I wish to make a declaration of interest. I am vice-chair of the Personal Injuries Assessment Board, a nominee of the Irish Congress of Trade Unions. I will not be playing an active role in the discussion this morning. I am just here to cheer on the representatives because I know they have done a great job.
Insurance Market Reform: Presentations.
I welcome Ms Dorothea Dowling, chairperson, and Ms Patricia Byron, chief executive, of the Personal Injuries Assessment Board, who are here this morning to assist us in our examination of the reform of the insurance market. We also have our consultants, Mr. Myles O'Reilly and Ms Lynda Maurice, back with us again. They are welcome.
Before asking Ms Dowling to commence her opening statement, I draw attention to the fact that while members of the committee have absolute privilege, the same privilege does not extend to witnesses. Members are also reminded of the long-standing practice to the effect that members should not comment on, criticise or make charges against a person outside the House or an official by name in such a way as to make him or her identifiable. Ms Dowling is very welcome back to the committee. I invite her to make a presentation.
Ms Dorothea Dowling
Thank you, Chairman. There are three simple but important points that must be stressed. First, there are no oral hearings in the PIAB process. It consists of an application and a medical. Second, 20% of the claimants who come direct to the PIAB get their cheques direct from the respondent or their insurers. Third, PIAB is a non-adversarial process, there is no role for representations. Once a respondent or their insurer agrees that a claim should be assessed, they are out of the process until the end when they draw the cheque.
They say that the best things in life are worth waiting for, and that has certainly been the case with the PIAB. It has taken us nearly 20 years to get action on a low-cost alternative to the courts for straightforward personal injuries claims.
The first mention of such a scheme goes back to 1986 in this committee under the chairmanship of the former Fine Gael Deputy, Ivan Yates. At that time, litigation overheads accounted for 15% of the cost of insurance. Ten years later, in 1996, when the Labour Party was part of Government, the then Minister, Deputy Pat Rabbitte, received a report from Deloitte & Touche which indicated that litigation overheads had risen to 25%. That contained a proposal from the Irish Congress of Trade Unions for a personal injuries tribunal. Members can probably guess the reason the concept of a tribunal was dropped.
By the time of the Motor Insurance Advisory Board report in 2002, litigation overheads were found to be adding 42% to every cent paid in compensation and by 2003, that had risen to46%, despite the fact that less than 10% of litigation cases ever proceeded to an oral hearing.
It is thanks in no small measure to this committee that substantial changes have been made in the past year. It also gave TDs and Senators an opportunity to earn their benchmarking because I understand the legislative process involved the first time the Seanad sat on a Monday and the Dáil took a debate on a Friday. I am not sure if that precedent has been followed since.
The cross-party support for the PIAB in the unanimous vote in both Houses of the Oireachtas was courageous and far-sighted, particularly in the face of fierce lobbying, some of which fundamentally misrepresented the PIAB process, coupled with some Members' legitimate concerns that the facts now prove were largely unfounded. Both parties accept the awards; only 5% of respondents are rejecting them.
PIAB is not just about tackling costs. Independent research showed that people here wait years for their compensation entitlements. In fact, claimants in Ireland wait six times longer than those in England for negotiations to even commence on their claims. That cannot be unrelated to the fact that 4% of claims in England involved barristers while in Ireland, 70% of claims involved barristers. There was a clear need for a quicker and lower cost system for delivering compensation in the straightforward cases. Awards are now being delivered three times faster, a maximum of nine months, at a quarter of what was the previous litigation overhead, and 80% of these claimants have legal advice. Again, we can see that it is just the minority of solicitors who are vocal critics.
To state matters as simply as possible, PIAB is for genuine claims where the person who would otherwise be sued does not require adjudication on any legal issues for whatever reason. PIAB does not inquire into the circumstances of accidents. We are concerned solely with the extent of injury and loss. Enforcement of the law is a matter for other State agencies.
The chief executive will give members full details of the 15,500 applications the PIAB has had to date but it is important to stress two aspects of that data. So far, PIAB has released 3,500 cases at the very outset and authorised litigation for them because they are more appropriate to the courts. These are largely cases which will be fully defended.
Is that 3,500 cases of the 15,500 claims?
