I wish to share time with Deputy Deenihan.
Personal Injuries Assessment Board Bill 2003 [ Seanad ] : Second Stage (Resumed).
Is that agreed? Agreed.
I welcome the opportunity to speak on the Bill. As previous speakers have stated, the question of insurance, which is a matter of concern to people throughout the country, needs to be dealt with urgently. The fact that insurance premiums have doubled in the past two years has given rise to serious difficulties, particularly for small businesses, self-employed people and car owners. Most Members have been approached in recent years by those who run small businesses and self-employed people who indicated that there had been significant increases in the cost of premia. They indicated that but for the costs associated with insurance they would have been able to expand their businesses. This is a major problem and it has proved difficult to solve. There is no doubt that fundamental change is needed in the industry and in terms of the cost of insurance.
The Bill is not a panacea for curing all the ills of the insurance industry or bringing about reductions in premia. We should not give the public the impression that it can achieve these things. It has been argued that 40% of the cost of claims relates to legal expenses and that, therefore, if we create a lawyer-free zone or remove legal involvement completely from claims, premia will be automatically reduced by up to 40%. That is not correct and we should not give the impression that it is correct. I am not stating that said impression is being given, but people might infer, from some Members' contributions, that there will be significant reductions in premia. There is no guarantee in the Bill that premia will be reduced. Representatives of the insurance industry who appeared before the Joint Committee on Enterprise and Small Business would not give a guarantee that premia would be reduced.
Insurance companies are interested in making profits for themselves and their shareholders. Despite a great deal of publicity to the contrary, they are quite profitable organisations and they made something of the order of €183 million in profits last year. They have been very good at using every avenue to ensure that the cost of premia are maintained at a high level and have used mechanisms such as loading, accounting devices and the smokescreen of the events of 11 September. The latter has been used by insurance companies to maintain or even increase the cost of premia.
One of the results of the enactment of this legislation will be higher premia. There is no doubt that any costs incurred by insurance companies in respect of the operation of the PIAB will be passed on to customers. In my view, the Bill contains an in-built increase in premia. In the 1980s, insurance companies carried out a campaign to have juries in compensation claim cases abolished and stated that there would be significant reductions in the cost of claims and premia as a result. This did not happen and the cost of claims doubled. In the interim, the costs of insurance premia have gone through the roof.
The Bill does nothing to change the position vis-à-visthe cost of car insurance for young drivers. We need to deal with this problem as a matter of urgency. Young drivers are incurring significant costs in terms of their car insurance. I am aware of one individual who was quoted €5,600 per annum for insurance and quotes of €2,500 to €3,000 are routine. In many areas there is little or no public transport but young people have to get to work. In Dublin alone, there are of the order of 80,000 people who drive to work each day. That issue will not be dealt with under this legislation.
There is also a perception that the legislation is a creature of the insurance companies and that every person who makes a claim is a fraudster. Claims are made that are not genuine and a number of high profile fraudulent claims have been taken. In addition, a number of individuals have made multiple claims against various public utilities, which have proven to be fraudulent. However, the vast majority of claimants are genuine and should be dealt with as such.
I welcome the legislation and I hope that, at least, it will ensure claims are dealt with expeditiously and awards are paid quickly. The Oireachtas Joint Committee on Enterprise and Small Business recommended that the board should be established immediately. A mechanism should be provided so that claims, which are not disputed in terms of liability, are processed quickly. The legislation offers the possibility that claimants will receive compensation due to them earlier than is the case currently.
Everybody accepts, in principle, that the 2% Government levy on insurance premia should be abolished and I urge the Minister to take that step and give a lead in terms of reducing insurance costs. Insurance companies derive significant profits in Ireland, much more, for instance, than they earn from their business in England and there should be leeway for reductions in premia costs.
Under the PIAB process, an insurance company or other respondent can say at the end of the process they do not accept the decision and they can return to the beginning and contest liability in the courts. That is a flaw in the legislation because it is likely, as Senator Maurice Hayes pointed out in the Seanad, that insurance companies will deliberately flush out the costs to them of cases and then contest them in the courts. There is a danger that if claimants are sucked into the process believing liability will not be contested, by the time it becomes clear the case will be contested, it will be too late for the claimant to collate the expert advice he or she might need to make his or her case. The Minister should insert a provision whereby, if liability is not accepted by an insurance company at the beginning of the process, it cannot subsequently walk away from the decision of the PIAB.
The resourcing of the board is an issue. It is estimated that 10,000 employer liability cases are taken each year and it will be difficult for the board to process that number of claims. A limit should be put on the time it takes to process a claim, otherwise the process will be hampered.
I am also worried about the membership of the board. Insurance companies are represented and there may be a constitutional issue because claimants are not. Such companies have legal, actuarial and engineering advice available to them.
I welcome the Bill. Members of various political parties have called in recent years for the establishment of the Personal Injuries Assessment Board. However, this legislation is the first step in facing up to the difficulties experienced by individuals, companies and the State as a result of spiralling insurance costs. Action to encourage competition within the industry and to tackle bogus claims is still awaited but it is on the Minister's agenda.
It is widely accepted litigation costs add, on average, in excess of 40% to the costs of compensation claims and this has contributed to the high cost of insurance and the cost of claims against the self-insured sector and the State. Spiralling insurance costs have led to a reduction in our competitiveness as a country and a number of businesses have been forced to close.
Insurance costs in the tourism sector are six times higher than in other European member states. This was highlighted in the recent report, New Horizons for Irish Tourism. The report stated that one of the major disadvantages faced by small businesses in the tourism sector is insurance costs, which adds to their cost base. The industry is accused of being overpriced and uncompetitive but insurance costs are not appreciated by people. Last year, insurance for most tourism providers and products increased by 50%, while over the past three years insurance premia have increased by more than 300% on average through no fault of the providers. Most of them have not had claims against them.
Reductions in insurance costs in the tourism sector would be welcome. If the Bill contributes to that, it must be welcomed. Tourists say Ireland is pricy but the cost of insurance is one of the reasons for the increase in prices. This cost must be added to the cost of services provided, otherwise people will go out of business. Hopefully, by eliminating the need for litigation costs where legal issues are not in dispute, the PIAB will significantly reduce the cost of delivering compensation to the benefit of all consumers. The board will offer a lower cost and speedier means of finalising genuine personal injury claims than the current legal system.
ISME made a presentation recently to an Oireachtas committee, in which it pointed out the catastrophic impact of escalating insurance costs on the small business sector. The Minister meets the organisation on a regular basis and will be aware of its concerns. ISME stated that 100 companies have closed with the loss of 3,000 jobs in the tourism, engineering, construction and chemical industries. Many companies have been forced to self-insure or trade without insurance, while others are forced out of existence on a daily basis because of high insurance costs.
One encouraging note is that the number of cases appears to be on the decline. Some local authorities such as Tralee Urban Council, for example, named those who had brought successful claims against them. As a result, the number of claims in Tralee has reduced considerably. I believe a more universal application of that approach would result in a similar reduction in other areas. I note from a recent report in a national newspaper that there has been a marked fall-off in the number of personal injuries cases initiated in the High Court and Circuit Court due to the increased focus on fraudulent claims. It also indicated that judges were becoming more circumspect and the campaign by the Insurance Federation of Ireland to rule out fraudulent claims was having a significant impact.
When combined with the media spotlight on insurance costs, all of those factors are making people less inclined to take questionable legal actions. The experience in Tralee, of which I expect the Minister is aware, certainly had that impact. The general reduction in the number of claims being taken indicates that people are having second thoughts about taking claims, having regard to the fact that it is not as easy as before to be successful. At a recent conference, a solicitor pointed out that there were over 19,000 High Court cases in 2001 and approximately 80% of all writs related to personal injury cases. By 2002, the number of High Court writs was down to 16,400 and, up to November of this year, there were just 12,253 writs. It is very unlikely that there will be another 4,000 by the end of the year.
Clearly, therefore, the number of writs has been considerably reduced already. That can be attributed to the reasons to which I have referred. It indicates that people are becoming less litigious and I believe that, in many instances, solicitors are probably not encouraging people to take that route.
I wish to mention a few concerns which members of the legal profession have brought to my attention and to which I hope the Minister will respond. The general impression is that the reforms she has proposed are being resisted by the legal profession – that is not an understatement. It is being said that such resistance is due to the negative impact of the reforms on the earnings of the legal profession. However, I believe members of that profession are genuinely concerned about the balance of rights as between individuals and insurance companies and are concerned that this Bill may not provide that balance. I believe the legal profession would welcome a Bill which would deal fairly and properly with the fraudulently exaggerated elements of "compo" culture in this country.
The PIAB Bill has to be read in conjunction with the proposed new civil liability and courts Bill, only the heads of which have been published at this stage. That Bill is specifically designed to tackle exaggerated and fraudulent claims. Both of those Bills should be taken together, in a balanced way, to ensure a fair balance between genuine plaintiffs and the insurance industry. The concerns I have mentioned will, no doubt, be addressed on Committee Stage.
A further concern has been expressed about difficulties arising from the fact that the PIAB will not be bound to give any reasons for its decisions and it is not clear whether claimants will be provided with relevant documents submitted by insurance companies and will be allowed to comment on them. A further difficulty is that no reports will be issued to the media and the public will have no means of judging the operation of the board, other than on the basis of statistics which, presumably, will be produced a year or two later. I ask the Minister to address that issue.
I wish to share my time with Deputy Devins.
Is that agreed? Agreed.
I congratulate the Tánaiste and Minister for Enterprise, Trade and Employment and her Department officials on the work which has gone into the production of this Bill. This may not have been the easiest of Bills to put together and it occurs to me that it may have involved jumping through some legislative hoops to get it all to fit together. However, the end product is a definite triumph, not just for the Minister's commitment but also with regard to the promises made by the Government.
Clearly, significant benefits will come from this Bill which will have far-reaching implications for everybody, young and old. It may well prove to be one of the most significant Bills to have passed through the Oireachtas since the formation of this Government in June 2002. All of us are aware of serious concerns throughout the country with regard to the cost of insurance. Those concerns have been well set out already in this debate and I do not need to repeat them.
The issues dealt with in this Bill are far-ranging and complex. It is to this Government's credit that it has put them together in such a cohesive manner in such a short space of time. Despite some criticism last night to the effect that the Bill has been in preparation since the former Deputy Des O'Malley was the Minister dealing with it, I am quite pleased that so much work has been done so quickly. It would not have been surprising if it had taken longer to put this Bill together, but we have been able to produce the finished product in a relatively short period of time. The Government's commitments and promises are being delivered in this area in terms of reducing the price of insurance. That is precisely what this Bill and the establishment of the Personal Injuries Assessment Board will do. Not only will it put a stop to the problem of rising insurance costs, but Irish consumers should see their premiums reduced in the very near future, which can only be described as a positive development.
As Members are aware, the cost of insurance is a very definite problem. Businesses which are struggling to keep their costs low and maintain their competitiveness are seriously affected by the problem of high insurance prices. Those of us in the business sector are well aware of the significant increase in overhead costs, the feeling that the situation is out of control and the concern that there is relatively little return. Drivers are having to pay huge sums simply to get on the road. In some cases, these sums are even discouraging people from paying their car insurance, as indicated by court reports – an action which is, of course, illegal. The high cost of insurance is a problem which affects everybody. That is the reason the solution offered by this Bill is so important.
