has already been a quantifiable reduction in insurance premia, not only in motor insurance but across the insurance market. However, many companies and individuals have seen little evidence of this.

While we are bringing about this array of change and while the Labour Party will support and assist in transforming the insurance market in a fair and balanced way, we must have at the end of this debate a clearly stated objective. The Oireachtas committee and its chairperson have stated that our objective in the medium term is to ensure insurance premia are reduced by 30%. I would ask the Minister and the Minister of State to set out their objectives, the monitoring procedure that will apply and the timeframe involved so that we can not only say we are changing the law but grasping this issue and setting out a timeframe for quantifiable and real results that will benefit insurance premia payers across the country.

Mr. Eamon Ryan

I wish to share my time with Deputies Morgan and McHugh.

An Ceann Comhairle

That is agreed.

Mr. Eamon Ryan

The Green Party also supports the Bill. It welcomes it arrival and, hopefully, safe passage through the Oireachtas. It is unfortunate that the senior Minister is not present to engage in the debate. I do not in any way wish to belittle the contribution of the Minister of State in that regard. This is the second day I have contributed to a Second Stage debate on major legislation in respect of which the relevant Minister has not been present. There may be good reasons for that in terms of the timing of European Council meetings or whatever, but it is unfortunate. The Whips need to examine if we arranging business in such a manner as to ensure that Ministers, putting through important legislation such as this, are available.

From comments made to the media by the Tánaiste and Minister for Enterprise, Trade and Employment, she seems to be clearing her desk at the moment. However, she also implied that the passage of this Bill was of particular concern to her. It is strange, though, that she is not here on Second Stage. I hope on Committee Stage she will show more flexibility towards amendments because, even though the Green Party supports the Bill, it needs amending.

One issue the Minister must bring out of her filing cabinet before she departs is her role in ensuring that competition exists in enterprise and business so that consumers are getting the best value and not suffering cosy cartels across a range of activities. There is concern, given the small number of players in the insurance industry, that our efforts to reduce insurance costs through legislation will be in vain. In essence, we are dealing with a market that is comfortable, setting premia based on nice market conditions rather than tight, competitive ones. While we are examining the reduction of legal costs in insurance, the Minister needs to be equally strident in enforcing competition. I hope in the remaining months of her ministerial position she addresses that issue with equal vigour.

Many believe that legal and other professional costs are inflating Irish insurance premia above any other international comparison. I believe that to be the case and it is appropriate that the Bill reduces those costs. The central tenet of the Bill is to reduce legal and professional costs in insurance claims. However, despite Oireachtas committees having looked at this issue extensively, as well as the MIAB, and discovering that 40% of costs are taken up by the legal and professional sector, this figure is hardly precise, as we tend to rely on anecdotal evidence.

I derive my anecdotal evidence from when I was a small businessmen and found insurance costs to be a huge barrier to innovation and enterprise. The massive cost of insurance added to my business overheads. They also were way ahead of what any other similar company paid abroad. Insurance costs are crippling innovation and enterprise in the country. If one had an idea for a new enterprise, one's first thought was it could not be done due to the implications of insurance costs. That had a crippling effect not just on the economy but on society. As a member of voluntary groups organising activities, such as cake sales or pub quizzes, to raise funds and awareness, we constantly ran into these cost implications. Massive premiums had to be paid in case someone was injured at such an activity and proceeded to make a claim against the organisation. The claims culture is crippling our society across the board, and this Bill provides one of the measures to stop it.

Much of the legal work that has been done in protecting employees where they have suffered a genuine loss has been beneficial. Many of the broad class actions and individual claims have subsequently provided regulations that were needed. The fear of potential claims brought about safety measures in the workplace. It is important that we do not lose sight of that. However, the balance has gone in the wrong direction with the positive effects of safety laws now outweighed by the huge costs that have to be borne. In many cases, lawyers and other professionals are happy to promote cases which otherwise would not be taken because of large fees for them at the end of the process. If the PIAB is a way of taking those costs out of claims, it will be a proper course of action.

I disagree with some of the earlier speakers who argued that the board must be required to deal directly with the lawyer of a claimant being assessed by the PIAB. This would fundamentally undermine the purpose of the Bill. Certain lawyers could use such a provision to sow doubt in people's minds so as to ensure they had to use their advice to get the best representation. We would then be back to where we started but with a structure for lawyers and professional advisers. I disagree with such a change to the Bill. The nature of the assessment work that will be done by the board, which is largely paper-based, means that neither claimant nor correspondent will see a significant loss of rights. We need strong legislation to tackle this issue and such an amendment would undermine it.

I disagree with concerns that have been raised with regard to revenue records. If an individual is making a claim based on loss of income, it is valid for the PIAB, on a confidential basis, to have access to records to confirm income loss. I do not see a constitutional or legal problem where the board has such access. However, it is important that we are thorough and exact in the measures we are introducing. I am concerned about medical and professional advice that people may seek for claims. It is not just lawyers who inflated insurance costs in Ireland. A whole industry of medical and other professional advisers have benefited from the litigious culture that has developed. I am concerned about the provisions to monitor the medical assessment and claims that are coming through. I want to see a provision in the Bill which will allow some censure for medial practitioners entering claims that are inflated or misleading. It does not have to be a financial censure but can be an exclusion from further assessments by the PIAB. It would be a way of self-policing the outside medical advisers the board will employ and the quality of the advice.

The Minister did not accept any amendments on Committee Stage in the Seanad. However, this Bill will be examined from top to toe by lawyers and will be subject to legal analysis and possible court challenges. The Minister for Transport speaking on the Road Traffic Bill 2003 said that drink driving regulations were the one area that was challenged more than any other in the courts. The same can be said for the workings of this Bill. It is important that, as the Minister for Transport, Deputy Brennan, said, we dot the i's and cross the t's on legislation before it is enacted. To do that, the Minister needs to take account of what the Oireachtas can provide in its legislative role. There is cross-party support for this Bill but I hope she will accept amendments to rectify flaws in it and not enact it as initiated. If that is not done, the process may end up in the courts, with the PIAB compromised and the Minister ruing the day she did not listen to those arguments.

Mr. Morgan

Insurance reform is desperately needed. Tackling the issue in an effective way would yield real savings for individuals, community and voluntary bodies, businesses and State services. As has been pointed out in this debate, insurance premiums have rocketed in recent years. The cost of insurance for companies has doubled in the past two years. This has had severe knock-on consequences, particularly for small and medium size enterprises. Jobs have been lost because a number of companies have gone out of business as a consequence of being unable to pay these excessive insurance costs. Litigation costs alone amount to 40% of the total cost of compensation and claimants in this State are waiting up to six times longer than claimants in other EU states.

It is not only business which is suffering because of exorbitant insurance costs. Sports clubs, voluntary bodies of all kinds, community groups and many others often find it impossible to organise fundraising events and other events which once were their bread and butter and in many cases their only source of income. This is because they cannot afford the exorbitant cost of public liability insurance cover. It is simply stifling community life as well as business activity.

While any effort to reform the insurance sector is to be welcomed we must carefully examine whether the Bill will help to resolve the problem. This Bill is concerned in the first instance with employer liability insurance and not with public liability insurance, which is the greatest problem for small businesses. Importantly this Bill does not address the problems which face young drivers trying to obtain insurance.