Ms. Dowling
That is correct. Another 2,500 were resolved directly between parties with the assistance of our service centre and many were probably settled undoubtedly with the assistance of the publication of the Book of Quantum which levels the information playing field.
Some members will be aware that a judicial review was launched against the PIAB only one month after we opened our doors. While the O'Brien decision is under appeal to the Supreme Court, it is necessary to be clear what it was about and what it was not about. The High Court did not rule that a claimant must have a solicitor to make a PIAB application. If claimants choose to have an adviser, as was provided for in section 7 of the Act and in the first draft of the Bill, the claimant does so at his or her own expense, but at least now solicitors are offering to do a PIAB case at a fixed fee of €399 plus VAT. That is quite a change compared to the old regime.
From day one the PIAB never cut solicitors out of the communication loop. We copied all our correspondence with the claimant to his or her solicitor. The PIAB never refused to deal with solicitors. We communicated directly with claimants, explained to them how the process worked, told them that they had an option of seeking legal advice if they so wished and pointed out the fact that those fees could not be a percentage of the compensation as per the law established in 1994. When we could tell people about that option 50% of claimants came to deal with us directly, but that figure has now fallen to 20% of claimants.
Following the O'Brien case, a claimant who has a solicitor is cut out of the communication loop from any direct contact with the PIAB as to how his or her claim is progressing. This is not because the claimant has sought legal advice but because solicitors are getting clients to sign a restricted mandate, drafted by the Law Society, forbidding the PIAB to make direct contact with the claimant and requiring the settlement cheque to be forwarded to the solicitor's office. A sample of such a letter is available to the clerk of the committee
We now await the outcome of our appeal to the Supreme Court to see what changes to the legislation may be required to resolve that situation. However, whether a claimant has a solicitor makes no difference to the assessment process, which is carried out by the statutory officers, not by members of the governing board, such as Senator O'Toole or me.
The PIAB is a non-adversarial process with no oral hearings. Therefore, there is no role for representation. Assessment of personal injury is mostly based on examination by a member of the independent medical panel, and is based on real evidence about diagnosis of and prognosis — both to date and into the future — for the personal characteristics of each individual claimant. The other element of compensation is financial losses in terms of earnings, both past and into the future, which are all verifiable directly with the Revenue Commissioners, if necessary, and out of pocket expenses which are vouched such as doctors' fees, physiotherapy, travelling expenses. All the details of what we do can be transparently seen on our website. The CEO will now deal with how this new statutory body operates, having been set up in record time and coming in under budget, which is greatly to her credit and that of some members of her team who are present.
I do not need to remind members that the establishment of the PIAB is only one aspect of the Government's reform programme in which this committee has been so closely involved. It must be stressed that the courts system is changing radically with the Civil Liability and Courts Act 2004, which judges may apply from this month to exaggerated claims. It also must be mentioned that automatic awards of legal costs in the courts are a thing of the past because the plaintiff must exceed the offer made. Also gone are the days of playing poker with aces up one's sleeve until one was on the steps of the courthouse. The full facts of the claim must be set out in the originating document called a personal injury summons, replacing the writ and civil bill when a case goes to litigation. There have been major changes on a number of fronts, most importantly, in regard to accident prevention. This also has potential to attract new players to the Irish insurance market, which is an issue of particular interest to this committee.
Members may be interested to know that the UK is examining the possibility of introducing a PIAB-type model. Therefore, the British will have more to thank Ireland for in the future than simply the smoking ban. I will hand over to Ms Byron and we will then take questions from the committee.
I thank Ms Dowling for her presentation. I welcome Ms Byron and invite her to make her submission.
Ms Patricia Byron
It is a privilege to be here today. It has been a busy year and a half since I took over in this position. I knew it would be a challenge but I believed this development was good for Irish society and that is the reason I came on board. In many respects, I am here after the event; the members are those who brought through the legislation and gave myself and our executive team, who are present, the opportunity to deliver on their promises. I hope we have delivered as they would have expected. If there is more to be done, we will deliver on that. We are going through a maturing phase in terms of making the process a little more sophisticated and refined, and we are in midst of doing that.