Putting the PIAB in place is an essential first step to solving this problem. Once that has been achieved, we should see the situation alter dramatically in the very near future. By assessing compensation claims in an efficient and consistent manner, this board will significantly reduce the cost of claims. As we have so often been told by the insurance companies, it is the cost of claims that has driven up insurance costs. Accordingly, it is only logical that once the cost of claims comes down, the price of insurance should follow suit. The insurance companies will no longer be able to claim that it is the cost of litigation that is driving up premiums. In most cases, litigation costs should no longer be a factor in the situation. We were told that legal bills were adding 40% to the cost of insurance. If the cost of claims is reduced by most of that 40%, it is only right that the cost of premiums should also be reduced correspondingly. It is a simple formula. As the cost of compensation decreases, the cost of insurance should also decrease. Cutting the cost of compensation is precisely what this Bill will do by streamlining the process. Questions will have to be asked if we do not see reductions in insurance premiums close to the amount envisaged.
We will not see that.
It takes six times as long to begin the process of negotiations on claims here as it does in Britain.
We have heard it all before, that if juries were abolished the cost of insurance would decrease.
Let us hear Deputy Moloney without interruption.
The Members oppositie are being codded.
The Deputy is listening too much to what his colleagues are saying.
I am pleased to congratulate the Tánaiste on recognising and being prepared to address the difficulties ahead. Given that it takes six times as long to commence the negotiations on claims as it does in Britain, it is obvious that we need to address that delay. The Bill will have an impact in that regard. The operation of the Personal Injuries Assessment Board will allow for a shortening of the compensation process and that should go a long way towards reducing overhead costs. When the board is established, I hope that disgraceful statistic will no longer represent the position.
The Government is playing its part to reduce the cost of insurance throughout society, not only through the introduction of this Bill but through the successful implementation of the penalty points system, which has already significantly contributed to cutting down the number of deaths on our roads. I am pleased to note that the Government will introduce the civil liability and courts Bill, which should help further to speed up the litigation process and to cut significantly the number of false claims.
The ball is definitely back in the court of the insurance companies. Lowering prices will be their responsibility and the field has been cleared for that. That is the least they owe to the people who have subscribed to their companies by way of insurance premia over the years. The current level of insurance costs is not acceptable. The high cost of insurance is affecting our competitiveness and putting jobs at risk.
The cost of commercial liability insurance cover is estimated at €2 billion annually. Insurance companies cannot be allowed simply to convert their savings into extra profits. It is important that pressure is maintained to ensure they reduce their prices to a fair level rather than squeeze every last cent from policy holders. They have a responsiblity not only to business people but to other citizens.
From running a small business, I am aware of the exorbitant cost of public liability insurance, the importance of ensuring that one always has such cover and the continuing concern of ensuring that one is well covered. Insurance companies continue to cream profits at the expense of citizens and the State. I expect insurance companies will begin to tell us again that the cost of insurance has decreased. They quoted a figure of 20% in that regard in the past eight or nine months, but they always fail to mention that insurance premia have increased by 150% during the past year or 18 months.
It will also be interesting to observe how insurance companies can continue to justify the exorbitant prices they charge young motorists for cover. The cost of their premiums should also significantly decrease following the enactment of this legisation. Coming from a midland county, I am aware of the number of young people who regularly complain about the high cost of motor insurance. Many of them make the point that they cannot afford to pay the premiums. This causes them great inconvenience in getting to and from their places of work and study. The cost of motor insurance is causing many young people to move from County Laois to live in the capital. Others have been forced into a corner and they have no choice but to pay the premium. The insurance companies apparently continue to ignore young people's legitimate concern about high insurance costs.
Members have met many deputations and, on their behalf, have brought forward concerns about the difficulties facing young people in getting to their places of work or study and pointed out that for them a car is a neccessity. Even though many people have cars, they have to put aside a great part of their salary to enable them to travel to work, and the largest segment of that cost is the insurance premium. These problems need to be addressd soon.
Insurance companies and the Irish Insurance Federation must ensure a reduction in premium costs across all insurance sectors. It is up to them to accept their responsiblity in tackling the threat posed to our competitiveness by the high cost of insurance. It is important they should recognise that. They need to ensure that premiums are reduced and maintain them at a reasonable level. If they do not achieve that, the threat to our competitiveness will put jobs at risk.
I hope insurance companies will avail of the opportunity afforded by the Bill to reduce the premia they charge before the Government is forced to take further action. A token reduction in premia will not be enough and, if one is offered, the nonsense of insurance companies claiming they are working with Government will be seen through. A wholesale reduction in premiums should be made immediately.
I compliment the Minister on the introduction of this legislation, which delivers on one of the many promises she has made. I welcome the Bill and I look forward to the postive outcomes that will emerge from its enactment.
I welcome the opportunity to speak on this important legislation. It has been obvious for some time that the cost of obtaining insurance, of whatever type, has rocketed. Constituents, in a personal capacity or as representatives of their own businesses, have repeatedly told of enormous increases in the premium levels compared to a few years ago.
How often have Members heard motorists, especially young motorists, tell of how much they have been quoted for car insurance? Recently a young man, with a clean driving record, told me he had received a quote in excess of €5,000 for car insurance. The point must be made that it is young people living in rural Ireland who are most dependent on cars for transport to work.
Despite all the diffiicluties of living in Dublin, with the major infrastructural works currently in process, there is still a public transport system in place and it is operating well. DART, taxis and buses are all readily available. Contrast that with the position of a young man or women living in rural Ireland, whose place of employment may be 20 or 30 miles from where he or she lives, yet the only form of transport is either a car or bus and, unfortunately, buses only run between the major centres of population. For many young people in rural Ireland, it is an economic necessity to have a car, yet with the increasing levels of insurance premiums being sought by the motor insurance companies, more and more young people cannot afford it. This is having a devastating effect on the economic life of rural Ireland, to say nothing of the blight on the social fabric.
Motor insurance is only one aspect of the increasing cost of insurance. Public liability insurance and employer's liablity insurance are two other areas where problems arise. In Sligo, there are many instances where community facilities, such as playgrounds, cannot be built or operated because of the horrendous cost of insurance that the community would have to pay.
The Government, in An Agreed Programme for Government published in June 2002, gave a commitment that there would be a fundamental reform of the insurance market. Much work has gone on since then and today we are seeing the first fruits of that reform in the form of this Bill.
The costs insurance are multifactorial, but without doubt the huge increase in personal injury claims associated with the horrendous costs of litigation have contributed in no small way. Our legal system is adversarially based and, as a result, a large element of any claim settled is absorbed in legal fees. It has been estimated that as much as 30% to 40% of any claim is due to the legal element.
The Personal Injuries Assessment Board will operate from a completely different basis. Instead of being adversarial it will be inquisitorial. This system is already in place in the United Kingdom and has seen a dramatic fall in the number of cases of personal injury that go to court. A book of quantum will be prepared and published, which will operate as a guideline for damages that may be paid for various categories of injuries. I believe strongly that it is necessary for this list of injury payments to be published in advance of the board starting to adjudicate on claims. There must be some allowance for similar injuries which occur in different situations to be taken into account. For example, a health young man with uncomplicated leg fracture may take a much shorter time to recover than a 55 year old with similar injury.
Will the Minister clarify the provisions in the Bill regarding oral hearings? These will not be considered or conducted by the board. All the board's deliberations will be based on submitted evidence of injury in a medical report. Since most claimants will do so only once and since the defendants – the insurance industry – will be constantly involved in this process, it is important that the rights of the claimant are fully protected. It must not develop into a David versus Goliath situation and, in that regard, the medical report is all important. To help claimants have as much of a level playing field as possible, the board should issue the claimant with a detailed letter outlining the necessity for a comprehensive medical report, including x-rays and other tests needed. It is not fair on any individual to expect them to submit professional documents to support their case without good guidelines when the defendants have the full weight of their medical and legal experts preparing their documents behind them.
I say this not in opposition to this timely Bill, which I warmly welcome, but in defence of the rights of the ordinary man and women who will, in most cases, be submitting his or her case to the board for the first and, hopefully, the only time.
This Bill is part and parcel of a comprehensive insurance reform package and is closely linked with the civil liability and courts Bill which is due to come before the House. The requirement to notify a claim within two months of the injury is too short a time, particularly in cases of more serious injury. I will illustrate this point with a case with which I am personally familiar. A young man sustained horrific injuries in an accident, through no fault of his own. He spent three months in hospital and a further period learning to walk again. During this time, he resolutely focused on his recovery and did not entertain any idea of not returning to his previous employment. His employers were supportive of him and kept his job open. Two and a half years after his accident, it became apparent that he would not be able to return to work which initiated the onset of severe depression. Legal proceedings then ensued and his case was settled, amicably, for €500,000. For the first year after his accident, this young man was not focused on litigation or injury claims but recovery. This highlights how a time limit of two months for submitting a claim to the board is too short. I ask the Minister to consider extending the limit to one or even two years.
Likewise, once a claim is made, the board is not under a time constraint to publish its findings. In the interests of fairness and transparency, the PIAB should be obliged to issue its findings within a specified timeframe, unless there are compelling reasons for not doing so, such as if a claimant's medical condition has not fully responded in that time.
There is the issue of who should provide the medical report in claims. In the Seanad, there was some discussion as to whether it should be registered medical practitioners or others. The ideal person to issue the medical report on behalf of the claimant is the family doctor, as he or she knows the person in his or her entirety.
I welcome the Bill and commend the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, for her great work on insurance reform. I commend the Bill to the House.
I must begin with a declaration of interest. Mea culpa, I am a lawyer. That puts me to the back of the temple of public opinion. As a politician-lawyer, it puts me outside the door altogether. However, my declaration is one of non-interest because I am now a legal consultant and not involved in active practice. If this Bill impacts on lawyers' incomes, it does not matter a toss to me. I am looking at how this Bill will impact on the many thousands of accident victims. The danger is that the Minister, Deputy Harney, and the Fianna Fáil-Progressive Democrats Government, through this Bill, will trample on the constitutional rights of accident victims, unless it is amended.
Article 34 of the Constitution prescribes that justice must be administered in courts established by law, by judges appointed under the Constitution and, in general, must be administered in public. There are specific provisions that allow the exercise of limited functions and powers of a judicial nature by people who are not judges. However, the exercise of such powers must be in accordance with the principles of natural justice and fair procedures. Under the Bill, injured claimants will now be obliged to present their claims personally to the proposed board, which will operate in secret and deny them the right to independent advice, assistance or representation.
The Bill makes provision for vulnerable parties, but these are wholly inadequate. The claim, therefore, that the PIAB's priority will be to implement fair procedures in accordance with the principles of natural justice is wholly without merit. On this score, methinks the Tánaiste doth protest too much, though she understands my point on this. I have no doubt that the approach adopted in the Bill will lead to constitutional challenges, particularly in cases where amounts are accepted without any independent advice or assistance, only to be found inadequate at a later stage. Where will this leave the board and the claimant? The intransigence of the Minister in accepting the argument for reasonable amendments will affect what could be a decent Bill.
The second flaw in the Bill is of a more practical nature. The establishment of the PIAB is unlikely to lead to substantial reductions in insurance premia. Last year, with the establishment of an interim board, in a headline article in The Irish Times, the Minister stated there would be a 31% decrease in insurance costs. However, the latest target reduction from the insurance industry is far below that figure. The chief executive of the Irish Insurance Federation, Mr. Michael Kemp, stated the reduction will be 7.6% when he was giving evidence to an Oireachtas committee. There is no guarantee of any significant reduction.
Some commentators suggest that the PIAB will add another unnecessary layer of expensive bureaucracy to the system and lead to an increase in insurance costs. I do not believe that will happen. However, the Des Peelo report suggested it could. The Minister has refused to countenance an independent cost benefit analysis of the entire process. The jury is still out on this issue. On balance, the Bill, if amended to ensure that the legal and constitutional rights of genuine claimants are not restricted, will not do any harm and might even do some good, particularly with small claims. However, if the Government persists in bulldozing the Bill through unattended, it will be demonstrating that it is in the pockets of big business and the insurance companies.