Before looking at the Bill itself we must question why the current insurance problems exist. They have come about as a consequence of the economic policies and political ideologies pursued by the Government. The mindset of the Progressive Democrats, encouraging rampant individualism, greed and consumerism, enables a culture of litigation to flourish. Their philosophy is based on everyone being out for themselves. They have therefore contributed to the huge cultural change in this State where people view litigation and making a claim for compensation as a reasonable way to make money to survive. The Government has courted, supported and rewarded the speculators or developers who hoard land and the tax defaulters who stash their money overseas, both of whose actions damaged the wider interests of the community as a whole.

If there is a problem in this State with excessive eagerness to take claims for compensation, it can easily be argued that these values were learned from the top, from politicians and leaders of industry.

We have higher compensation levels and we wait longer than our EU counterparts to settle claims. We wait longer because there has been a failure to reform the courts system and we pay higher compensation levels because a person who has an accident because of another person's negligence etc. faces higher medical costs. There is no national health system that would care for an accident victim without charge. Those wanting to recover as quickly as possible have little choice but the private health care system where they can obtain the necessary physiotherapy etc. for which they would have to wait an unreasonable length of time in the public sector and they might not even have the option of accessing such services in public hospitals.

Most EU states have a social security system which pays a proportion of the wages of those who cannot work after accidental injury. In this State there is very little State supported income protection for those who cannot work due to accidental injury, thus pushing many people into claiming for loss of earnings.

Will this Bill bring about the long-promised reform of the insurance industry? Will the PIAB bring about a reduction in insurance premiums? Will it shorten the time it takes to process cases? Will it shorten the time between a worker having an accident, lodging a justifiable claim and receiving compensation?

The Minister stated in the Seanad that the PIAB's objective is "to tackle the delivery cost of speedier compensation to genuine claimants while reducing the cost of insurance for consumers and businesses alike." However, we have absolutely no guarantee that premiums will drop because the insurance companies have failed to give such a guarantee. When such a significant action is being made in consultation with the insurance companies why have they failed to give such an assurance?

The aim of this Bill is to establish the PIAB as a method of eliminating the litigation overhead and the Minister has said the PIAB "will offer lower cost and speedier means of finalising genuine personal injury claims than the current litigation system." For whom will it deliver lower costs? We must be careful that the establishment of the PIAB does not end up assisting insurance companies to make even grater profits than they are currently making. In the absence of a guarantee of lower premiums this is a very real prospect.

Arguably a State-owned insurance company, which would have responsibility for indemnifying its own agencies and offering a lower cost service to the public, would provide the best option for reducing insurance premiums.

Why was it decided that the PIAB would deal with employer liability cases in the first instance rather than addressing the areas which cause the greatest problems – motor insurance and public liability insurance. It is commonly accepted that public liability insurance faces the greatest number of fraudulent claims. At the same time workplace accidents and fatalities are unacceptably high in this State. How influential was IBEC in the decision that the PIAB would deal with employer liability cases first? Instead of this, why would the Government not put greater effort into reducing workplace accidents and fatalities? There is a risk that the Bill will not reduce the time it takes to process cases, as people will still have the option of rejecting the board's decision and going to the courts anyway.

I question to some degree the logic that says that because a system is becoming too expensive we should set up a new system rather than make an effort to control the current system and tackle the escalating costs of the legal profession. Legal reform designed to deliver faster and less costly processing of civil cases would have been a real option.

Under the terms of this Bill the PIAB will be able to demand information about a claimant's income and other financial affairs from the Revenue Commissioners, which would not be allowed in a court case. Will information on the profits being made by insurance companies be equally clear and transparent under the terms of this Bill? While I welcome the introduction of a book of quantum, I question why a book of quantum was not introduced under the current legal system. From the questions which remained unanswered regarding the PIAB, it is clear that it will need to be reviewed at an early date to see if it is bringing about a reduction in the cost of premiums to the consumer. A cost benefit analysis is essential.

I seek statutory control of insurance costs accompanied by action at EU level to remove restrictions on such control. Inflated insurance costs and profiteering by insurance companies are barriers to commerce and social cohesion. The Government needs to do far more to reform the insurance industry in this State. Accident prevention, the elimination of fraudulent and exaggerated claims and court reform are all necessary if we want to see a real reduction in exorbitant insurance premiums.

Mr. McHugh

While the publication of this Bill leading to the establishment of the PIAB on a statutory basis is to be welcomed, it is not to be seen as the panacea to all the ills of the insurance industry. Even the Bill as published is not to be taken as complete perfection because it has some grey areas and potential flaws. The theory that establishing the PIAB will reduce insurance costs by as much as 40% is a fallacy. The 40% figure is a famous figure being thrown around by those who want to talk tough about the legal profession. This 40% is being identified as the percentage increase on compensation awards attributable to legal fees.

While I am not a defender of the legal profession, it is unfair, not necessarily to the legal profession but to the long-suffering public who are crucified with insurance costs, to give them false expectations that the PIAB will automatically reduce insurance costs by 40% simply because the legal profession will be excluded. That 40% is not entirely composed of legal fees. It is a combination of a number of items, including the fees of medical and engineering expert witnesses, among others, in addition to the cost of legal fees.

If that was not enough, an assumption appears to have been made that the operation of the PIAB will not cost anything. This assumption gives false hope to the public that the future in regard to insurance costs is exceedingly promising due to the introduction of the PIAB. One could be forgiven for thinking, listening to the hype coming from certain quarters, that no cost will attach to the PIAB. The respondent will be charged with funding the PIAB and he or she will pass that cost on to the policyholder.

What will happen in a case where a claimant and respondent agree to go to the PIAB but, after a determination has been made, one or other of the parties decides to reject the determination and seek legal redress? This will lead to a doubling of costs – those associated with the legal route in addition to the costs associated with the PIAB. This will result in higher insurance costs. In such cases, the PIAB will increase costs rather than reduce them.

A great deal of discussion has focused on legal fees. I do not defend the high level of those but, in focusing on them one can lose sight of the main goal, which is a reduction of insurance costs to businesses, householders, community and sporting organisations and motorists. In that regard, I find the forensic attention that Dorothea Dowling applies to the legal profession to be both unnatural and ill-advised. I compliment her on the close attention she is paying to this debate. While I acknowledge that a problem exists with legal fees, many other issues need critical focus and immediate attention. If one is obsessed with one issue, one may be blind to other equally important issues.

Many areas require attention and most of these are included in the interim report of the Joint Oireachtas Committee on Enterprise and Small Business published last August. As a member of that committee I place on record my thanks to the various interested parties who assisted us in our work and enabled us to produce a report in a reasonably short time. The report of the joint committee contains 40 recommendations which the committee considers need to be implemented as a matter of urgency. The operative word is "urgency". The high cost of insurance to business has been identified as a major problem for at least three to four years. The Government's response to the crippling costs with which businesses are faced is disappointing. The pace of Government reform of the problematic elements attached to the high cost of insurance is boringly slow. I cannot understand why it takes so long to bring forward proposals to address the problems.

The delay in tackling the causes of high insurance premiums has led to job losses, companies not taking on extra employees and the closure of businesses. That is the unfortunate legacy of the failure of Government to take action sooner. An immediate practical expression of the Government's concern would be for it to abolish the 2% levy which is now merely a source of tax revenue. This was introduced at the time the PMPA was in difficulty and the necessity for it no longer exists. Therefore, as a recognition of the problems facing policyholders, this levy should be removed forthwith.