My presentation will take approximately 15 minutes following which I look forward to taking members' questions. Moving to the agenda I outlined, I have prepared a presentation and will go through it as quickly as I can. When we took over this operation I had to examine the legislation which, of necessity, was lengthy and complicated. I sat down with the executive team and identified what the legislation tasked us to do and where it wanted us to go. We set down key objectives for the organisation. Everything that has happened in the Personal Injuries Assessment Board is based on the key objectives, as we established them.
I will deal with the pathway of the organisation in terms of timeliness from December 2003 when the legislation was passed by the Dáil and key experiences during 2004 and 2005. I will remind members how the process has worked from the point of their vision and aspirations to the stage at which we are now. I will cover key performance indicators because in the PIAB we believe we are accountable not alone to the member and the State but to the man on the street. From the outset we have carried out customer surveys on a daily basis. Some 10% of those who use the system receive callbacks in terms of customer surveys. We are monitoring and measuring ourselves. In many respects we like to be hard on ourselves because we believe we should be able to respond to those to whom we account in an appropriate manner. I will project to where this operation is moving as the volumes increase over the years ahead.
The PIAB has honed down our core objectives to three statements. We, in the Personal Injuries Assessment Board, undertake to deliver the same level of compensation as victims enjoyed and experienced under the old system. We undertake to reduce significantly the delivery time than that experienced under the litigation route. We undertake to deliver that compensation at a lower delivery cost and, as the presentation will show, a significant reduction has been achieved to date.
Regarding the pathway of the organisation, following the passing of the legislation by the Dáil in December 2003, the operation was established by ministerial order in April 2004. Over the following four months, there were many late nights and notes on stickers on the wall because we started from the base of the legislation and did not have in place any process, infrastructure, building or people. It was due to the executive team here and the people they hired that we have achieved what we have over a short period of four months.
On 13 May 2004 we opened our helpline service, 1890 828 121. On 1 June 2004 we opened our doors to the registration of employers liability claims here. We road-tested the process and the infrastructure, the system that we had conceived and built, and when we were happy it was robust we moved on to the registration of all personal injuries claims in this country from 22 July 2004. In the intervening period we also published a Book of Quantum which, to be clear, is not the PIAB Book of Quantum but a guide to compensation levels here based on data taken from the Courts Service, the Irish Insurance Federation and the State Claims Agency. We have continued to track that data on a monthly basis to make sure that we are at the cutting edge of reflecting what people are receiving in the courts system.
As we moved to open our doors, so to speak, we announced that we would open our doors to trade and there was a rush of personal injury cases into the litigation route. If I recall correctly, between January and June of that year some 7,000 writs were issued in the court system. Between the beginning and end of July there were another 7,000. When the law came into being, between 22 July and the year's end, a mere 52 writs were issued so there was quite a significant turnaround. That summer the line was drawn in the sand and the future came into being.
The impact was that we had very few claims to handle on 22 July because, predominantly, claims were taken into the litigation route. While we were ready to roll, all systems were in position and all the staff were ready to man the operation, we had to wait for accidents to occur over the August to December period. As those incidents occurred, the volumes came on stream towards the end of 2004 and as we have progressed throughout 2005.
The key deliverable, as it transpired through 2004, was to build the operation. While we were available to trade we did not have that additional pressure. In many respects it was a gift insofar as we had built the operation and had the subsequent months to refine and establish it. During those months we built a new State organisation from scratch, sourced a premises, kitted it out and sourced staff. We had over 1,000 applications. We did very little outsourcing and continue to do very little of it in the PIAB. We consider that we know our own business best. We involve consultants in facilitating and recording discussion and the development of our own strategies and modus operandi. We did all the sourcing of staff ourselves, along with interviewing internally, with some assistance from consultants on an ad hoc basis.
We sourced an IT system to mirror the process that we had conceived and built off the legislative framework and then we customised that. The process and service proposition is as simple as it possibly can be because we built it for our customers. We have defined and must always remind ourselves who our customers are — claimants and those responding to parties within the personal injuries sector. We also built a website from scratch which has proven to be effective. It is a major communication tool for our customers as regards how the process works and the impact of that process on their lives in getting resolution and getting back to work.