They care not a whit for the ordinary individual seeking to recover his or her legal and constitutional entitlements.
Rubbish. Is the Deputy supporting the Bill?
I have drawn blood. I want the Bill amended to ensure that victims can be in the same position as insurance companies, not in the David and Goliath position as referred to by Deputy Devins.
Lawyers, the Progressive Democrats, the insurance lobby, big business and medical consultants represent vested interests. For example, changes should be made to the way medical consultants operate. Given their 30 hour per week public service contract and huge private incomes, changes have been indicated. However, this does not mean that, if I have a serious illness, I should be prevented from or penalised for going to a consultant. The first action I would take is to go to a consultant.
However, this is what is happening in this case. Effectively lawyers are being excluded from the stage. While this may cost lawyers some money, in many instances it will effectively cost claimants considerably more. This Bill is presented in such a way as to indicate that claimants will get the full amount of their entitlements through this board. Who is to say what is the full amount? Who is to advise them? Where is the independent advice? Who represents the victim in all this? There is no such representation on the interim board that has been established. Big business is represented by the chairperson, Dorothea Dowling. IBEC is also represented.
That is rubbish. She does not represent big business.
Of course she represents big business.
Whom does she represent?
She represents big business.
The Deputy must withdraw that remark.
Under no circumstance will I do so.
What the Deputy said is completely untrue. He is a disgrace.
There is no representative of victims.
Ms Dowling does not represent big business. She represents the public interest. She has done a terrific job
She represents big business and I do not say that as a criticism.
I am disappointed with the Deputy.
The representative from IBEC also represents big business. I do not criticise that person either.
Ms Dowling does not represent IBEC. She represents herself.
The representative of the Irish Insurance Federation represents its lobby. Who represents the victims on the board?
Will the Deputy withdraw what he has said about the chairman?
Will I withdraw the remark? She represents big business.
I insist that the Deputy withdraw that remark. It is completely and utterly wrong and he knows it.
I do not know it. It is my firm belief—
The Deputy is a disgrace. This is disgraceful. The Deputy is the first Member of the House I have heard criticise Dorothea Dowling.
I do not say it as a criticism, rather as a fact.
The Deputy is trying to imply she has a vested interest.
I say it to highlight the fact that the victims—
Does the Deputy accept she has no vested interest?
I say she is doing the best job she can. However, she comes from and represents the big business sector—
She does not.
—in the same way the person representing the unions, Senator O'Toole, or the representative of IBEC do the best job they can. There is no representative of victims on the board.
The Deputy should withdraw what he said.
This lack of representation is consistent with the Tánaiste's thinking on how the board is to operate. Who will advise and assist claimants coming before the board? Who will give them advice on the adequacy of awards?
Who advises them at present?
They are advised by their lawyers who are responsible.
This is why we have the problems that exist.
A lawyer has a professional obligation to claimants. Who will advise them in the future?
They can get any advice they want. It will not be paid for. It is as simple as that.
The Tánaiste presented the Bill on the basis that claimants will get their full entitlement.
They will, and more quickly.
At present the costs follow the event. If claimants must pay for professional advice, they are not in net terms getting their full entitlement.
How are they getting their full entitlement? At present if a claimant is entitled to €100,000, he or she will get costs as well and the €100,000 can go into his or her pocket. Under the new system, if such a claimant pays for professional assistance, he or she will not get €100,000. What is the answer to that?
What would a claimant have to pay his or her lawyer? No advocacy is involved.
If the Tánaiste states that claimants will get their full entitlement under the Bill, what is the answer to the question I posed?
They will get what they are entitled to for their injuries.
The Tánaiste has no answer to the question.
They will get the same amount as if they had gone to court, but much more speedily and efficiently.
What about the responsibility for costs?
An Leas-Cheann Comhairle
I would prefer if Deputy O'Keeffe would make his contribution. The Tánaiste has the right of reply at the end.
The respondents will pay for it.
How will the respondents pay for it? There is no provision for it. This is one of the weaknesses in the Bill.
The second weakness is the issue of who will advise the claimant on the adequacy. I foresee considerable trouble where a claimant will accept an inadequate amount, without independent advice.
On a point of order—
The Tánaiste should not tell me that the board will—
An Leas-Cheann Comhairle
Deputy Stagg has a point of order.
What the Deputy says is important and there should be a fuller audience for him. I notice we do not have a quorum in the House.
Notice taken that 20 Members were not present; House counted and 20 Members being present,
I was discussing the David and Goliath situation and the de facto inequality between the injured claimant and the high-powered insurance company that will have all sorts of representation, the costs for which will be added to premia. Insurance companies will have their in-house lawyers, external lawyers, medical consultants, actuaries and engineers. No expense will be spared as far as they are concerned. Against that, the claimant who may have been mangled in an industrial accident or mashed in a road traffic accident will be alone, which is wrong.
I have concerns about the time limit for the operation of the board. A female garda from my constituency was badly injured in a riot and applied to the Minister for Justice, Equality and Law Reform under the Garda Síochána (Compensation) Acts. These Acts do not provide a time limit for issuing authorisation by the Minister. The riot in which the injuries were sustained took place in 1997. Six years later that unfortunate person had to come to me to try to find a way for her claim to be processed. The Bill is formulated in the same way. No time limit is involved.
There is a time limit. Did the Deputy read the Bill?
What is the time limit?
Has the Deputy read the Bill?
Has the Tánaiste read it? What is the time limit?
Has the Deputy read the Bill?
The Tánaiste should answer the question and tell me now.
The Deputy should read the Bill. He can come back on Committee Stage and deal with the facts of the Bill instead of myths.
What is the time limit?
I want the Deputy to read the Bill.
An Leas-Cheann Comhairle
Deputy O'Keeffe should conclude his contribution.
Does the Tánaiste have an answer to my question?
Yes, I do. It is 15 months. If the Deputy read the Bill, he would know that too.
What section is that in?
The Deputy is a lawyer. He should read the Bill. I will not provide an ABC guide to the Bill. He is the lawyer and he seems to know—
I am telling the Minister that there is a problem with the time limit, in particular where the respondent is entitled, having decided not to pay the award, to raise the liability issue again. That is a huge problem in so far as the time limit is concerned. The evidence may not be available to the claimant or his or her advisers in going to court from the point of view of proving liability at that stage. It is another huge difficulty with this Bill.
I mentioned the diminishing expectations as regards reductions in premiums. It is ironic that already there is a reduction in premiums, apart from any Government action, particularly on the road traffic side. This has nothing to do with Government action. It is occurring long before this Bill will become operational. We have not seen it on the employers' liability side as yet, but it is already in existence, partly because of the law of diminishing returns. With insurance premiums going up by as much as 300% over a number of years the insurance companies found that the law of diminishing returns was taking effect. The other main reason given to me for the reduction in premiums is that judges never crossed the euro bridge. Where they awarded £100,000 in the past they now give €100,000. That, in effect, is a reduction of 20% in awards. Other factors such as the abolition of no foal, no fee advertising have contributed, but the figures show a reduction in the number of writs issued.
I saw an article written by solicitor Emer Gilvarry the other day in which she quoted that the figure for the High Court where 80% of cases relate to personal injuries is down from over 19,000 in 2001 to 16,400 in 2002 and is likely to be less than 15,000 in the current year. That shows there is already a reduction in that area. It has nothing to do with the PIAB or any Government action.
If pressure can be put on the insurance companies, that is great. I have no confidence, however, that the insurance companies will react to the formation of this board by reducing their premiums. I come back to the basic point, if savings are to be made, they will be achieved at the expense of claimants because of the way this Bill is structured. That is wrong. I would be happy with the Bill if that was not the outcome. I have no problem about savings on the legal front. However, the imposition of a de facto inequality between the claimant and the insurance company is unjust and wrong. That is being achieved by effectively ensuring as far as possible that the claimant does not have independent legal advice.
I accept that under the Bill there is no prohibition on getting legal advice – the contrary is the case – but it will be at the expense of the claimant. That is contrary to the existing system and in net terms it means that the amount received by the claimant will be less than he or she is properly and fully entitled to. That is the fatal defect in this Bill. If the Minister had an open mind on this issue it would be possible to improve the Bill without unduly increasing the cost. It would turn a Bill that is unjust and unfair into a good Bill. I am concerned that the Minister has refused at all times to maintain an open mind as regards this Bill and to accept reasoned amendment. If that attitude persists we will end up with a Bill that will not achieve the desired purpose and could result in substantial inequity and injustice in so far as claimants are concerned.
Ba mhaith liom mo chuid ama a roinnt leis an Teachta Carey.
An Leas-Cheann Comhairle
Is that agreed? Agreed.
I welcome the Personal Injuries Assessment Board Bill 2003. For a long time improvements have been sought in this area within this House and indeed outside. Our constituents make the case strongly to us that there is need for an insurance reform programme. This Bill constitutes an important element of that. I think virtually everyone will have been surprised by the findings in the report that litigation costs account for in excess of 40% in cases of this nature. High insurance costs threaten jobs, particularly in the case of small manufacturers who are charged extraordinary premiums, some of which have risen by as much as 400% over the past five or six years. It threatens competitiveness, which in general has been tackled successfully by industry and the Government. However, this is one of the areas where it has been difficult to maintain competitiveness. Ultimately it threatens the economy.
Concerns have been expressed on behalf of the legal fraternity. Given that 40% of compensation has gone to lawyers heretofore, there are, clearly, income and employment implications. No one should be surprised at lawyers seeking to defend their patch in this regard. However, we could as a nation, employ our legal resources much better. The cost of training a solicitor or barrister is substantial and is borne in great part by the State. The need for much stricter regulation and better practice within a plethora of agencies and areas of public and private enterprise has been indicated in recent times. It is something that could be fruitfully examined. The concept of an alternative to the courts system has been considered over decades. The view has been expressed in this Chamber and elsewhere that there were substantial legal and constitutional obstacles – some of them were outlined by Deputy Jim O'Keeffe.
The principal obstacles have been successfully addressed in this legislation. Besides the surprise that more than 40% of the cost of cases goes to the legal profession, people are also somewhat taken aback that less than 10% of cases eventually find their way into the courts. Despite that, in excess of 70% of cases involve barristers, as against 4% in England. That is a considerable surprise for anyone who looks at this area for the first time.
The provision in section 44 seems to provide for an interim payment to cover medical and other expenses. It is not clear how it is meant to operate. From the way it is written it is implied that the PIAB has the right to make a charge against the respondent. In a great many cases, however, medical expenses and bank overdraft costs, due to unavoidable expenditure in replacement labour costs or whatever, are major considerations. Currently there are enormous delays and there will still be hold-ups as people await medical reports etc. It is hugely important that the legislation sets out the right of access to an interim payment.
Section 3 provides that the PIAB will start with employers' liability claims. I am not sure how it then progresses to public liability and motor accident claims. Perhaps the Minister will explain that. Deputy O'Sullivan raised the question of insurance costs for schools. That is something that, I believe, has been raised with all Deputies, as indeed has the issue regarding voluntary and sporting organisations. My fellow principals frequently complained that claims were made which they considered spurious in some instances, only to discover some considerable time later that the claim had been settled by the insurance companies without the school authorities being informed. This caused extreme anger in cases where school staff believed the claim would not have been sustainable in court.
Certain action could be beneficial in this area. For example, the vast majority of parents of children attending schools would be perfectly happy with a system which met basic medical costs only. Very often these are not provided for and parents sometimes have a genuine complaint that no effort has been made to meet medical expenses arising from accidents. It is worth examining a formal system for meeting basic, genuine medical expenses, to which people would sign up and be bound. Arising from such a system, it would be essential to require insurance premiums to reflect the drastically reduced exposure of schools to claims.