Concern has been expressed at the inconsistency of awards made to claimants in the courts. In the interest of equity and fair play, that inconsistency needs to be addressed. Specialised training needs to be introduced for judges dealing with insurance claims. Consideration also needs to be given to setting up courts solely to deal with insurance claims. Courts also need to have regard to the proposed book of quantum. Both proposals would bring consistency to court awards and lead to reduced insurance costs.

I referred earlier to the high cost of legal fees. It is universally recognised that the fees attached to compensation awards are exorbitantly high. The Government needs to address this by establishing an inquiry mainly composed of non-lawyers. Such an inquiry would undertake a study of costs and consider whether the current level of fees being awarded by the Taxing Master are reasonable. It would also consider the necessity for the extensive use of barristers in personal injury actions.

Awards should fully compensate claimants for injuries and losses sustained as a result of accidents. It is also necessary to ensure that the level of award takes into account similar awards in other jurisdictions as well as previous such awards in Ireland. A book of quantum should initially be published in draft form to allow various interested parties, including representatives of victims, to make submissions. I repeat that the PIAB should be obliged to use this book of quantum, as should judges when adjudicating on awards in court.

Sections 13 and 14 appear to be unnecessarily clumsy. As it is accepted that only claims where liability is not an issue will be brought to the PIAB, a mechanism should be put in place to require a claimant to have the agreement of the respondent before going through the process of lodging a claim. One of my major concerns about the PIAB and the operation of same is vulnerable claimants. For various reasons people may not be in a position to represent their case fully and with clarity and may suffer as a result.

The PIAB may give rise to a unique situation. On the one hand will be the respondent who in most cases will be an insurance company with unlimited resources and access to both legal and medical professionals. On the other hand will be the claimant who will not be reimbursed financially if he or she employs legal professionals. On the face of it the claimant is at a disadvantage, especially if one factors into the equation that some people may have difficulty in putting together the basic paperwork for a claim. Section 29 purports to deal with this issue, but further safeguards need to be put in place to ensure that the board has a duty of care towards vulnerable parties and to ensure that claimants get their fair entitlements.

Attention will be given to fraudulent claims in the forthcoming civil liability and courts Bill. I urge the Minister to move forward quickly with this legislation as the issue of fraudulent or false claims has been identified as a contributory factor to the high cost of insurance. The causes of the high cost of insurance have been adequately highlighted and identified. The Government needs to bring forward proposals as quickly as possible to deal with the matter. Assuming all the issues will be dealt with as a matter of urgency, a monitoring committee needs to be put in place to carry out an annual review of the insurance market to ensure that benefits arising from reforms are passed on to the consumer. The insurance industry has traditionally been both secretive and unco-operative. In principle, I support the Bill. I look forward to Committee Stage when the outstanding issues can be addressed.

Mr. B. Smith

I wish to share time with Deputy O'Flynn.

Acting Chairman (Mr. Carey)

Is that agreed? Agreed.

Mr. B. Smith

I am glad to make a short contribution on this important legislation. It is one of the most significant items of legislation we have had in the House for some time. I compliment the Minister for Enterprise, Trade and Employment, Deputy Harney, the Minister of State at that Department, Deputy Fahey, and their officials for the preparatory work on the legislation. I can well imagine that many major issues had to be dealt with in the drafting of this Bill.

The legislation before the House makes provisions which will place the Personal Injuries Assessment Board on a statutory footing. It is a fundamental aspect of the insurance reform programme the Government is implementing. The Members of this House and the public wish to see that genuine claimants receive fair compensation which is adjudicated on and paid out in a speedier manner than has been the case previously. Everyone wishes to see a reduction in costs which benefits consumers and businesses. One of the major problems for society in recent years has been the continuing increase in insurance costs. Every Member agrees that compensation claims must be assessed fairly and efficiently at minimum cost.

It is horrific to discover that it takes six times longer to begin negotiations on claims in this country than it does in Britain. Similarly, litigation costs add an average of more than 40% to the cost of compensation. Those statistics are stark. They paint a picture of an insurance system which has been out of control for a number of years. Individuals, businesses and society suffer from the consequences of an insurance regime which is out of control. Central and local government have been defrauded on many occasions over the years. Compensation claims have been awarded against them which were totally out of step with reality. I hope the introduction of this legislation goes a long way to ensuring that the process is rectified and pay outs of this sort are put behind us. I emphasise that genuine claimants must have their claims assessed and adjudicated upon in as speedy a manner as possible at minimum cost.

During the general election campaign of April and May 2002, one of the major issues brought to the attention of politicians was the cost of insurance. It is particularly noticeable in rural areas where young people face huge motor insurance costs. As I canvassed, I met many people who provided me with details of exorbitant quotations for motor vehicle insurance. Those quotations denied people the opportunity to insure a vehicle and to take up employment at locations to which they needed a car to travel. I heard a person in the insurance industry recently compliment Quinn Direct, a major company in my county. Quinn Direct recently placed a full page advertisement in the national press in which was presented a scale of insurance costs for a young person at ages 18 to 25 with a one-year, no claims bonus. I understand from people working in the industry that this is the first time any company has provided information to young people who have been treated scandalously by other insurance firms. I compliment Quinn Direct on its innovative approach and on its initiative to ensure that young people can find motor vehicle insurance at a reasonable cost.

We can look forward to important legislation which the Minister for Justice, Equality and Law Reform, Deputy McDowell, is to introduce. He is preparing a civil liability and courts Bill which will include a number of measures with which to tackle fraudulent and exaggerated claims within the courts system. The Bill will represent an important and welcome legislative measure which will assist in the reform of the insurance industry.

I take this opportunity to compliment the former Minister of State at the Department of Enterprise, Trade and Employment, Deputy Treacy, who established the Motor Insurance Advisory Board. The remit of the board was to advise the Government about the structures and reforms needed to tackle the escalation in insurance costs. The Minister for Enterprise, Trade and Employment showed great foresight and wisdom in appointing Ms Dorothea Dowling as chairman of the board. Any Member who had the opportunity to listen to Ms Dowling speak about the need for insurance reform and her determination to ensure that the reform came about as quickly as possible, could only be impressed by her interest, knowledge and commitment to the insurance reform programme. In appointing Ms Dowling to chair the new board Deputy Harney has made another wise decision.

In establishing the boards which will act in an advisory capacity to the Personal Injuries Assessment Board, I hope the Minister ensures that all interests are represented including consumers. It amazes me that insurance companies got away with murder in the aftermath of 11 September 2001 when they jacked up insurance costs beyond all comprehension. Insurance costs affect every sector of the economy. Escalating insurance costs have led to job losses. Every public representative has met individuals from small and large businesses who have spoken of their absolute frustration when seeking a reasonable insurance quotation. We have all dealt with companies who could not even find a quotation, never mind insurance cover at a reasonable cost. I hope the insurance reform programme ensures that those days are behind us.

The huge increase in the cost of insurance to schools has come to our attention in recent months. This must be addressed. Insurance companies must be asked why insurance premia were jacked up so much in the Irish market after 11 September 2001 when they did not rise to the same extent in the United States of America or other major economies. If our economy is to remain competitive, we must have a competitive and fair insurance regime. Even if its cost is reasonable, insurance is still a significant expense for any company. In a few short years, there was a 300% increase in public liability premia which was unwarranted and uncalled for. Insurance companies, especially the larger ones which had the entire market at their feet due to lack of competition, were in a position to charge whatever they wanted.