I will now summarise our experiences in 2004 and 2005. There were lower volumes within the PIAB system in 2004 because they were entered into the litigation route. Volumes have now come on stream in 2005. As Ms Dowling mentioned, we were hit with a judicial review within weeks of opening our doors, which pinged off the computer system in my room. We invested much time in dealing with that issue. The aspiration of the governing board and myself, as chief executive, is that we keep claimants in the loop. We never sought to exclude any agent who presents a claim on behalf of claimants and in that particular case we always copied the agent, which was a solicitor, with all correspondence on that file. That is a continuing aspiration for us and it is why we are hoping to go to the Supreme Court early next year.
There has been a cultural shift and not just because of the PIAB — we only play a part in the jigsaw — which is tangible and continuing. It is as a direct result of the combined insurance reform programme. We are pleased to play our part in that and we consider ourselves a component on the playing pitch. We dovetail with the other deliverables in this overall equation that is now beginning to bear fruit.
In terms of structure, when I came on board I had a view and a vision that we should put high-volume routine activities into one centre, and then segment the core activity, which is the assessment of personal injury claims. My team built the structure around that. We opened a service centre which deals with the helpline queries, registration of claims, and the toing and froing of assisting claimants in completing the two documents that are required to kick off the process — the application form and a report from the treating doctor.
After that there is no other intervention by any other party because we are looking at the assessment based on medical facts. We also decided that we would make ourselves as accessible as possible. If it required seven days a week we would do that because we felt this was a huge change in Irish society that had to work and so we had to put everything behind it. As it happened, our research showed that our customers, that is, the claimants and respondents would be open to activities over Saturday, as well as from Monday to Friday. Therefore, we are open from 8 a.m. to 8 p.m. six days a week from Monday to Saturday.
Our assessment centre is where the core activity of the statutory awards are made. The routine activity includes getting a claim registered on the system, getting the application in along with the consent from the responding party to the process and the medical information from the treating doctor. I emphasise that this information is the medical records from the treating doctor — no new event, no new medical. This is just a transcription of what happened when the accident victim had the accident, in terms of medication, prognosis, and invoices and bills at that stage.
As regards how the system works, claimants come in through the helpline service. We assist them in completing the application form by phone. They can download the form from the website or we post it out to them. They can ring us as many times as they want, six days a week between 8 a.m. and 8 p.m. and we will help them to complete the application form. The form does not deal with legal or liability issues. It is on our website for committee members to see in order to confirm its simplicity. We then provide the respondants 90 days in which to investigate and decide if they have a liability to answer.
We know from the MIAB report that 90% of claims under the old system did not involve legal or liability issues, so what are we doing? We are ringfencing the bulk of those claims that do not involve legal or liability issues to bring them across the line and assess them within a nine-month timeframe. We release cases that do involve legal and liability issues into the court system. As Ms Dowling mentioned, we have already released 3,500 which are available to go into the court system. Statistics do not show that they have all arrived into the court system. I am not sure if that is due to the litigation timelines or whether, when full defences are put up in some cases, there were cases that were never really runners. Also, there is a volume within there where dialogue had continued throughout the process and they resolved the cases, so they did not need either the court system or ourselves to resolve them.
Our up-front service centre plays a key role in this cultural shift because we encourage dialogue and transparency. We frown upon people who hide behind wrongdoing. If one has a wrong to right, it is much more effective under this new system to set liability aside and have the matter assessed. We encourage people to get on with it if they have done a wrong. If they have not done a wrong and have initiative whereby true advocacy, legal and liability issues require debate, we are happy that legal minds are brought to bear on that so they can be thrashed out within the court system.
Typical costs amount to €50 for the claimant, which is a processing fee that is returned in the award at the end. The sum of €150 is our contribution for the transcription of the medical records — in other words, what happened when that claimant was attended to by the doctor; no new event and no new medical examination. The responding party, whether self-insured or insured, pays an €850 processing fee. An independent medical examination is often carried out by the board six or seven months down the line in the assessment process, possibly to bottom out a particular medical issue or to see how the prognosis that was given at the outset is bottoming out. We are absolutely focused on making sure that people are given the correct amount of money — that which they would have experienced under the old system.