The Independent Insurance Company entered the Irish market some years ago on foot of European Union regulations allowing outside companies to enter other markets. The company collected millions, perhaps hundreds of millions, of pounds in the pre-euro days in this market. When it subsequently collapsed, its United Kingdom clients were indemnified, whereas customers here who had paid full insurance premiums had to pay the cost of ongoing claims or, in some cases, went out of business because they could not afford to pay them. This also meant that claimants incurred losses because no redress was available to them when the company collapsed.
If we want competition in the market – EU regulations already allow companies to enter the market – at minimum we must regulate insurance companies and provide a safety net in the event that such circumstances arise again. To the best of my knowledge, the position today is as pertained when the Independent Insurance Company collapsed. During the Presidency we will have an opportunity to insist that proper EU regulation and control is enforced to cover circumstances in which companies from one member state enter markets in other member states.
Nearly every Deputy will have been approached by young drivers who find the cost of motor insurance a major burden, especially if they need a car to get to work which is often the case, specifically in rural areas. We must acknowledge that considerable progress has been made in this area in the past year or thereabouts, but only on foot of the recommendations of the Motor Insurance Advisory Board report published in 2001. Insurance companies have begun to look at initiatives to reduce costs, such as on passing the driving test or, in the case of one company, successful completion of special training. In the latter case, drivers receive a considerable decrease in their insurance premium.
The establishment of the PIAB arises from a commitment in the programme for Government. Its role is confined to claims in which legal issues are not disputed. I presume in the case of the respondent, the insurance company, this judgment will be made on foot of legal advice. I hope it will not become a mechanism to facilitate fraudulent claims, with insurance companies regarding the PIAB route as the cheapest option, regardless of liability. This would be similar to the experience I have just outlined with regard to schools. I am not certain this possibility is balanced by forcing the companies, once they have accepted liability before the PIAB, to subsequently accept liability in the court – if my reading of the Bill is correct, the opposite is the case.
I welcome the provision which allows the PIAB to protect vulnerable claimants. While the modus operandiis again not clear, it is an important provision. The provision in section 7 to allow claimants the right to employ legal advice is important and addresses the potential difficulties outlined by Deputy Jim O'Keeffe.
I welcome the opportunity to make a short contribution on this Bill, which is, in some respects, long overdue. One wonders at times why it is has taken so long to introduce this legislation and, in this respect, I pay tribute to the Minister and the former Minister of State at the Department of Enterprise, Trade and Employment, Deputy Treacy, for the determined manner with which they grasped and pursued this issue. The House should also compliment the Chairman and members of the Committee on Enterprise and Small Business for the recent wide-ranging debate they have managed to promote on the insurance issue. One cannot allow the occasion pass without paying a deserved tribute to Dr. Dorothea Dowling for her almost missionary zeal in pursuing this agenda. I am sure she will not rest until all the recommendations in all the relevant reports have been implemented.
There is no doubt that we have been bedevilled in recent years by what is known colloquially as the compo culture. Those of us who have served on local authorities have experienced at first hand the cost such claims impose on local authorities. The Bill, although it is only a beginning in that it is confined to employers' liability, is nevertheless wide-ranging. The two local authorities Deputies know best are Dublin City Council, on which Deputy Finian McGrath and I have served, and Fingal County Council. While checking the figures, I found that to the end of October this year, Dublin City Council had paid out €6.078 million to settle 722 claims. In 2002, it settled 1,358 claims at a cost of €8.51 million and, while not comparing like with like because of an issue which arose with regard to taxis, in 2001 the city council settled 1,713 claims at a cost of €7.9 million.
Similarly, this year, to the end of October, 234 claims have cost Fingal County Council €1.75 million. In 2002, the cost to the council of 437 claims was €1.2 million, while the equivalent figures for 2001 were 401 and €1.5 million. The amount of money spent on settling claims has been extraordinary. We should consider playgrounds, community centres, swimming pools and footpaths which could have been provided if we did not have to pay such phenomenal costs. A few years ago, 60% of all claims against local authorities were related to flooding in flats or damage to property, for example, collapsed roofs and so forth, while 40% were personal injuries claims. The reverse is now the case, with 60% of claims being for personal injuries and 40% related to property.
To be fair to the public utilities in Dublin, they have tried reasonably successfully to co-ordinate their approach and have managed to ward off some of the more determined litigants, although they are still paying catch-up. It is for this reason that the Personal Injuries Assessment Board will bring renewed coherence and cohesion to the insurance and claims issue.
Deputy Killeen mentioned the cost of insurance to schools. Some Deputies have had first-hand experience of the enormous costs to schools of settling claims. Another issue that needs to be examined is that all schools are insured by one insurance company. As a former vice-principal of a school who was at the receiving end of letters making claims, my experience is that this company would settle in nine out of ten cases without reference to the school. The income of many schools in disadvantaged areas where enrolments are dropping and costs are extremely high has been almost exhausted by the cost of insurance settlements.
Small businesses are in a similar position and, unfortunately, we are all aware of many small builders, shopkeepers and so forth who can no longer afford the cost of exorbitant insurance premiums. The most recent group to have been in touch with me includes organisers of youth organisations and sports clubs. The costs are such that it is almost impossible for football clubs, sports clubs and youth clubs to function. No one is taking any risks. It is almost unheard of that anything other than the absolute number of people who are supposed to travel in a minibus will be allowed to do so. In Dublin city we have long since abandoned the development of adventure playgrounds because of the inability of the local authority to obtain insurance cover. We have all been criticised by the skateboard fraternity for not facilitating it. Even the private sector has been unable to provide sufficient insurance cover for these people as a result of the high cost of litigation. We have all heard from the insurance industry about the costs it has incurred.
Another group with whom many of us in the city have had contact, including I am sure the Minister, are taxi and hackney drivers. This sector appears to be crucified by the insurance industry. A small accident can result in their premiums being increased by anything up to 300% or 400%, without any reference to the drivers or owners of the plate. I know a number of drivers who have gone out of business and onto the unemployment register because of the high cost of insurance. It is for that reason I welcome the Bill. I welcome the book of quantum. This exists informally in local authorities at present. The fact that 40% of the costs in these settlements are legal costs highlights the need for this measure.
I am concerned about people who have a problem with form filling. Many people who genuinely do not seek huge amounts of compensation find it difficult to fill out forms because of literacy and other problems. No matter how user-friendly companies are, people should not be told they can get the form on the website. We are not all computer literate, particularly elderly people. The other issue that must be borne in mind is the danger of what used to be ambulance-chasing solicitors now becoming the new generation of consultants assisting, at no small charge, in filling out these forms. This has happened in recent weeks in regard to the sports capital programme. Some of us will have received letters from people advertising their services helping community groups to fill out application forms for a sports capital grant. One of the fees being charged amounted to a modest €1,500, which would pauperise a club. Imagine the difficulties this would create for individuals.
Another aspect is the cost of medical letters. The cost of a medical letter can amount to anything up to €250. Equally, one can no longer walk into a doctor's surgery and expect to be provided with a letter. I have been approached by people who have been waiting for three weeks to two months for a letter. If one goes to a reputable consultant, one could wait for at least that length, if not longer. These areas must be looked at.
As other Deputies said, the overall objective of the Bill ought to be a reduction in insurance costs across the board. There is anecdotal evidence that there is a tendency towards a reduction in insurance premiums so far. However, it needs to be pursued with vigour. I would welcome a greater degree of compulsion on insurance companies to pass on reductions to customers because we have all been involved in trying to help young motorcyclists and others who find the cost of insurance prohibitive. We must pay tribute to the Minister for Transport, Deputy Brennan, for his tenacity in pursuing the penalty points system. It is making a difference but all insurance companies do not appear to believe they ought to reduce their premia.
I do not expect insurance companies to act as charities or to exist entirely for the benefit of the community. However, they make enormous profits. The profits in this country are completely out of line with the level of profits elsewhere. I would welcome greater competition in the insurance industry. I would also welcome the introduction of any mechanism to drive down the cost of insurance. I am sure the PIAB will contribute towards this.
I welcome the proposal of the Minister for Justice, Equality and Law Reform to introduce the civil liability and courts Bill to tackle fraudulent and exaggerated claims. Certainly there is some evidence that this is happening. I was heartened in my discussions with some officials in Dublin City Council who have managed through co-operating with the other public utilities to drive down the numbers of claims made. Between a quarter and one third of claims made against Dublin City Council do not relate to the council.
There is another aspect which might be examined. I am referring to an initiative similar to that introduced by the Mayor of New York, namely, a call centre for reporting false claims against public utilities. I am aware that Dublin City Council is considering this measure.
I welcome the Bill and look forward to its early enactment.
I am sure all of us would welcome any measure which seeks to introduce a fairer system in regard to insurance and, as a consequence, possibly a cheaper system. There are times when Irish society appears not just to be polarised but gridlocked. One of the key issues for this economy is competition and regulatory policy. These are crucial issues in a modern economy to stop the kind of rip-off practices many consumers and small business people experience in Ireland.
There are powerful vested interests involved in insurance. As Deputy Carey pointed out, the insurance companies make enormous profits. These profits are not always transparently assessable because of the complicated nature of the insurance companies' accounts, but they have done very well. The other vested interests are lawyers and, more recently to an increasing extent, doctors who act as expert witnesses in insurance cases. Approximately 40% of all insurance claim costs relate to professional fees, mostly lawyers and professional witnesses' fees. These people have fine homes in Dublin, and second and third homes in this country and outside the jurisdiction, which were obtained on the back of the "compo" culture. In this regard one often thinks of an individual, perhaps on a low income, who has pursued an inflated or fraudulent claim. Such people, however, have willing partners assisting them to make claims in the legal and, sometimes, the medical profession. It is important that we acknowledge this.
Consumers and small business people operate in an environment which is often unregulated and very expensive and when something goes wrong they are often left with no recourse. Insurance companies have grown fat on premia, as have lawyers, and this has developed our claims industry. The consumer of insurance services, whether the individual householder or a business owner, are to be pitied given the sky-high level of premia.
All Deputies can give examples of businesses, especially small and medium-sized ones, which have been almost driven to the wall because of the unbelievable level of inflation in insurance costs. A successful small video company in my constituency had hopes of expanding but its insurance premium increased by some 4,000% in one year. Inevitably, its expansion plans had to be put on hold and, in order to limit the amount of insurance it had to pay, it let go one of the company's five employees. Every Deputy could repeat such a story.
Another major problem is the discrimination against young male drivers. We know that young male drivers, particularly late at night if they have been drinking, are a danger to themselves and other road users. Nonetheless, not every young man is an irresponsible driver or drinker. Due to the dispersed nature of housing development, most young men need transport, especially those who operate as carpenters, plumbers, mechanics and so on. They need to be able to drive and to have a clear insurance certificate. Many parents pay extraordinarily high insurance costs to allow young people to drive, especially their sons. This is essential from a business point of view because of our limited public transport services. All other European countries provide adequate public transport in towns and cities, especially trains, from early morning to late at night. This is not an option here because of the appallingly poor transport system we have developed.
There is also a growing insurance problem for schools and community centres. Once they engage in dialogue with insurers about any kind of activity, whether it is a political meeting or a leisure activity for children, the cost per head for insurance becomes extraordinarily high. It costs an additional premium of up to €100 to cover some community centres in my constituency for the potential insurance liability of holding a political meeting. Many people operate without insurance. They chose to become self-insured because they cannot support the cost burden it imposes on them.