This legislation will ensure that the legal profession is, to some extent, brought to heel. There is no doubt that solicitors and barristers have creamed off money. Exorbitant fees have been charged by professional solicitors, barristers, doctors and engineers. The fees charged by various professionals in particular cases were often in excess of the awards made to genuine claimants. I look forward to the continuation of urgently required insurance reform by the Minister for Enterprise, Trade and Employment, the Minister of State, Deputy Fahey and their officials.

Mr. O'Flynn

I commend the Minister of State, Deputy Fahey, and the Minister for Enterprise, Trade and Employment for their initiative in bringing forward this Bill. At the Fianna Fáil parliamentary party conference in Sligo, the cost of insurance topped the agenda. The Government is now passing legislation to give effect to new laws on claims and compensation which I welcome. The topic of the prohibitive cost of all types of insurance is raised in everyday conversation all over the country. There is a common belief among motorists, particularly young drivers, employers, sporting clubs, house owners and any person or group that pays insurance, that they pay far too much for cover. There is a common perception that one is dealing with a monopoly that ensures one is always quoted the same terms. No matter where one shops around, one does not really have a choice. The Competition Authority is to assess whether there are anti-competitive practices and whether price increases across sectors are in line with international trends.

For years insurance bodies have been telling their customers about their losses to which they have attributed their high quotations. Given that they recorded massive profits in 2002, the public expects a drop in rates in line with the logic being used by the companies involved – we are losing money, the public must pay more. The public expects to reap the benefit as it sees the insurance business prosper.

The price of insurance is one of the main costs facing consumers and business. Many factors have a negative effect on insurance and we have a compensation culture that encourages litigation for personal injury damages. Litigation costs are estimated to increase insurance costs by more than one third. In addition, the legal system is far too expensive. Rising premiums have a bad economic effect on business and jobs. Commercial liability insurance costs an estimated €2 billion annually.

Under forthcoming legislation, people who make false claims could face perjury charges and the prospect of fines and imprisonment. Claimants must lodge a letter of notice within eight weeks of the alleged incident occurring or face possible liability for legal costs. I welcome the fact those who refuse to take part in a mediation conference could be liable for costs. Those measures will mean that insurance firms pursue false claims more vigorously. Insurers will now have incentives in that if a small part of the claim is not being made in good faith, the whole claim is invalidated. The new measures should be of major benefit to the insured, particularly younger drivers who pay such astronomical premiums. Perhaps the Minister of State will tell us whether insurance companies will be obliged to admit liability at the scene of accidents if their insured driver is responsible or whether they will face perjury charges if they do not contest the claims subsequently at the PIAB.

I have some reservations about the Bill, as drafted. I have received numerous representations from constituents, including professional people such as lawyers, solicitors, doctors and engineers, who have expressed concerns about aspects of the Bill. I raised them with the Minister of State at the Fianna Fáil parliamentary party meeting the other night. I cannot tell the House exactly what I said because I might be brought in before the Taoiseach or the chairman of the party.

Mr. Crawford

The Deputy is used to that.

Mr. O'Flynn

I ask the Minister of State to consider these concerns on Committee and Report Stages.

There is an imbalance in the position of the claimant in relation to that of the respondent, the insurance company. How will claimants be able to deal with such an unfamiliar ordeal as assembling professional documents and putting forward their case without professional help? By professional help, I mean solicitors, doctors and engineers to help them assemble a proper case so it can be presented to the PIAB.

The Government's implementation group suggested that where legal representation is not provided for, there could be a de facto inequality between the claimant and the insurance company. I agree with that because the insurance company will have a professional team available to it to assemble its response to a claim which, of course, will be at the expense of the policy holder. No legal representation will be allowed and while I do not have a difficulty with that, a scale of fees should be available to people. For example, an old lady who is knocked down by a car but who does not have a professional person to advise her nor the resources to get one, should be able to get professional help. There should be a scale of fees which would allow an old lady who is knocked down to present her case to the PIAB in a professional manner and which would enable her, the injured party, to get the best possible result.

We have ignored the findings of the Government's PIAB implementation group. Mr. Frank Cunneen of the Health and Safety Authority chaired this group and stated that considerations of natural justice and the legitimate expectations of all participants in the process argue for the making of some provisions for the recovery of legal fees. Despite this recommendation, the Bill does not make provision for legal representation at document level, unless the claimant pays for it. The Bill appears to indicate that the claimant must discharge out of his or her own pocket the cost of all medical and other reports submitted to the board to support his or her claim. The Bill proposes that the board may, at its discretion, reimburse the costs of these reports but only in exceptional circumstances. These reports cost on average €250 each and are generally funded by the solicitor under the present system. The effect of this proposal could disadvantage innocent victims of accidents, some of whom will not have the funds to pay for reports that would ensure their claims are properly presented.

The Bill is supposedly aimed at the general cost and the overall efficiency of the system. While there are legitimate areas of concern, any publicly funded system should not be made cheaper or be made to appear more efficient by curtailing the rights of those using it. A constitutional right to fair procedures is well established. If the documents submitted by a claimant are made available to the respondent at the discretion of the board, then the respondent will have been allowed to force the claimant to lay all his or her cards on the table. In this situation, the respondent, the insurance company, reserves its own position. The absence of legal representation will hinder the proper preparation and submission of the claims to the board in the first instance. Claimants will require professional assistance in putting a claim together. For example, if one was building a house, one would seek the assistance of an engineer or an architect as one could not build it one's self unless one was a professional. The formulation of these claims is difficult enough, even in simple cases. I repeat that scale of fees should be available for those preparing their claims, otherwise I see a professional claims body or person, who will assist people in assembling, submitting and presenting claims, springing up in the future. I forecast a whole new industry growing out of this.

Matters become more complicated if there is a difficult medical situation. This could arise where the claimant is no longer able to work as a result of an accident or is forced to work at a reduced capacity. There would then be a need to formulate a claim for future loss of earnings. Who will investigate this? Will it be the board? The Bill confers particular strategic advantages on the respondent, the insurance company. A respondent which intends to defend the issue of liability can still argue about a matter going before the board even if it has no intention of accepting the board's assessment. By letting the claim proceed before the board, the respondent will be able to flush out the compensation aspect of the claim in a forum in which the claimant will not have the resources to present a case effectively. The respondent will know the figures assessed by the board and will be given free rein to attack the compensation aspects of the claim.

I make these comments because I fear claimants may reject unfair offers to satisfy their claims and take their cases to court anyway because of low pay outs to claims and further clog up the court system. I do not have a vested interest in this matter. I want to see cheaper insurance policies and an end to fraud but I also want fair play for genuine claimants in a "documents only" process. I urge the Minister of State to consider my views and concerns, including a scale of fees for the preparation of documents for genuine claimants. The Bill, as it stands, is tilted in favour of the respondent, the insurance company. That does not provide a fair procedure for claimants and will operate to the benefit of insurance companies.

Mr. Crawford

I wish to share time with Deputies Hayes and Perry.

Acting Chairman

Is that agreed? Agreed.

Mr. Crawford

I want to declare my interest, small as it is – I am an original shareholder of FBD and was involved in the setting up of that farmer-owned company. I am proud it is a successful company and is doing a first-class job. I am unhappy with the amount of money I have to pay for my insurance at present and make no apology for letting the company know that.

It is important that this Bill is passed but it is equally important that we have competition in the system. I put a question to the Minister this week on the matter and am glad she said her Department and the Competition Authority are undertaking a study into the insurance market which will identify and analyse barriers to entry and limitations on competition in the market. That element is part of the problem of high cost insurance.