In 2005, our volumes came on stream. Some 15,500 applications have been brought through the PIAB pipeline.
What was the timeframe? Were the 15,500 applications from the inception of the PIAB up to now?
Ms Byron
Yes, but predominantly from December 2004 to now because of the cases. It is quite a short timeframe. The first two boxes show what has happened through the intervention of the service centre as regards giving people advice and assistance as well as in terms of transparency, dialogue and removing the fear of talking to the other side. There are 2,500 applicants who came to the PIAB and returned to say, "Well, actually, we did talk to the other side and the matter is resolved. We are entirely happy that it has been resolved". That is a cultural shift in society whereby the fear has been taken out of knuckling down on both sides of the table, and predominantly from the responding party whether they be self-insured or insured, who under the old system tended to run away from their wrong doing. We now frown upon that. If there is a wrong, it should be righted as quickly as possible.
There are 3,000 applications in the system in terms of documentation at one stage or other of completion and where we are toing and froing with claimants. Some claimants simply want to inform us they have had an accident and will say they may or may not claim because they want to see how an injury pans out and that they may not incur a financial loss at the end of the day. We are happy to stick with them through that process. Some of them will come through the pipeline, some will be resolved in the early stages and some will go no further. Some 10,000 applications are fully registered where all application forms have been completed and medicals have been done. One will see high volumes in the early days. We are only getting to grips with those volumes now.
As regards the 90-day time line, when the responding parties do their investigations, there are 3,500 claims in that process. Our experience is that within 30 to 40 days, many of the responding parties have established their liabilities and have moved on to the next milestone. The 90 days is the maximum time line and, in many instances, it is not required.
Some 3,000 cases are in the nine-month assessment process and our assessments to date are coming through within approximately seven months. However, we will stick with the nine months because again looking at historical data, 80% of claims in this country were under €50,000. That continues to be our experience, so the prognosis is good in that nine month period within which we would deal with the bulk of those claims. As Ms Dowling mentioned, good things are happening with the 3,500. Some of them will be resolved during the process, some will go on to the courts system and some will go no further because the defendant will say his or her machine on the factory floor was not even on that day, that he or she did not spill water on the floor that day or that he or she was not driving that car.
In terms of key performance indicators, three out of every four claimants who have received awards from the PIAB have accepted them. Almost all respondents have accepted PIAB awards. Awards have been delivered three times faster, that is, nine months or less versus three years on average under the old litigation system. That was established by the research carried out by the MIAB report. Awards are delivered four times cheaper, that is, 10% or less versus on average 46% in the litigation system. As it stands, the cost of delivering the awards to the victims has been 8.7%. We are also driving resolution, a cultural change, openness, transparency and honesty in this process. We believe that has great value on which we have not placed monetary value.
The saving on awards made to date is €3.7 million in compensation awarded by PIAB. The actual cost of the delivery truck to get that money from A to B, that is, to get it from the responding party, whether an insurance company or a self-insured person, is €324,000, or 8.7%. Under the old system, at on average 46% uplift, it would have been €1.7 million. In our short time in existence and now that we are getting our hands on the volumes, that is an immediate €1.4 million saving. We have made 520 awards to date and hope to make 1,000 over the next five to six months. In addition, 2,500 claims were settled up-front between parties.
To move to the courts system, there were 11,245 writs in the High Court in 2003 while in 2004, there were 15,293. There has been a significant, if not dramatic, change. As of September 2005, 404 writs have been issued in the courts system.
Taking the average level of awards we have made and projecting them forward on our model, if we make 6,000 awards, that will be compensation of just under €70 million. The cost of getting that money from the responding party to the claimant is just short of €7 million. That is a saving of approximately €30 million on just 6,000 claims. Taking 15,000 claims on the average level of awards, €170 million would move into the claimant's hands. The cost of getting it there — the cost of the delivery truck, that is, PIAB, which we do not mind being called — is just under €17 million. Under the old system, that would have cost an uplift of on average €77 million. That is a saving of almost €61 million. We are talking about significant figures and a significant impact on society.