Deputy Carey referred to local councils in Dublin. I was elected to Dublin County Council in 1991. One of the first issues I raised in that forum was the lack of children's playgrounds. At that time, a case had been taken by a journalist who rode a bike in an area of a park reserved for children. His claim against Dublin County Council was successful. As a result, the children of Dublin city and the new county council areas of South Dublin, Dún Laoghaire-Rathdown and Fingal have been unable to establish local neighbourhood playgrounds due to high insurance costs based on potential claims. Today's initiative will not address that difficulty.
Many people – including members of the Government who have been in office for the past seven years – have chosen not to address the issue of children's playgrounds in urban areas. It suits them to say they cannot do it for reasons of insurance. It also suits public officials to blame a lack of initiative in many areas on the high cost of insurance. A strong case exists for a constitutional amendment to redefine reasonable duties of care and the balance between a reasonable exercise of care by a local authority or another public body and the requirement of individuals not to be grossly negligent in their use of public facilities. This is particularly an issue for the farming community in the context of strangers accessing farm land.
What has happened in the insurance industry has had a tremendously negative effect on many areas of life. The economic argument in regard to loss of competitiveness, higher prices and the rip-off involved in insurance costs, are the key economic ones. However, we have not sufficiently counted the cost in terms of quality of life, the effects of insurance industry practices and the lack of Government action thereon. This extends to children not having access to playgrounds or having the freedom to run around and, perhaps, risk some slight injury in the rough and tumble of play. In many schools, traditional play is severely curtailed by teachers because of the insurance risk involved due to a lack of definition of the exercise of reasonable care and personal negligence.
Why has this modest initiative taken the Minister for Enterprise, Trade and Employment, Deputy Harney, seven years? I heard her speak on the "Marian Finucane" show earlier in the week. She said she did not want to leave her current ministry until she had pushed the PIAB reform through, as though it was some great reform. I remind her that, when the leader of the Labour Party, Deputy Rabbitte, was Minister of State in the same Department, he drew up a prototype for this legislation which was signed off and ready for implementation.
It must have been in his pocket.
It is all about courage.
He had initiated, under the chairmanship—
Deputy Burton should be aware that the big things take courage.
—of Mr. Dan McAuley, previously of the employers' federation, a review group which set out precisely the type of development which we are only seeing seven years later.
Did the other colours of the rainbow agree with that?
An Leas-Cheann Comhairle
Deputy Jim O'Keeffe did not agree with that. That is the reason.
The Minister of State, Deputy Treacy, once had responsibility for this area—
An Leas-Cheann Comhairle
For all his effectiveness, the Minister of State, Deputy Treacy, might as well have been a member of the Carthusian Order so silent was he about real reform in this area.
Deputy Burton was not a Member. We were.
Was that because the Minister of State, Deputy Treacy, was frightened off by the vested interests in the insurance companies?
The Labour Party was.
Was it the vested interests in the legal profession?
Where has Deputy Burton been? She was not in the House.
This legislation is welcomed on all sides of the House.
In that case, the Deputy should stop being so negative.
However, we would be pulling the wool over people's eyes—
There is no such thing.
An Leas-Cheann Comhairle
—if we suggested this legislation was enough of itself.
I will speak in a minute.
It will not of itself improve matters for consumers, owners of small businesses and young men starting out as self-employed carpenters and tradesmen who need vans to reach their customers. These are the people Fianna Fáil used to cater for until Deputy McCreevy dedicated the party to the redistribution of wealth upwards to the rich.
What about the Labour Party's Attorney General?
One would have thought it was the mission of Fianna Fáil to cater for these people.
The Labour Party is the 183 brigade. What about Proinsias De Rossa?
This legislation is welcomed by all sides of the House, but we require an explanation from the Minister for Enterprise, Trade and Employment and the Minister of State, Deputy Treacy, should he be willing to provide it, as to why they spent seven long years doing almost nothing while they wrestled with the vested interests in the insurance companies and the legal profession.
What about the MIAB? Our report was so large, it brought the Deputy's party down.
Finally the legislation is before us. I hope it is not a mouse roaring.
The Deputy is unprepared. She has not prepared her speech.
It was the Labour Party's experience that the insurance companies mounted an enormous lobby a number of years ago to get rid of jury trials in cases involving compensation. The Deputies opposite will remember we were told that, if non-jury trials were introduced, the process would be speedier and more efficient as there would be less requirement for lawyers. Despite the fact that juries disappeared, the lawyers multiplied like the loaves and fishes until we found ourselves in the ridiculous circumstances of today.
Members on all sides have pointed out a number of critical issues in respect of making applications to the new board. There is a draft document on applications which is supposed to be user friendly. Everybody knows this is a legal area and that lawyers will be leaning over people's shoulders offering to rescue the poor individual who cannot fill in a form. It is essential that the Minister and Minister of State do not restrict assessment of the document to their Department. It should be circulated to community centres to establish how easy it is for people with limited reading skills to read it.
What is at issue is a huge change of culture. We want people who have relatively small claims to feel confident that the new board will deal fairly with them. If the board is not seen to deal fairly, speedily and resolutely with reasonable claims from its first day of operation, it will falter and people will turn to the lawyers. Even if it means waiting a considerable period, they will take their cases to a solicitor instead. The legal profession will be only too happy to accommodate them.
Inevitably, there will be cases in which the medical damage resulting from an accident is not immediately apparent. It will be necessary for the board to promote a culture of fairness through its mission statement. The parties on both sides in the case of a claim must have confidence that the board will deal fairly with them. The publication of the book of quantum is welcome.
We must ensure from now on that where is a defect in public property, a fire-brigade method of addressing it as rapidly as possible is in place. Every Member of this House can refer to instances of collapsed walls. In my constituency, a wall adjoining a cemetery was knocked down by the cemetery JCB. The rest of the wall may now be unstable. It can take weeks to get the council to attend to a problem. If there is an injury to a child or adult in the meantime, who will be liable? Both sides of the wall are public property in one way or another. We must have a rapid reaction to defects in public property which, if they injure people, will certainly give rise to claims.
An issue which was never tackled when Senator O'Rourke was the Minister dealing with the privatisation of Eircom was the right of the succeeding generation of utility companies to dig up the roads as often as they wished without co-ordination. We still have to tie this down because it is a significant cause of accidents in the Dublin area. There is a serious lack of regulations on this.
I wish to share time with my esteemed colleague, Deputy Cassidy.
Is that agreed? Agreed.
It is a great challenge to follow Deputy Burton. The quality of her contribution makes a strong case for Friday sessions. I hope she will continue to persuade her party to support them. They give Deputies an opportunity to debate the issues of the day.
I wish to praise Deputy Cassidy's work. He entered the Dáil on the same day as me and he is now the Chairman of the Joint Committee on Enterprise and Small Business. All Members will applaud the efforts of the committee in bringing forward its first report in record time. Deputy Cassidy is worthy of particular praise in that regard.
I thank the Deputy.
My colleague, Deputy Pat Carey, specifically referred, in the context of the insurance debate, to the need for skateboard facilities. Everyone in the region understands the case he has made. I have been campaigning in the Tallaght area for a skateboard facility which is badly needed. The initiative came to me from a group of young people in Killinarden in Tallaght and it is important that we support them. I have worked to persuade South Dublin County Council to bring forward proposals for a skateboard facility. We have been hampered hugely by the insurance industry. I noticed the capital sports grant advertisements over the previous weekend. That is to the great credit of the Minister, Deputy O'Donoghue. I will be calling on South Dublin County Council to make a meaningful application to ensure that a skateboard facility is provided for the young people in my community.
Since my election to this House to represent the people of Tallaght, Firhouse, Greenhills and Templeogue, I have, like my colleagues, supported the Government's actions to ensure the cost of insurance is reduced. It must be brought down from the unsustainably high levels which have closed businesses, cost jobs and increased the number of uninsured drivers on our roads. On many occasions businessmen, young people and parents have come to my weekly clinics to make their frustrations known.
The Government's response to this issue has been speedy and co-ordinated. A range of measures have been or will be introduced. These include the penalty points introduced by the Minister for Transport, Deputy Brennan, greater enforcement by gardaí, the insurance industry's fraud report line, the impending civil liability and courts Bill from the Minister for Justice, Equality and Law Reform, Deputy McDowell, which includes a number of measures to tackle fraudulent and exaggerated claims within the courts system, and this Bill from the Tánaiste which provides for the establishment on a statutory basis of the body to be known as the Personal Injuries Assessment Board.
The establishment of the PIAB is a key part of the Government's insurance reform programme. Its objective to tackle the delivery costs of speedier compensation to genuine claimants while reducing the cost of insurance for consumers and businesses is welcome and should be supported. I have always admired the work of the Minister of State, Deputy Treacy, and I hope he takes note of this view.
Within the insurance industry litigation costs can be in excess of 40% of the cost of compensation claims. One has only to read the papers to appreciate the level of legal costs incurred in the tribunal industry. Legal costs have contributed to the high cost of insurance and to the cost of claims against the growing self-insured sector, especially the State. The media tell that story well.
The increase in insurance costs is a threat to our economy, job security and the country's competitive edge in the European and world marketplace. I support the basis of the Bill whereby, by eliminating the need for litigation costs where legal issues are not in dispute, the PIAB will significantly reduce the cost of delivery of compensation to the benefit of all consumers.
The Personal Injuries Assessment Board will offer a lower cost and speedier means of finalising genuine personal injury claims than the current litigation system. I welcome that the board will commence operation early in the new year with employers' liability claims before encompassing public liability and motor accidents in mid-2004. The Tánaiste stated that, under the current legal system, fewer than 10% of claims reach an oral hearing in court. The 90% of claims settled without a trial are considered to carry an excessive litigation overhead. These figures must act as a major catalyst to the PIAB to assess compensation at current levels more quickly while eliminating the excessive litigation overhead.
As Deputy Harney said, the PIAB is not being set up to reduce the level of awards to genuine claimants. It should give claimants confidence in the process to know that the PIAB will always communicate directly with claimants in order that they know how their cases are progressing through each stage of the assessment. I agree with the procedures to be adopted where assessment of general damages for pain and suffering will be based primarily on medical reports from the claimant's treating doctor. In some cases the claimant will be examined by a member of the independent medical panel established by the PIAB.
A book of quantum – I wish we did not choose to copy United Kingdom descriptions all the time – will be compiled and published as a guideline to general damages for various categories of injuries. Parties can use it to satisfy themselves as to the reasonableness of PIAB awards. The existence of the guide should also assist parties in reaching negotiated settlements without recourse to litigation. The existence of a similar book in England contributes to only 4% of cases involving barristers compared with their involvement in 70% of personal injury cases here.
In contrast to the current adversarial system of personal injury litigation, the approach adopted by assessors in the PIAB will be of a different inquisition type and will result in the board getting to the facts of the extent of the allowable claim and ensuring the claimant gets that to which he or she is entitled, no more and no less.
The costs of the board will be covered by fees levied on respondents on a case by case basis, at a standard minimum rate plus any outlay incurred for expert opinion in more complex cases. These fees will be set with a view to the board breaking even financially. PIAB fees payable by insured defendants will be covered by their insurance policy.
Colleagues have shared information with regard to their areas. South Dublin County Council, based in Tallaght, informs me that 270 new claims were lodged with it this year while, over the past two years, 339 claims were settled, costing in excess of €2 million.
I welcome the Bill and support the work on vital issues which the PIAB will address. I commend the Bill to the House.
I welcome the Bill to the House and commend the Government on its courage in bringing it to this stage. I congratulate the Tánaiste, the Minister for Transport, Deputy Brennan, and the Minister for Justice, Equality and Law Reform, Deputy McDowell, on the great work they have done in addressing the serious issue of the insurance industry.