Recently a local school pleaded with me on account of it having to spend €27,000 for insurance this year. Because it is independently run, unlike a VEC school, it must pay that bill from its own resources. A playground in Glaslough which must meet an insurance bill of €10,000 will almost certainly be closed unless someone takes it over. A small business I know of faces a bill of €17,000. These examples have come to my attention in the past week.

Some people claim insurance costs have gone down. Insurance for some motorists has gone down and I welcome that. While it may seem the Government has only been in power for 18 months, the Minister with responsibility for this issue, the Tánaiste, has been in power for seven and a half years. The issue did not arise yesterday. We need to ensure full action is taken on the matter.

My colleague, Deputy Richard Bruton, recently visited four factories in my constituency with me and met the local chamber of commerce. The principal issue that arose during his visit, apart from the lack of job creation, was insurance. I was glad to hear my colleague from Cavan-Monaghan, Deputy Brendan Smith, make the point about 11 September. It was important that somebody on the Government benches should make that point. I agree that insurance companies got away with murder after 11 September. Who let them away with it? It is clear that they did not get away with murder in the United States or the rest of Europe. We sat back and allowed it to happen.

I welcome this Bill and hope it will do something to resolve the problem. I also welcome the promise made by the Minister for Justice, Equality and Law Reform to bring in a Bill to deal with fraudulent claims which will make it easier to handle that problem. These claims have created unnecessary costs for insurance companies.

The Minister must take responsibility for the insurance problem but she is only taking responsibility in a narrow field. In her statement she says that the PIAB will not deal with cases involving medical negligence. Medical negligence is one of our more serious problems. If we continue to have 40%, 50% or 70% legal charges for medical negligence compensation insurance, our problems will continue. In my local hospital in Monaghan the maternity unit was closed down, supposedly because of medical claims.

I concur with Deputy O'Flynn's remarks about who prepares a claim. A short time ago I spoke to a Minister about a grant I hoped a group would get but the Minister claimed the wording was slightly wrong and said it would have been better if the form had been filled in properly. If an old lady has an accident, who fills in the form for her or who pays for her personal medical expenses? These issues must be dealt with in the Bill before it passes through the House and I am glad the issue was raised by a Member from the Government benches.

In the Minister's statement she says that section 46 permits the board to make rules which will be set down in regulation. We need to know what those rules are before the Bill is sanctioned. It is unfair to be asked to sign a blank cheque. It is often the small print that causes a problem.

Mr. Hayes

I am delighted to have the opportunity to speak on this important Bill. High insurance costs have been the bane of consumer and business life in Ireland since 1999. In that period we have seen premiums for motor, household and all forms of liability insurance rise to an exorbitant level. I have heard at first hand harrowing testimony from business people who have had to curtail their business plans or cease trading as a direct result of high insurance costs.

I know of one case where insurance rose from £3,000 in 1999 to a quote this year of €29,000. I know of a small hotel which had to close its doors because of the huge cost of insurance. Examples can be found throughout the industry. It has been suggested that some premiums have increased by 100% per annum for each of the four years since 1999. This is a shocking level of increase for any business to sustain and is particularly galling for a business that has never made a claim. This is a worrying aspect of the issue.

The high cost of motor and household insurance is a serious imposition on consumers. Major increases in the cost of living and the rising level of taxes add further costs to the exorbitant premiums faced by motorists and householders. Premiums have recently started to reduce even without the enactment of the reforms in this Bill. However, the levels of reduction and the inability of insurance companies to commit to specific levels of reduction is a concern. I was pleased to see the cost of car insurance reduce recently, be it by a small amount, particularly for younger drivers.

Members of this House need to send a strong message to the insurance industry that we expect clear examples of the reforms being brought forward in this Bill. We demand that the insurance industry delivers cheaper insurance and does not try to fudge the passing on of reductions to consumers and businesses. I hope the Minister and the Minister of State, Deputy Fahey, have received bankable guarantees from the insurance industry and the insurance federation that they will deliver cheaper insurance. Unfortunately, the insurance industry has previously failed to pass on savings that resulted from reforms passed by the Oireachtas. Measures that were supposed to remedy the problem of high insurance costs were passed by the Oireachtas in the past. I refer, for example, to the abolition of juries in most civil cases and the removal of the two senior counsel rule. The levels of insurance costs remain high, however.

I recognise the role this Bill should play in reducing insurance costs. It should reduce the cost of delivering compensation to those involved in accidents. I do not doubt that the litigation system has been costly, particularly in cases in which liability is not an issue between the parties. We could all cite the cases of friends or constituents who had to go to court to seek compensation after being injured in accidents. While there have been cases of lawyers milking the system to maximum benefit from a cost perspective, it is true that insurance companies have been slow to concede liability and to negotiate settlements. I hope that insurers will adopt a constructive approach to this Bill. They should not seek to test the water in PIAB cases and then decide to fight the cases in court.

I do not doubt that all Members are keen to ensure that insurance costs are reduced. That was certainly my intention in contributing to this debate. Regardless of whether one is a motorist or a businessman, one would like to have lower insurance. No issue has been the subject of such concern on the part of constituents throughout the country. People want cheaper insurance. I am prepared to give this Bill a chance. Its success will be judged on its ability to deliver cheaper insurance.

Mr. Perry

I thank Deputy Hayes for sharing his time with me. I am delighted to speak on the Personal Injuries Assessment Board Bill 2003 because high insurance costs are a problem for businesses and consumers throughout the country. All businesses have seen rapid increases in employers' liability, public liability and motor insurance. There are many reasons for these increases. They are partly due to our culture of compensation, but they may also be due to the inefficiency of the court system's delivery of compensation to plaintiffs. This Bill sets out to address the latter problem.

When a person takes out an insurance policy, one often gets the impression that he or she abdicates all his or her rights to the insurance company. This frequently means that the insurance company can do what it likes about the claim, regardless of the policy holder's perspective. I suspect that this phenomenon is part of the reason problems have arisen in this area. I do not doubt that thousands of indignant policy holders throughout the country, who have been involved in accidents, are frustrated beyond belief at the unwillingness of insurance companies to defend actions. Insurance companies sometimes will not settle a case that should be settled until it reaches the door of the courts. While some opportunistic lawyers may be to blame for the problems that have arisen in litigation and costs, there is no doubt that insurance companies have some element of culpability because of their tardy management of cases.

I am always concerned when new State bodies are touted as solutions to complex problems. The establishment of the PIAB is not an exception in this regard. State authorities and quangos which have been established in the past ten years have absorbed considerable amounts of public money. It was hoped that such bodies would improve the lot of consumers and businesses but, with very few exceptions, they have failed to deliver. The Competition Authority has not brought about more competition for consumers, the work of the Commission for Energy Regulation has not resulted in cheaper electricity or better choice for consumers and the Commission for Communications Regulation has not been able to achieve any great benefits for consumers. The recent publication of the profits of two mobile telephone companies bears out the latter point.

I earnestly hope that the PIAB will not become just another quango. We do not need another layer of bureaucracy because the country is being choked with such bodies at present. Not only is it important that the PIAB set realistic and achievable targets, but it should also be able to deliver on its objectives.

I share the concerns expressed earlier by some of my colleagues, as well as Members from other parties, about the absence of entitlement to representation in one's dealings with the PIAB. While I appreciate that the PIAB will not have oral hearings, one should be able to instruct a solicitor to act on one's behalf, as long as one is prepared to pay the cost of such representation.