When one makes projections, people will say it is always easy to project and will ask how one can ground that. I asked that question of myself and I decided to go back over what happened in this country. In 2004, if one looks at the Blue Book and if one extrapolates personal injury claims and what was paid to claimants in compensation, just under €1 billion was paid to victims of personal injury claims. It is a huge arena. At an uplift of on average 46%, bills to the litigation arena amounted to €440 million. Our projected saving of €60 million is quite conservative because the argument is so compelling, we have no need to move into the realms of Disneyland. Some €444 million was paid out. Under the PIAB system, if we had those volumes last year and were able to administer them as we hope to as the years progress, that would have been a delivery cost of €100 million and a saving of just under €350 million.
It has been a privilege to start off a new State organisation which has such a good aspiration behind it and which has all-party support, for which we are very grateful. It has been built on time and under budget. In 2005, we have delivered the same level of compensation to victims. Three out of every four claimants have accepted their awards. Almost all respondents have accepted their awards. As for the claims which will be pursued into the courts system, we will have to see how many do so. The number of writs in the courts system are not mounting considerably, so many of those claims may never appear in it. We are making awards three times faster and at a cost four times cheaper. The PIAB continues to put the claimant and the respondent at the centre of the process. We consider that our privilege. We are happy to take questions and answers.
I thank Ms Byron. It is certainly a change in direction and the PIAB has achieved much in a short period of time. It makes our work rewarding, that is, the long hours, our endeavours and the all-party agreement. We were determined to make a change during the lifetime of this Government.
I welcome the chairman and chief executive of the Personal Injuries Assessment Board. I am sure the committee would unanimously approve of what it has heard. What has been achieved in a short period of time has been a tremendous success. All the team deserves the commendation of the Oireachtas in terms of what has been achieved. I thank the chairman for her kind remarks to the committee. This committee will continue to monitor the activities required to ensure the customer gets the benefit of whatever good work the PIAB is doing.
A clear part of the equation for the establishment of the PIAB was a reduction in insurance and legal costs and in insurance costs for consumers. That is the basis on which it will be judged. In light of the enormous increase in the profitability of the insurance industry in 2004 which was recently brought to our attention, are consumers are seeing the full benefit of the work the PIAB is doing? Is it a case of all gain and no pain for the insurance industry as a consequence of the reforms introduced by the Oireachtas because we certainly do not see it at the liability end? While I see motor insurance premiums falling, which is welcome, I do not see it as much on the liability end.
According to figures published by the PIAB in October, of the approximately 10,000 cases mentioned which have been deemed fully completed in terms of applications for assessment, the respondents, who are mainly insurers, agreed to have the PIAB assess only 29% of them, which is a worry. It suggests that insurers are not bringing cases to the PIAB to the extent they should but are opting to fight them in the conventional way. I would like clarification on this aspect.
Are the medical costs of €150 the full costs or must the applicant pay a little more? Normally the medical report would be more expensive than €150. Would it normally be approximately €250 or €300?
Ms Byron
No, that is a medical legal report under the old system.
Is there an average time within which to respond to applicants and how does it live up to the standard? Is it two months, six weeks or less? What is the average time it takes to settle claims or finalise cases and make an assessment of them? Is the 15 month period in the Act the exception or the norm?
Ms Dowling
I will deal with some of the policy points first. Of course consumers are not getting the full benefit. However, it is not the role of the PIAB to investigate that matter.
I am sure Ms Dowling has a view on it.
Ms Dowling
I have a view on everything.
It is like putting her on the penalty spot.
Ms Dowling
As the Deputy said, this committee is doing a lot to ensure that consumers get the benefits. On reviewing some of the evidence before the committee, there are examples of considerable reductions. While it is not the responsibility of the PIAB or its sponsoring Department, I will be quite happy to talk about it another day.
On the completed application forms, the consent rate is approximately 50-50 at the moment, which is good. We expected approximately one-third of cases to proceed through consent, but members must understand that we must earn our credibility. Many respondents were concerned about the level of compensation awards and wanted to see how the system works. We are working hard to ensure it goes up and the target is that 75% of cases will go through the PIAB process. This is a realistic projection, given what was in the courts system where just 10% of cases proceeded to oral trial. Some 90% of cases were completed without an oral trial.