I pay a special tribute to Deputy Treacy who, as former Minister of State at the Department of Enterprise, Trade and Employment, carried the can for this industry for a number of years. I had experience as Leader of the Seanad of the difficulties he experienced at the time. I remember the day he appointed Dorothea Dowling, which was probably one of the best decisions he made as a Minister of State. The 750 page report of the MIAB, which she chaired voluntarily for five years, speaks for itself. The Oireachtas Joint Committee on Enterprise and Small Business endorsed that report en bloc.Nobody could have done so much work or been more committed in a voluntary capacity than Dorothea Dowling and her committee. I look forward with confidence to her being chair of this new board, the PIAB, and to its speedy implementation. We are fortunate to have Ms Dowling and I thank the Minister of State for his foresight in convincing her to take the position.
Deputy Jim O'Keeffe contributed earlier and expressed various views. All fair-minded people would agree that, in the system being proposed, the claimant is awarded the party costs for the adversarial aspect. The claimant also pays the solicitors their day-to-day costs. The PIAB has an adversarial aspect where claimants can seek independent legal advice if they think they are in a position to get more. They will be responsible for their solicitors' costs. We often see examples of cases where this occurs in the media. In some cases it is alleged that legal people get percentages above their actual costs in cases where awards are won.
Whether on the Government or Opposition benches, we know the greatest challenge facing us in this area is employment in small family businesses and small and medium industry. These small and medium-sized family industries are the backbone of the country and have given us the Celtic tiger. The difficulty experienced by these businesses with insurance is an outrage. All of us who employ people know that after wage costs, the most expensive item on the expenditure sheet is insurance.
The Joint Committee on Enterprise and Small Business has held 12 public hearings on the issue of insurance. Some 17 delegations from all sectors of the industry, such as brokers, the legal profession, customers and clients, attended the meetings. The committee was told that insurance charges have increased by between 100% and 350% in the past four years. The Government cannot stand by and allow the increases, which are neither acceptable nor sustainable, to continue. If this Bill had not been brought before the House to control the increases in insurance costs, tens of thousands of people would be laid off. It would be inconceivable to allow so many people to become unemployed. Great efforts have been made by this generation and previous generations. The insurance costs of some family businesses, which have been handed down over the decades and have track records that are second to none, are going through the roof. In that light, I commend the Government's efforts to bring this Bill before the House for its approval.
Deputy O'Connor has mentioned that just 4% of cases go to court in the UK, whereas 70% of them go to court in Ireland. Why does it take six times longer to get to court in Ireland than it does in other jurisdictions? The average compensation payment for a whiplash injury is €2,500 in the UK, but it is €10,000 in Ireland. Such statistics have been brought to the attention of the joint committee. Although 90% of motor insurance policyholders have been receiving a no claims bonus for ten years, 10% of their claims relate to uninsured vehicles. Some 80,000 uninsured vehicles are roaming around the country. Decent people who have a no claims bonus have to pay an additional 10% because others are driving without insurance.
I have the great distinction of chairing the Joint Committee on Enterprise and Small Business. During the committee's insurance hearings, contributions were made by Deputies Callanan, Tony Dempsey, Hogan, Howlin, Conor Lenihan, Lynch, McHugh, Murphy, Nolan and Wilkinson – Deputy Wilkinson is present in the Chamber this afternoon. The Deputies worked with Senators Coghlan, Hanafin, Leyden and Ross. I commend the consultants who assisted the committee in preparing its interim report in a record time of five weeks. The first of the interim report's 40 recommendations is that those who breach the compulsory motor insurance obligations should face new sanctions and, in particular, uninsured vehicles should be confiscated.
It is right that the Bill before the House should prioritise employer's liability. We have been told by the industry that it is dealing with this difficulty and that premiums are reducing. The Alliance for Insurance Reform informed the Joint Committee on Enterprise and Small Business last week of the case of a young couple in County Monaghan. The people involved, who were setting up a business, were given a quote of €75,000. When they were advised by their bank to try to get another quote, the same broker reduced the sum to €61,000 five days later. Three weeks later, when the bank decided it needed its name on the policy for collateral reasons, the couple checked the policy in minute detail. They discovered that the premium being charged by the insurer was €50,000. When they asked the broker to explain this, he printed out a break-down of the costs, the details of which were forwarded to the joint committee. The insurance company was to receive €50,000, a further 18% was to be paid in commission to the broker in Dublin who placed the insurance with the insurer and 3.5% was to be given to the small broker in County Monaghan.
The couple in question were familiar with the insurance company, which was charging €50,000, because it is a wholly-owned Irish company. When they consulted the company, it was so appalled that it reduced its premium to €45,000. In effect, the insurance costs being demanded of a couple which was trying to start up a business in rural Ireland decreased from €75,000 to €45,000 over the space of four weeks. This case is typical of the difficulties that are being experienced. I do not wish to elaborate much further in this regard because the joint committee has published its report, which is based on hard evidence.
The brokers of Ireland have acted in a decent manner, generally speaking, over the years. They have carried the can for generations. I recall that certain brokers acted as bankers in the 1960s, 1970s and 1980s, when there was a flight of the earls. They paid the premiums to allow family businesses and small businesses to continue. I am trying to be fair to the brokers. The brokers that are ripping people off at present are not doing credit to their industry. They should be investigated by the brokerage industry and dealt with accordingly. The joint committee has passed on a complaint to the Competition Authority because the products of a major insurer in this country were not being passed on by three major brokers to clients.
The Bill before the House will introduce regulations and a degree of common sense to this sector of the insurance market. It will give everyone a fair reward for an injury. All Deputies agree that if someone is unfortunate enough to have an injury, they should receive a just award. We want such people to be given such an award directly. We do not want the moneys to be passed indirectly to others who did not suffer. It seems to be the case that the latter group of people are receiving almost as much as those who are involved in accidents.
The members of the Joint Committee on Enterprise and Small Business look forward with great interest to 10 and 11 December, when the Committee Stage debate on this Bill will take place. I compliment everybody associated with the Bill. I could speak on this matter for an hour, but I will conclude by saying that Members of the Oireachtas on all sides of the House have waited for this Bill. I am not making any form of political point. Those who showed the courage to bring this Bill forward to where it is today deserve to be commended. This Bill will protect those who create industry and jobs, as well as those who protect people who are unfortunate enough to be injured.
Ba mhaith liom mo chuid ama a roinnt leis an Teachta Ó Baoill.
An Leas-Cheann Comhairle
Is that agreed? Agreed.
In introducing the Personal Injuries Assessment Board Bill 2003 in the Seanad, the Minister, Deputy Harney, said that "its objective is to tackle the delivery cost of speedier compensation to genuine claimants while reducing the cost of insurance for consumers and businesses alike." It is unfortunate that she did not go on to make an attempt to quantify this aspiration. I am afraid that she has left a huge gap in the presentation of this Bill.
The Government, by giving no guarantees, is telling us that it is taking a shot in the dark. It hopes that the outcome of this legislation will be a reduction in costs so that ordinary people and small businesses will not continue to be at the mercy of the insurance industry to such a great extent. We cannot afford to hold our breath while waiting for sharply reduced insurance costs, unfortunately. This is especially true when one considers the Government's poor record in respect of challenging vested business interests and tackling the exploitation and outrageous profiteering of some such interests. I am afraid that the Government's record on some of these business interests does not give us an enormous amount of hope.
For six and a half years, the Government allowed developers and land speculators to profiteer at will at huge cost and suffering to ordinary working people, particularly young people. The cost of housing is still a disaster some six and a half years after the Government came into power and no serious successful attempts have been made to tackle that small minority of society whose racketeering has put a basic human right beyond the reach of so many people. Similarly, there has been a complete failure to tackle the drinks industry and other powerful retail industries in regard to the rip-off culture and practices that exist within them. While I was preparing notes for this debate, it occurred to me that the initials for the Republic of Ireland, ROI, are suitable initials for "rip-off Ireland", a culture which the Government has endorsed.
The Tánaiste, in particular, must carry the guilt in this regard. She has told us to shop around in answer to complaints from consumer bodies and ordinary people about the huge rip-offs and profiteering evident in certain sectors of retail and industry. However, the unfortunate working man and woman are trying fulfil their working and family lives. They are working extra hours to pay for expensive mortgages as a result of the Government's failure to curb house prices. Must these people also drag themselves from shop to shop spending time they do not have in the hope they will find someone with more of a conscience than another? This is an ineffective and ludicrous position which the Tánaiste advanced on behalf of the Government.
Nowhere else is this more evident than in the continued bleeding of young drivers by insurance companies. The Motor Insurance Justice Action Group, which lobbied on behalf of young drivers, has done excellent work in recent years in bringing the extent and nature of this rip-off to public attention and putting the Government under some pressure on the issue. Unfortunately, the issue has not been resolved and there are still huge problems with young people being victimised by the insurance industry, irrespective of their records and sense of responsibility, which many have. It has come out in the wash in the past year or so that the insurance companies make substantial profits from most categories of drivers, including most categories of young drivers. However, it is still the case that young people who need a car for work in many cases are faced with €3,000, €4,000 and €5,000 a year demands from insurance companies. This is an abject failure of the Government.
Some Fianna Fáil Deputies have waxed eloquent about the crippling cost of insurance to small businesses, which is true. However, the Government has not taken the situation in hand by moving to stop the profiteering at the expense of small business, let alone the community centres and other voluntary groups which are being crippled by public liability insurance. That notwithstanding, the Government can move quickly against sections of our society when their actions displease the Government, and it throws decent PAYE taxpayers into prison within days of making peaceful protests about unjust stealth taxes. The Tánaiste also waxed eloquent about the alleged anarchy these people were causing. However, the real anarchy which is being caused by the powerful vested business interests, including the insurance industry, does not merit anything like the same condemnation from the Government.
Much has been made of the litigation costs of the current insurance system. This applies equally to the legal profession and the medical and engineering professions, where exorbitant fees are demanded and, simply for being on standby, can be commanded. The Government has, for many years, failed to take any action against a section of barristers who have been able to write their own demands for payment without let or hindrance, no matter what cost was involved. As a result of the Government's failure to resolve a just fees regime in the courts, it is now forced to resolve the problem through the PIAB.
We should give the Government proposal the benefit of the doubt since it could not be worse than what exists. There are problems with the details of the Bill in that an unfair advantage to the insurance companies is written into it and the restrictions placed on claimants having certain legal assistance is unfair considering the insurance companies will have huge legal expertise behind them. It is not a question of wanting €5,000 a day barristers. Rather, one could have legal advisers with strictly restricted levels of fees. The possibility is also there for insurance companies to renege completely on a determination with which they disagree and to drag the claimant back to the courts, which is wrong.
The insurance industry should be in public ownership as an essential industry for society and should be run on the basis of the needs of the public, rather than for the maximisation of profits for multinational corporations. The board is not one which is in the best interest of ordinary people. It should be a completely independent board rather than one which features established big-business interests.
Mar focal scor, dúirt An Tánaiste gur cheart go mbeadh cúiteamh do éilitheoirí níos saoire ná mar atá i láthair na huaire. Cé go bhfuilimid go léir d'aon guth mar gheall ar sin, níor dúirt An Tánaiste cén laghdú nó méad an laghdú a mbeadh i gceist más rud é go gcuirfear an reachtaíocht seo i gcríoch. Sin an cheist mhór atá againn don Rialtas agus tá súil agam go mbeidh freagra againn.
I was going to begin by acknowledging the presence of the Tánaiste, who, in a welcome development, was here for the first couple of hours of proceedings this morning. My party's spokesperson on enterprise, trade and employment was somewhat perturbed when he noticed that she was not one of the main speakers at the start of the debate. I accept, however, that there may have been factors involved which led to her not being present. With respect to the Minister of State at the Department of Foreign Affairs, Deputy Kitt, who is present, it is a matter of even greater concern that the Department of Enterprise, Trade and Employment does not have a rota in place to ensure that one of its two Ministers of State is here for the entire Second Stage debate.