There have been many references to fraudulent claims and their impact on insurance prices. Perhaps the most worrying claim made in recent weeks has been that the PIAB will deal only with those cases in which liability is not an issue. Contributions to the Seanad debate on this matter, as well as to this debate earlier today, suggest that the PIAB will deal with cases where liability is not at issue for as long as the insurance company decides liability is not at issue. Most right-thinking and fair-minded people would be appalled to hear that insurance companies can force claimants to go to the PIAB and then disregard the assessment reached by the PIAB if they feel the amount is too much.

I hope the Minister will examine this aspect of the legislation. It is patently unfair that claimants will be placed at a considerable disadvantage. They may be subjected to delays of up to 15 months before their cases get under way in earnest. The Minister cannot allow the possibility of such a serious injustice to be part of the new regime. I suspect that the new regime will fail if she does not make changes in this regard. If it does not flounder on the rocks of constitutional lawyers, it will flounder on the lack of acceptance of the board by the public. This would be a major problem from the start.

The Minister needs to do very little to this Bill to secure all-party support for it. It is wrong that she is trying to ram through this legislation. She seems to regard the Dáil as a mere clearing house for the recommendations of the interim PIAB. Genuine and serious concerns have been expressed about issues of representation and liability. The concerns, which extend beyond the vested interests of any particular sector, are genuine. When assessed from the perspective of a legislator, it is obvious that amendments are needed and I hope the Minister will provide for this on Committee Stage.

The Minister should place severe and unrelenting pressure on the insurance industry to deliver reductions in premiums to consumers. I hope insurers manage to secure reductions in the cost of compensation, but it would be appalling if such reductions find their way into the profits of large insurance companies. Consumers will not tolerate such actions in respect of this matter of concern. I hope the Minister will take these points into account on Committee Stage. As Chairman of the Committee of Public Accounts, I intend to maintain a firm hold on the PIAB to ensure that it is effective. It should not be another layer of bureaucracy to block up the system. I will be unrelenting in the pursuit of this objective.

I welcome this Bill, but I am concerned that a claimant should have the right to be represented by a solicitor at an initial hearing. The argument in favour of such a right must be listened to. I know there is a perception that the system is fuelled by lawyers' costs. If there is a possibility that a claim can be thrown out, the claimant should have the right to be represented by a solicitor at an initial hearing as long as he or she is willing to pay for the privilege.

Previous speakers mentioned the bottom line of insurance companies and the lack of competition in the trade, which is unfair. Although it is an open market, the culture of compensation which has taken a foothold in this economy means that high levels of costs are associated with small companies. There is a need for traceability and accountability. I do not know how insurance companies can justify increasing their premiums by 100% or 200%. The Consumers Association of Ireland should bring insurers to task, for example, by asking them how they can justify increasing the insurance costs of those who have not made additional claims. It is true that certain claims can be without foundation. Although the points system is effective, it is important that we do not establish a quango that will not have effective powers.

I hope that the points I have raised in this contribution regarding lawyers' representations at the initial stages where the client will bear the cost of the initial appearance fee will be taken on board.

Mr. Nolan

I wish to share my time with Deputy Dempsey.

Acting Chairman

Is that agreed? Agreed.

Mr. Nolan

I welcome the opportunity to speak on this legislation. If one were to see a negative side to it, it is that it has taken so long to come before the House. The Government is to be commended on what it has done in the insurance industry. It is possibly another milestone in the reform of the insurance industry.

Every Member of the House is well aware of the problems encountered by industry, the commercial sector and individuals through the high cost of insurance, over the past five years in particular. Motorists have seen their premia go through the roof in that time. Householders find it increasingly difficult to secure competitive rates to insure their homes, and employers have, over the past three years, in my experience at least, found it increasingly difficult even to get companies to give them a quote for public and employers' liability.

Comment has been made about insurance companies running some kind of closed shop. In fairness to them, they work in a difficult climate in this country. If it were that easy for insurance companies to operate profitably in Ireland, there would be far more of them here. I am a member of the Joint Committee on Enterprise and Small Business. Over the past four months, we have investigated the insurance industry. The number of submissions we have received from insurance companies is amazing. When those individuals attended – very willingly, I might add – to make presentations to the committee and were asked why there is not more competition in the Irish insurance industry, they said that, as soon as international companies heard that they were interested in getting involved in the Irish insurance industry, they simply walked away. They were not interested because of our history of fraudulent and exaggerated claims. One hopes that, with the change in legislation and the new improvements that various Ministers have made, including the Tánaiste, who is to be commended on bringing this legislation forward, the Minister for Transport, who introduced penalty points, as well as the co-ordinated action of the Government, we will now see that international companies are considering Ireland as a place where they can do business.

The establishment of the PIAB is one of the central aspects of the Government's insurance reform programme. It will arrange for speedier compensation to genuine claimants while reducing the cost of insurance to customers and business. It will bring new competition to the Irish insurance market, and one hopes that it will be reflected in our having more competitive insurance quotations for the public. One central theme in this debate is that, where claimants are genuine, they should be assured that their claims will not be affected by the introduction of this legislation. I know that the Minister made that point in his opening address. They need the comfort of knowing that the legislation is not aimed at them or at cutting their compensation claims. It is hoped that it will make for a climate where claims can be processed more speedily and the cost of litigation cut.

One interesting statistic which has come out in this debate is that the cost of litigation in the UK is around 4% to 7% for most claims, while here it is up to 40%. If one wished to see evidence of that, all one would have to do would be look back on the past three to four years at what I can only call the scandal of the Army deafness claims. It will cost this State around €300 million to pay out those claims, yet the cost of litigation payments to the solicitors and barristers involved is almost one third –€100 million. That is a disgrace, and I do not see how the umbrella body for the legal profession can try to justify the inordinate fees claimed by several solicitors and barristers, and it has done so.

It does no credit to the legal profession that its members are allowed to do that. They can justify it by saying that those fees were agreed beforehand with the Office of the Attorney General, but morally they stand indicted for the practice whereby claims coming from individuals go to a clerk-typist. All that she does is change the name and address on it and send it in to the Department. She gets paid full fees on that. It is a disgrace, and I have said that to the legal profession itself. We in this House must sometimes suffer the slings and arrows aimed at the misdeeds of some of our colleagues. Legal professionals should also examine some of the actions of their colleagues and the manner in which they carry out their public functions.

As I said, the PIAB is a welcome development. One hopes that it will be in place by early next year so that claimants can see genuine reductions in legal costs. One aspect to it is that, when the Tánaiste introduced this legislation, the immediate reaction from the Bar Council and the solicitors' governing body was to pick holes in it. In doing so, I hope that they are responsible enough not to delay the legislation's passage onto the Statute Book by taking Supreme Court actions on the basis of its constitutionality. Some of the comments certainly kept that option open, and it would be unfair if the profession took such an attitude.

I notice that the Tánaiste is confident that the Personal Injuries Assessment Board will face no constitutional difficulties, and I hope she is correct. I presume she has had discussions with the legal profession and sought its assurances in that regard. If she has not, I hope she will do so. She is confident that the PIAB will be operational by early next year and will drive down the cost of insurance so that we can see it reduced significantly by next spring. The Tánaiste kept her promise – a Government commitment given some time ago – to tackle the high cost of insurance in this country.

The Personal Injuries Assessment Board will make awards regarding claims where legal issues are not disputed. It must be pointed out that there is no dispute where the PIAB issues findings. All such cases must first be referred to the PIAB. In contrast to the current adversarial system with legal teams on each side, the PIAB assessors will seek to ascertain the facts and make awards on that basis.