Given that this Bill is meant to be flagship legislation, the way it is being dealt with says something about the way the Government views the proceedings of the House, particularly on Fridays, and the value it places on Members' contributions.
Having said that, I welcome this legislation. The explanatory memorandum states: "The Board will be charged with the making of assessments, without the need for legal proceedings to be brought." Those words indicate the degree of political pressure the Government must be feeling from particular vested interests involved in the area of insurance claims and those who, technically and actually, benefit from them.
The title "Personal Injuries Assessment Board Bill" might indicate that the legislation is aimed solely at the individual. I would argue, however, that the effect of proper reform in the area of insurance will be a collective benefit. In the area of public liability, there is no doubt that those who suffer most are those, who through their own time and effort, provide social services that the Government is unwilling or unable to properly resource. Anyone involved in community or voluntary work will be aware that a great deal of time and effort is unnecessarily expended on fundraising for exorbitant premia that are subsequently used to bolster the services offered by community and voluntary groups.
If I am disappointed about any aspect of the Bill, it is that it is another piece in the jigsaw in this area. However, the Government is unwilling to articulate what is its wider policy in respect of the said area. There is no doubt that a detailed policy is required in respect of insurance reform. Previous legislation abolished juries from court cases involving insurance claims. We now know that claims from the insurance industry that the latter would reduce the number of claims proved incorrect. I am concerned that the Personal Injuries Assessment Board might suffer a similar fate unless it is properly supported by further legislation and adequate resources.
The naked profiteering that occurs in the insurance industry, both on the part of the insurance companies and those who make tremendous living from processing insurance claims through legal mechanisms, is matched to some extent by anecdotal evidence of a compensation culture. Fraudulent claims are made by a small minority of people. Everyone would know of a family, the different members of which would share a neck brace or set of crutches depending on which one of them was making a compensation claim at a given time. False and malicious claims clog up the system and delay the genuine claims of people who should rightly expect immediate redress and monetary recompense.
The type of mirror image that exists between those who make false and malicious claims and the profiteering engaged in by some members of the legal profession and the insurance companies is a reflection of the individualisation of society. Ours is a mé féin society, which the Progressive Democrats have played no small part in creating. In recent interviews, the Minister has indicated that she is tired of the position she currently holds and that she wants to move on. This legislation appears to be her parting shot. If that is the case, we have a responsibility to point out that the flaws which exist in society in respect of the insurance issue are due in no small part to that credo of individualisation under which those who can do better by ripping off the system tend to do so. In general terms, however, I believe that the House will favour the establishment of a mechanism which will avoid much of the unnecessary cost and profiteering found in the system at present.
Spokespersons for the insurance industry, through the Irish Insurance Federation, have referred to the difficult times it has experienced in the past. However, one strange aspect of the industry is the extent to which it makes profits. I do not refer here merely to overall profits. The Irish insurance industry seems unique in that it makes profits on its underwriting, which is a relatively modern phenomenon. The theory behind insurance is that a profit is rarely, if ever, made on underwriting because the idea is to amass large sums of money which, if properly invested, generate profits. In Ireland, however, insurance companies seem to demand the right that premiums themselves must outweigh the payments made at any given time. They have a right, therefore, to make a profit that seems not to exist in other jurisdictions. I would argue that this is because the political systems and those who support the industries in those countries are not strong enough or do not allow such behaviour.
The Green Party is generally supportive of what is being suggested in the legislation. On Committee Stage, our spokesperson will seek to introduce a number of amendments. We will be pressing the Government and whoever has responsibility for carrying forward this agenda in the future – it obviously will not be the current Minister – to ensure that a more all-encompassing policy on insurance reform comes into being. This piece of the jigsaw only tackles a small part of the overall problem. If we are successful in ultimately solving the insurance conundrum, those who will benefit will be communities and society in general. I do not believe that the Government has a will to introduce the type of reforms to allow this to happen.
With the permission of the House, I wish to share time with Deputy Wilkinson.
Is that agreed? Agreed.
I will take 12 minutes and Deputy Wilkinson will take eight.
I commend the Government on placing the issue of insurance costs under the spotlight. The huge increase in insurance premiums has become a burden, not just to motorists but also to business people and consumers in general. I pay tribute to the Minister and the Ministers of State for working hard to address this issue.
Two of the major contributing factors to the recent reduction in insurance costs have been, in the case of motor insurance, the penalty points system and the huge decrease in the number of accidents it has brought about and, on the industrial side, the work of the Health and Safety Authority. These are positive developments.
Before proceeding I must declare an interest in that I have been a practising member of the Bar since 1985. I have participated in the profession largely in the area of civil litigation, torts, or civil wrongs, and obtaining compensation for people who have been injured in accidents of various types.
How much does the Deputy charge per day?
I have worked for people who have suffered injuries and for insurance companies which have been obliged to defend cases.
It is important to state that what we are discussing here is the tort system. A tort is defined as a civil wrong. When people come before the courts seeking compensation, they are the victims of a civil wrong. They come before the courts, as they are fully entitled to do, seeking redress for a civil wrong. The major instrument the courts can use to redress civil wrongs is that of awarding compensation.
People have different views on compensation but I am critical of the insurance industry. Many years ago the industry advocated the abolition of juries in compensation cases. When this was done there was not a substantial decrease in the compensation awarded by judges sitting alone. The establishment of the PIAB is an attempt to reduce insurance premiums but I am not sure it will work. The insurance industry has stated it cannot guarantee that the operation of the board will reduce premiums.
Are we wasting our time?
We may well be. In the absence of a promise from the insurance industry, which should be forthcoming, the board should be abolished if it does not work because its only rationale is to reduce insurance premiums. The insurance industry has a case to answer and it should give a guarantee that premiums will reduce over time, otherwise this body should not exist.
Insurance premiums will not substantially decline as a result of the establishment of this body. As Deputy Cassidy stated, tens of thousands of uninsured vehicles are on our roads currently. Tackling that problem would reduce premiums but the PIAB will not do so.
One solution to the problem could be to increase the jurisdiction of the courts. The District Court has jurisdiction up to €6,300, the Circuit Court up to €38,000, while the High Court has unlimited jurisdiction. The costs awarded in the District Court are small. This issue was raised a number of years ago. Why not increase the jurisdiction of the District Court to €10,000, €15,000 or even €20,000 and that of the Circuit Court to €80,000 or even €100,000? The vast majority of personal injury awards amount to between €3,000 and €20,000.
I have two concerns about the legislation. The first is that there will not be oral hearings. The Minister of State, Deputy Kitt, in a previous guise, served as Minister of State at the Department of Labour. That Department established the Employment Appeals Tribunal, a non-adversarial and informal body which has worked effectively. However, the tribunal holds oral hearings at which aggrieved workers are given the opportunity to make their case to an adjudicating panel, which can make awards. The submission of written details to the PIAB may mean some people are over compensated while others under compensated. One cannot better an individual appearing before a judge or judges to state his or her case, following which the evidence is weighed up and an award is made.
My second concern relates to legal costs. People involved in accidents will have to attend a solicitor to be advised about their rights under the PIAB legislation. Many citizens cannot read or write, for example, and they will require assistance to make an application. When they receive their awards, they will require legal advice to ascertain whether the awards are reasonable and acceptable. Such legal advice is costly and the claimants will have to pay for the advice out of their awards from the PIAB.
That breaches a fundamental principle of tort compensation, which is that the wrongdoer should pay. By making the claimant pay for legal advice out of his or her award, the tortfeasor, or wrongdoer, will be let off the hook in terms of legal costs. It is not practical or fair that people should enter this process without legal advice. That is not in the interest of the average citizen or people on whom a wrong has been visited. This issue should be examined on Committee Stage so that claimants can be awarded reasonable legal costs from the PIAB fund.
Many cases taken to the Employment Appeal Tribunal are not appealed to the Circuit Court because the claimants are normally advised by a solicitor. If many cases proceed without legal advice under the PIAB process and such advice is given only following the making of the award, many people will ignore the award by the PIAB and litigate their cases through the courts, which will do away with the rationale for the legislation. The Bill is unnecessary, unfair to injured parties and legally problematic.
I refer to two other legal issues. When an award is made, it must be enforced and, therefore, legal advice will be required. Second, until recently, one had to initiate a personal injury claim within three years of the incident under the Statute of Limitations but that has been amended to one year. Will the institution of a claim under the PIAB process stop the clock ticking with regard to the Statute of Limitations? The Bill states awards must be granted within nine months of a claim being made, but if the Statute of Limitations expires during that period, will a claimant be statute barred from taking a claim?
That is covered under section 59.
If the clock does not stop, that would put claimants at a major disadvantage. However, I will read section 59.
I fully support what the Minister is trying to achieve. If the board reduces premiums and processes cases more quickly and efficiently, I am all for it but I ask the insurance industry where is the beef. The industry promised us that when juries were abolished premiums would reduce but they did not. The industry has said there is no guarantee premiums will reduce under the PIAB process. If there is no such guarantee, why is another layer of bureaucracy being added to the system? Cases are currently heard in the District Court and the Circuit Court within six months of claims being taken and there is a nine month provision in the legislation. I would support this structure if the correct guarantees were in place and the insurance industry delivered on what it has promised. Thus far, the industry has failed to keep its part of the bargain and, therefore, the jury is out on whether this structure is necessary.
I am delighted we have reached a stage in the insurance debate where the matter is actually being debated in this House. Over the past three years in particular, the hike in insurance premiums has been both unfair and unjustified. I welcome the decision to publish the Personal Injuries Assessment Board Bill 2003. When enacted it will provide for the establishment of the PIAB on a statutory footing. That will reduce the cost of delivering compensation by eliminating the need for expensive legal fees and providing a speedier means of finalising personal injury assessments for genuine claimants, in comparison to the current court based system.
The PIAB is not being set up to cut the level of awards to claimants. Litigation costs add in excess of 40% to the cost of compensation and that has contributed to the high cost of insurance in this country. By eliminating the need for litigation costs, where legal issues are not in dispute, the PIAB will significantly reduce the cost of delivering compensation. Independent research has shown that claimants in Ireland wait six times longer than in the UK for negotiations to commence on personal injury claims. There has, for some time, been a public demand for an alternative to the existing litigation system. I am pleased the Government is now providing that alternative.
I am confident that when the PIAB is up and running, further cuts in insurance premia will ensue. Undoubtedly, the road safety measures introduced by the Minister for Transport, Deputy Brennan, will also help. It has been stated that it is because of the compensation culture in this country that many more insurance companies are not getting involved in the Irish market. There has been much talk of cartels in the insurance business but the Joint Committee on Enterprise and Small Business, of which I am a member, has not been given any evidence of that. However, it is true that many insurance companies do not cover all kinds of risks and perhaps, therefore, cartels exist under another guise.
On its return to office in June 2002, the Government set out a comprehensive programme to reform the insurance market and a clear path for the achievement of reform. Since then, the Government has given high priority to insurance reform in its legislative programme. I am pleased the Government is delivering on its commitment in regard to the PIAB. As a result of this and other Government initiatives, such as those of the Minister for Transport, which are already bearing fruit, further significant cuts in insurance premia are likely.
The establishment of the PIAB will, undoubtedly, save lives and protect jobs. I especially endorse the provisions on motor insurance. Uninsured drivers add 10% to the insurance premiums of honest motorists. The proposal to confiscate the cars of those who drive without insurance, as set out in the interim report of the Oireachtas Joint Committee on Enterprise and Small Business, must be acted upon. The report also recommended new legislation to regulate driving schools and deal with licensing of young drivers in particular. There has been appalling carnage among younger drivers and that shocking loss of life must be stopped. It is encouraging to note the substantial reduction in the number of fatalities and serious injuries on our roads, but a great deal still remains to be done.
In the context of jobs, insurance premiums are the main cost facing businesses. Personal injuries and the compensation culture are a major factor. The establishment of the Personal Injuries Assessment Board should result in the removal of legal costs from the compensation process. Cutting the cost of business insurance will help competitiveness and save jobs. The civil liability and courts Bill must also be introduced as a matter of urgency. I particularly welcome the proposal that people who make false claims could be charged with perjury.
The Oireachtas committee report on insurance, to which I referred, is not the end of the process. That all-party committee, which is under the excellent chairmanship of Deputy Cassidy, will continue to be vigilant in monitoring the insurance industry in all our interests. We are determined to ensure that the price of insurance will fall. Rising premiums have, naturally, had a bad economic effect on business and jobs. According to the Small Firms Association's list of obstacles encountered by businesses, insurance costs are public enemy No. 1, having been ranked by 19% of respondents as their main problem and by 83% as a business problem. Insurance costs over the year to May 2003 increased by an average of 52%, but many companies had increases in the region of 70%.
On a point of order, I notice there is not a quorum in the House.
Notice taken that 20 Members were not present; House counted and 20 Members being present,
Is it not appropriate for the Member who called for a quorum to be present?
It is not appropriate.
I wish to share my time with Deputy Murphy.
That is agreed.
I welcome this important Bill but I have some serious reservations about it. The chief executive of Allianz said recently that he could not see the price of insurance coming down as a result of the establishment of the Personal Injuries Assessment Board. I am concerned that a claimant who goes before the PIAB will not have legal representation, but the insurance company against which such a claimant is making a claim will have legal representation. Some Deputies opposite also raised this point. It is important that claimants should have legal representation. The board and the insurance company concerned would be familiar with dealing with insurance claims, but a claimant might not.
The high cost of insurance was one of the Minister's bugbears and she promised that when she came into office she would try to reduce it. I hope this Bill, when enacted, will help to achieve that.
Many organisations made representations to the committee dealing with recommendations to solve the problem of the high cost of insurance. The committee tried to take on board the points put forward in most of the submissions. Many submissions were made by people with vested interests, particularly the legal profession. That profession put forward two reasonably good points which must be taken into consideration. One is the ability of some people to submit proper claims to the PIAB without the assistance of some legal advice or support from a family solicitor. The other point is that insurance companies can accept liability at the PIAB stage but later refute it if not satisfied with the settlement reached.
It is important to demonstrate from the start that the PIAB is about delivering compensation in a fair and cost effective manner to claimants who genuinely need to be compensated. The legal fees of a plaintiff are covered in a case that is successful in court, but a person who considers he or she needs the advice of, say, a family solicitor, will be immediately out of pocket. In an exchange between Deputy Jim O'Keeffe and the Minister on this issue, I understood the Minister to say that in those circumstances the respondent would be responsible for the claimant's legal fees. That needs to be properly clarified because I cannot find anything in the Bill to indicate that is the case.
The Minister of State, Deputy Fahey, pointed out yesterday that it has been alleged that respondents will contest a case going to assessment with the intention of rejecting the award and fighting liability in court. This is an issue of concern. While he maintained it makes no financial or tactical sense for respondents to waste fees on the PIAB and then incur litigation costs, some respondents with the necessary resources may use these tactics. With regard to the establishment of the PIAB, the Minister of State indicated yesterday that the priority would be to implement fair procedures, in accordance with the principles of natural justice, in such a document only process.
Questions have been raised about the possibility of legal challenges to the Bill because of the constitutional rights of claimants. Many people have commented on this and the legal profession has been insistent that there could be problems in this regard and that justice and fair play would not be seen to be achieved if the Bill, as it stands, is implemented. Deputies Hogan and Howlin pointed out that they consider this to be a problem, but they were confident that amendments introduced on Committee Stage could address this problem.
As the PIAB is the central plank in the strategy to bring down insurance costs, it is essential that it works properly. We cannot risk a return to high premia or a continuation of premia at current levels. They have had a devastating effect on our society and economy. Thousands of jobs have been lost and our competitiveness as a nation is being affected. Our young people are being disadvantaged from a social and work point of view. Communities, social groups, sports organisations and event organisers have failed to maintain certain activities due to the high cost of insurance. The PIAB must do its utmost to demonstrate from the start that it provides a straightforward and just way of delivering compensation.
Claimants should be allowed cover for legal costs to ensure that they can make a proper submission. Insurance companies should not be allowed to change their plea in terms of admitting liability if a case subsequently goes to court. With the insertion of amendments to address these two issues and the introduction of a reasonable book of quantum, I am confident the PIAB system can work.
Assuming that it will work in conjunction with other legislation, we still have to deal with and overcome the built in compensation culture that is prevalent in our society. There is no doubt that the legal profession has promoted this culture and must now pay the price. There is also no doubt that the ordinary citizen was encouraged to claim if an insurance company was the target. The attitude that it is only an insurance company which is being hit must be challenged. Every case in which compensation is paid affects every citizen. People pay for it in the cost of car insurance, home insurance, public liability insurance and employer's liability insurance. It is the ordinary citizen who pays for such compensation and who has been paying for the extraordinary fees charged by barristers, solicitors, engineers and doctors.
The escalating cost of insurance has already cost many ordinary people their jobs. Our exports have been hit by its effect on competitiveness. The cost of living for every citizen has gone through the roof, as high insurance costs play a large role in every aspect of our lives. The end result is that the ordinary citizen is paying dearly for false claims and the excessive costs incurred in delivering compensation in genuine cases. It is one's neighbour, friend, son and daughter who is paying for compensation claims, not some magic fund as was generally believed in the past, from which insurance companies could drawdown and in respect of which people could make dubious gains. In addition to the new laws and procedures that will be introduced, we must get this message across. The insurance companies are only facilitating the passing of our money to people who need compensation as a result of having being injured, although admittedly they make a substantial profit in the process.
For this reason it is equally important that the business transactions of insurance companies are fully transparent. The controller of the financial services sector must have the proper powers to ensure that insurance companies are not manipulating their books to benefit their profit lines. The manipulation of reserves is difficult to follow, but the controller must ensure transparency. This is all the more important since all but one of the four major players in the insurance market here is Irish, the other three being controlled by foreign companies.
Having got the structures right and having put this board in place, it is important to keep in mind the competition issue. Fine Gael advocated recently that we are living a common market and therefore we should be able to source insurance at a competitive price anywhere within the European Union, but without competition in this market this system will not be a success.
I apologise for the absence of the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, as she is unavailable for important reasons. The Minister of State at the Department of Enterprise, Trade and Employment, Deputy Fahey, is in Galway with the President. The Minister of State at the Department of Enterprise, Trade and Employment, Deputy Michael Ahern, has just returned from Edinburgh. My presence here, and that of the Minister of State at the Department of Agriculture and Food, Deputy Treacy, earlier, is as a result of our involvement with the Department in the previous Administration.
This pioneering legislation provides for the establishment on a statutory basis of the Personal Injuries Assessment Board whose objective is to tackle the delivery cost of speedier compensation to genuine claimants, while reducing the cost of insurance for consumers and businesses alike. The PIAB will offer a lower cost and speedier means of finalising genuine personal injury claims than the current litigation system.
The establishment of the PIAB is in the public interest. The PIAB is not being set up to cut the level of awards to genuine claimants. Awards will remain at current levels. The role of the PIAB will be confined to claims where legal issues are not disputed by the respondent and there are no reservations about the genuineness of the claim. Exaggerated claims should be defended in the courts and new provisions will be introduced under the civil liability and courts Bill by the Minister for Justice, Equality and Law Reform, Deputy McDowell. The PIAB is not designed to deny people's access to the courts or to their entitlement to seek independent legal advice. The priority for the PIAB will be to implement fair procedures in accordance with the principles of natural justice as they apply in this "documents only" procedure.
Deputies Hogan and Howlin, and other Members, referred to the issue of legal representation. The claim that the PIAB will be unfair to unrepresented claimants is not true. This is not an adversarial system and representation will not be required. The PIAB will not conduct oral hearings. There are limited opportunities for respondents, or their insurers, to attack the claimant's claim once the case has been accepted as one appropriate for assessment of quantum only. The PIAB will avail of its own expertise, either on staff or from appointed independent consultants, to assess the validity of a claim and will not indulge in an adversarial process between competing parties' experts. The PIAB will always communicate directly with claimants to ensure they know exactly how their case is progressing through each stage of the assessment process.
Legal representation would effectively cut the claimant out of the communications loop and may expose the claimant to additional and unnecessary costs. The inquisitorial approach adopted by the PIAB will ensure the claimant gets what they are entitled to – no more, no less. This approach will be of assistance to claimants on many issues where they may currently seek legal advice even in assessment only cases which do not involve legal disputes.
At the end of the PIAB process, the parties are entitled to reject the award if they consider they would secure a more favourable outcome through the court system. The PIAB will issue an authorisation for the claimant to proceed to litigation within a specified timeframe if he or she wishes to pursue the matter. From the planned effective date, all relevant non-litigation cases, which currently require the issuing of legal proceedings, will be subject to mandatory referral to the PIAB before they can proceed to adversarial litigation. If the respondent wishes to dispute legal issues or has reservations about the genuineness of the claim, the PIAB will immediately issue an authorisation for the claimant to proceed to litigation if he or she wishes to pursue the matter further.
The PIAB will endeavour to deal with assessments within specific time limits unlike the current litigation system where no such target dates are set for completion of cases. The PIAB will give genuine claimants a speedier settlement. A respondent's agreement to a claimant's submission for the PIAB assessment will not constitute an admission of liability nor can it be used in any other manner to prejudice legal arguments in subsequent court proceedings. Requiring a respondent to admit liability in advance of a PIAB assessment would effectively stymie the entire process because there would be no incentive for respondents to consent to the PIAB assessment process rather than going to the courts directly. This is what we are trying to prevent.
The PIAB will have the power to levy charges and will be a break-even operation without being a draw on the Exchequer. Funding of the PIAB will be primarily on a case by case fee, payable by the respondent as the most transparent and equitable distribution of costs. The board will make special provision for vulnerable parties and will take steps to ensure the application process is straightforward. The PIAB staff will provide assistance to either party where required and explain the consequences of a party either taking or not taking a step during the process. Cases involving claimants who lack full legal capacity will be subject to ruling by the court, such as persons under 18 years of age, persons of unsound mind or dependants after a fatal accident. In the case of a minor or a person of unsound mind, the PIAB will direct that they get legal advice with the costs borne by the respondent. In exceptional cases, the PIAB may direct the claimant to incur, most likely medical, expenses. Such expenses will be borne by the respondent.
Deputy Howlin referred to a lay person's guide to the PIAB. This document has since been updated in consultation with the National Adult Literacy Agency. In addition, the PIAB will have simple-to-use guides for claimants, respondents and treating doctors. This will greatly assist all parties in the PIAB process. The PIAB will also operate a helpline to assist parties throughout the process.
The board will consist of members representing the interests of employees, employers, consumers, insurers, as well as a chief executive. The board will also include members with relevant expertise such as that in the legal and medical field. The PIAB is not supposed to be a panacea for all the ills in the insurance industry.
The establishment of the PIAB is one key element of the Government's insurance reform programme. Other vital elements in this programme include road safety initiatives and measures to deal with fraudulent and exaggerated claims. Taken as a package, these reform initiatives being undertaken will lead to a properly functioning market that will attract new entrants and provide the much needed competition to reduce premia further. I commend this Bill to the House.