Claimants in Ireland must wait six months longer than in the UK. That is not acceptable. I see no reason for claimants here to have to wait so long for their claims to be negotiated and for the commencement of litigation in this area. We need an alternative to the courts system to process our cases. In the presentations made to the Joint Committee on Enterprise and Small Business, all the insurance companies bar one referred to the inordinate cost of litigation. They are confident that, if this legislation is passed – and I hope that we have the support of all sides of the House in our efforts to put it on the Statute Book – we will see genuine reductions in the cost of insurance to everyone. When we reflect back on this time next year, we will see the benefits of this legislation. Through this and the penalty points system, introduced by the Minister for Transport, we will see the number of claims reduced and consequent reduction in the cost of premiums to motorists and citizens in general.

Mr. T. Dempsey

Gabhaim buíochas leis an Teachta Ó Nualláin as ucht a chuid ama a roinnt liom. Tá áthas orm labhairt go gairid faoi chúrsaí costais agus árachais. Le linn an olltoghcháin, ní raibh aon rud ba mhó a bhí ar theanga an gnáth duine ná cé chomh ard agus costasach agus a bhí árachas. Tá sé thar a bheith in am dúinn mar pholaiteoirí rud éigin a dhéanamh chun na faidhbe sin a shárú.

It is beyond time that we addressed the escalating costs of insurance. Some time ago, when its representatives visited the Oireachtas Joint Committee on Enterprise and Small Business, the Irish Hotels Federation told us that the cost of insuring members' premises had increased by between 350% and 400% in three years. The Government must shout "Stop" and address this problem and I congratulate the Tánaiste and the Minister of State, Deputy Fahey, on doing so.

The Personal Injuries Assessment Board and the Bill which will give it statutory effect is the beginning of that shout to stop. Many Deputies have said it would be a huge mistake to regard the PIAB as a panacea for the ills of the insurance industry. It would be a monumental error because insurance and the problems it presents for Irish industry depends on the interplay of many different bodies. The PIAB will provide a focus and a beginning to the process.

It will require that employers and employees address issues of health and safety in the workplace in order to eliminate the huge number of avoidable accidents which occur each year. Some time ago a slogan stated, "Accidents do not happen – they are caused". The public too must realise that the compensation culture in which we have all indulged is not a free dinner. It is the public who pays the price by way of escalating premium costs.

The functioning of the Civil Liability and Courts Bill will have a huge role, as will the Competition Authority. I am a member of the Committee on Enterprise and Small Business and I cannot understand how an industry which made €183 million last year does not have people knocking on the door to come into the Irish market. No one has been able to explain that. Normally, if an industry is making that kind of profit, companies would be bidding to come in. Foreign companies do not want to come into the market and those which have subsidiaries here are happy enough. We do not have too many Irish-based companies. The Competition Authority has a role to play in this regard.

As a member of the enterprise committee, I discovered that some companies do not insure hotels. When I took a taxi to Leinster House the other day, I discovered that a company, which I happened to be lauding at the time, does not insure taxis. The players in the market do not even compete with each other for certain business.

The Minister for Transport, Deputy Brennan, also has an important role and has played it well to date. The professional bodies have a role too because the costs of the legal and medical input into claims and awards is excessive, in comparison to other countries.

The PIAB will hopefully bring a new approach to settling claims and will eliminate the need for legal input where legal matters are not in dispute, which seems eminently sensible. One can play 15 players on a football team, but one cannot play 16. It is the same in this case – if the legal people are not needed and facts are not disputed, they should not be there. That is what this is about.

Insurance costs are the second highest costs to Irish industry. A Fine Gael Deputy spoke about businesses throwing in the towel because they could not afford the insurance. What is worse is that some companies are operating without insurance and others are in the business of self-insurance.

One of the big problems with the awards system is the slowness with which awards are made. The process is six times slower than in the UK and it must be expedited. The Bill giving statutory effect to the PIAB will help to do just this.

The PIAB can eliminate huge legal costs and offer a more balanced assessment of damages by paying due respect to the book of quantum which will inform the board in helping to reach negotiated settlements. No one in this House wants people who are genuinely injured not to be properly compensated. However, we must direct the compensation towards the victim of the accident rather than the various practitioners who play a role in the current set up.

The fact that the Government has focused on the problems with insurance and that the committee has focused on it as a target to be addressed has already led to a number of important new developments which are crucial to industry and to citizens. Every family is affected by the cost of insurance. Those of us who have teenagers find we cannot get motor insurance for them and even sons and daughters who are 27 or 28 years of age are unable to pay premiums. I was glad to hear that one insurance company brought down the cost of hotel insurance by 28% and another has reduced the cost of motor insurance by 10% to 12%.

Only yesterday, I saw in one of the newspapers that there has been a striking decline in the number of cases going to the High Court. This is not accidental. Rather, it is because we have created a consciousness in regard to the challenge of insurance costs. The Irish Insurance Federation campaign to follow up and root out fraudulent claims has also led to that reduction. As the Irish phrase states –"Tús maith, leath na h-oibre"– a good beginning is half the work. We have made a good beginning by focusing on what the cost of insurance really means, namely, the loss of jobs, the impossibility of insuring a young man who wants to drive to his workplace and so on. If the beginning has been good, let us make sure the Bill is passed and the PIAB functions in the desired manner and premiums become affordable.

Mr. Ring

I wish to share my time with Deputy Connaughton.

An Leas-Cheann Comhairle

Is that agreed? Agreed.

Mr. Ring

Everyone wants to see cheaper insurance and I do not want to give the impression that every insurance claim is fraudulent. People who are injured and have to make a claim to an insurance company should not feel guilty. It is bad enough being injured, possibly so badly that one may not be right for the rest of one's life, without people thinking that, because one goes to court, one is wrong. If a person is injured in a car accident, a work accident, a football or hurling accident, he or she has a right to claim if there is insurance to claim from.

Some people made claims because they received advice that they should do so. They were told it was worth a try, that they had nothing to lose. That attitude is unacceptable and should not be supported.

I am not a particular supporter of the legal profession. However, it has a point in respect of the Bill. I am concerned that people will not be able to be represented by their solicitors.

Mr. Fahey

I thought the Deputy was the small man's man.

Mr. Ring

I will deal with that in a moment.

I wish to provide some examples in support of my argument. We were informed that when the electricity regulator came into office we would have cheaper electricity. In the past 12 months the cost of electricity has risen by over 17%. The regulator allowed the price to rise on three occasions in that period. We were also informed that when the telecommunications regulator took office we would pay less for our calls. What has happened? Two of the mobile phone companies operating here are robbing people. These companies impose the highest charges for calls in Europe. The regulator failed in this regard.

What I do not want to happen on foot of the Bill is that instead of money being paid to solicitors, engineers and assessors, it will be given to the board. I do not want people sitting in an office somewhere in Dublin to be given the money relating to insurance claims and previously paid to solicitors and others. I hope that does not happen.

I want the Personal Injuries Assessment Board to work. People cannot afford to pay the kind of insurance premiums they have been obliged to pay in the past three to four years. A friend of mine in north Mayo who had been with an insurance company for over 15 years was informed two years ago that it was going to consider whether it would assess him or retain his business. He had made no claims but he was involved in a high risk business. He eventually obtained insurance from another company but over a period of weeks he lost half a stone in weight because he was concerned that the would have to give up his business or try to operate without insurance, something his legal adviser counselled against.

I am concerned about the making of claims in written form. There are people who will need help and support in this regard because they will not be able to complete forms. As practising politicians, we are faced each day in our constituency offices with those who cannot fill out forms. I would not like people who would be entitled to make claims failing to do so because they could not get assistance in filling out these complicated forms. I hope these people can be given the help they need.

Another profession has created problems for the insurance industry and people are afraid to criticise it. I refer to the medical profession, which has an important role to play in respect of claims. Nine times out of ten it is the medical report which decides a claim. Like certain people in politics or the legal profession, I am sure there are those in the medical profession who do not take their responsibilities seriously and who do not complete forms in the way they should. Careful consideration must be given to this matter. As with other professions, there are very many good people involved but there are also some bad apples.

People have always been of the opinion that insurance companies are soft touches. Such companies must take much of the blame for this. I am aware of a traffic accident involving a person riding a bicycle with no light. The individual was prosecuted in the courts and lost the case but the insurance company paid out almost €50,000 in settlement of the claim because it was not prepared to fight the case in court. Insurance companies have a lot to answer for because they do not contest enough cases. They contest larger cases which involve major sums of money. However, they should have taken on those involved in cases relating to smaller claims and sent out a message similar to that being sent out by the Oireachtas, the business sector and everybody else that enough is enough. People can no longer afford to pay the kind of charges being imposed by insurance companies and those companies should no longer support people who make claims that are not justified.

People are beginning to realise that while they may defraud their insurance companies, everyone else will be obliged to foot the bill. It is somewhat similar to the social welfare system; if someone defrauds the State, there is less money for everyone else. The same applies to insurance companies.

I hope the Bill works. The Minister for Justice, Equality and Law Reform has promised to introduce further legislation to help reduce insurance costs. It is important, in terms of industry, businesses and job creation, that we send out the message that this country is not full of people who make claims against insurance companies. It is also important that from now on we monitor the activities of insurance companies in order to ensure that if there is a reduction in the number of claims, they will pass on the benefits to their customers.

We must ensure that those involved with the board are accountable to the House and that they will be in a position in a year's time to inform us whether the system has worked. If it has not worked, they must indicate what legislation will be required to make it work. I have no difficulty in supporting the Bill as long as the Personal Injuries Assessment Board operates on a trial basis for one year. However, I do not want what happened with the National Roads Authority and the various regulators to recur with this board. I refer to the fact that when one writes to the regulators in respect of problems, they reply that they do not have responsibility in a particular area and that further legislation is required.

If the Bill needs to be amended on Committee Stage so that the board will be given the powers it requires, so be it. We have to support people who are finding it difficult to obtain personal, motor or business insurance. A number of people have gone out of business in recent years because of insurance costs. One cannot operate a business without insurance.

I hope the Bill works. I hope the Minister, Deputy Harney, will put in place the necessary regulations which will allow people the opportunity to make their claims. However, I also hope that we are not making a mistake in respect of people not having legal representation. We do not want people stating a few years from now that their injuries were worse than first thought and that because they did not have legal representation they did not get the level of compensation they would otherwise have received. People can obtain advice, but they will not be paid for legal representation if they avail of it.

The Bill should not discriminate against the legal profession. Members of that profession are no different to the insurance assessors or engineers who make reports on claims. There is an old saying to the effect that, "We will add a few bob on to the cost because the insurance company is paying". Insurance companies do not pay, it is ordinary people who pay through their premiums. Insurance companies pay out on claims but it is their customers who pay the cost. The insurance companies will not foot the bill. As in the past, they will pass on the charges. Insurance companies want to make profits and there is nothing wrong with that. No business will remain in operation unless it can make a profit. Insurance companies want to obtain the best value for money and, like councils, they must remain within their budgets. For the Minister of State's sake and that of insurance companies and the country, I hope the legislation works.

Mr. Connaughton

I welcome the Bill which is a genuine effort to try to put right what has gone terribly wrong in terms of the insurance culture in this country. In itself, however, it will not make a huge difference.

What is needed is a system under which compensation will be paid in a speedier manner to genuine claimants. The insurance industry is beset by such a raft of problems and it is to its credit that the Government is at least trying to grapple with these. The Bill has no shortage of detractors, but they are all vested interests. We will have to wait to see how the legislation operates, but there are a number of fundamental things which could go wrong. I will deal with these later. However, the legal profession is bleating about this legislation and it is a significant vested interest. While I am not anti-legal eagle, no Government or electorate will put up with a system in which €40,000 must be added for legal fees to an average personal injury claim for €100,000. A mechanism such as the PIAB was inevitable and the legal profession has only got itself to blame.

These cases in the long-term will come down to a judgment call on the part of the claimant as he or she decides what is the best avenue to take in terms of pursuing his or her claim. Like most rational human beings, claimants will ask whether their best interests are served by going through the board or whether they should pursue their cases through the courts. I do not have great expertise in this area. If the board gets off to a reasonable start with claimants believing they are reasonably well looked after, their best interests are served and they do not have second thoughts about the process, there is a great chance the board will work. The results of the claims will be published and people will compare notes. If the news goes around that the PIAB is not as good to claimants financially as it might be, the Government will face a great deal of trouble. This is a significant danger. The benefit of the doubt on legislation such as this must be given to the Minister who is doing her best to address this issue.

The Minister of State will recall a sentiment expressed by Pat McDonagh, owner of the Supermacs chain and a significant employer. I cannot recall more people agreeing with a single sentiment than that expressed by him. He caught a fraudulent claimant on camera. An individual slipped deliberately so that he could pursue a claim. However, this phenomenon was widespread judging by the reaction to his statement.

Mr. Durkan

That is correct.

Mr. Connaughton

People who are genuinely injured have a right to be treated properly. However, those caught on the dodge are not dealt with harshly enough under the law. Their carry on is outrageous. Local authorities must pay professionals to act as private investigators in an effort to come to grips with this problem and, unfortunately, the compensation paid on fraudulent claims is significant.

My experience of dealing with insurance companies on behalf of constituents down the years is, if there is a way out in the small print of a policy, they will get out. I have witnessed cases where insurance companies were morally obliged to pay but, when it came down to it, they would not do so. I hope they will take extra responsibility when they avail of this process. It will be in their interests in terms of insurance rates to ensure the board works.

Unfortunately, I am aware of many businesses that do not have public liability insurance and that is dangerous. One must object to that because businesses are taking a chance and it is bad news for their employees and themselves if anything goes wrong. However, at the end of the day, the 500% leap in the cost of premia over the past four or five years is not sustainable. I know people who employed seven or eight workers in a high risk businesses and the only way they could afford insurance was to sack two workers. That was not good because the company had outlets for its products and was generating sales. It is difficult for company owners and even more difficult for those who lost their jobs.

I hope insurance companies understand that, if they get involved in this process, it is in their interest that it works. I hope there will be fewer costly claims in future, but the savings made should not be added to the bank balances of the insurance companies. Many people are suspicious that such companies looked upon the board as a positive development for them.

Claimants can decide to pursue their case through the board but, if they do, they are prevented from taking the legal route. Some will argue, as Deputy Ring stated, that they do not have the wherewithal to make a case to the board. What professional expertise will be available to make people feel secure when they appear before the board? The process is document-based. Will solicitors have to be employed to prepare the documents? I assume it is up to the claimant to decide which person he or she wants to do this. These are technical points but they are terribly important.

When the board comes into operation, I hope it will cover various types of insurance. I refer to motor insurance. A number of insurance companies have begun to see the light of day and they have reduced their premia but there is a long way to go.

Debate adjourned.