The charge of €150 for the medical report is a bit of a misnomer because we are not asking people to complete a medical legal report. With the assistance of a number of medical experts, we have designed a medical template which merely records the injuries and the treatment to-date. Usually doctors filling out forms for insurance companies would get approximately €75 while we are paying €150. Some 90% of personal injuries cases will be examined by a member of the independent medical panel to ensure we get the full picture about their injuries.
The time within which people come back to say whether the case is to be assessed is interesting. Obviously it is early days. Respondents who intend to defend cases come back fairly quickly. They will say they are not allowing the case to proceed to assessment, it is one for litigation. This is why, to date, we have authorised litigation in 3,500 cases for the courts system, some of which may have since been resolved.
Ms Byron referred to the average settlement period to date. It is six months from beginning to end. Nine months is the maximum statutory period, but some claimants will no doubt want us to extend that by a further six months in order that there is a stable medical prognosis. It is not a case of doing things quickly for the sake of being quick. We must ensure that the medical prognosis is stable before a case is assessed.
Does Ms Byron wish to respond to Deputy Hogan's questions?
Ms Byron
To elaborate on the medical costs, €150 is a fair amount of money for transcribing records in terms of the treatment received at the time of the incident. When we commission an independent report at a later stage, in many of the cases we pay the going rate. This reflects the cost of a new medical examination, including new tests and so on and the claimant having to attend a surgery. There is a cultural shift in that, under old litigation files, medical legal reports were commissioned over a three year period every six months. These would cost €250 or €300 and the claimant would be put to trouble of going back and forth to a doctor on numerous occasions. We take a cut at the beginning, consider the prognosis, what has been done and what treatment has been administered. At a later stage, we get a full medical examination around the sixth or seventh month to determine whether this has transpired to be the case and whether anything new has come into play. At that stage, the further figure is applicable.
It is important to point out that the timelines are all maximum timelines. The 90-day timeline is the maximum. In many instances, insurers and the self-insured sector have ramped up their ability to investigate claims quickly. Having been in the sector previously, I feel that 30 to 40 days is more than enough. Trails go cold after about a month. Cases that appeared to be a mystery for years, and took six and seven months to investigate, are now being investigated much faster. From our point of view, we have a statutory obligation to deal with claims within nine months. Anything that goes beyond that is the exception rather than the rule. We have met all our obligations to-date. In fact, we pay a lot of attention at the front line in the service centre identifying claims that are not particularly high value, or even complicated claims, but may have some sort of chronic side. We may say this case will malinger on for a time and, as it will not be resolved within our timeline, we will release it because it is not appropriate for us.
Ms Dowling
It is important to clarify that the reason respondents are coming back more quickly to put their cards on the table is not because they have grown wings instead of horns, but because for the first time ever there is a potential saving of 46% in litigation overheads. It just makes mathematical sense. Prior to this, there was no motivation to make up one's mind quickly, because every case trundled through the system and carried the average 46% litigation overhead. There is now a good business case for making early decisions. This brings transparency to claimants, relieves the stress of litigation and other factors on which it is difficult to put a financial figure and encourages rehabilitation. We have heard this from a number of medical people. I am not talking about malingerers. I am talking about the stress of litigation, which can be ongoing, and the fact that 2,500 cases have been resolved up-front. These people can get on with their lives as best they can.
The aspect that stands out for me is the High Court personal injuries cases, of which there were 15,293 in 2004 and there are only 404 to the end of September this year. That is an extraordinary figure.
Ms Byron
The Circuit Court records do not deal with personal injuries records on their own, therefore, we cannot give those figures. A ratio of 2:1 is probably applicable. Approximately 400 writs in the High Court and an estimated 800 in the Circuit Court is a phenomenal turnaround. Given the anecdotal evidence from the legal fraternity, it appears that things have moved on considerably and people are bedding down into the new system.
Is it the case that awards are four times cheaper to deliver through the PIAB?
Ms Byron
That is based on our statistics. We have quite a mature finance department, which was set up from the beginning, because we have been tasked by this committee and the legislation to be a self-funding organisation. We must run it efficiently. We make ourselves accessible to the public in any shape or form in terms of getting in the paper work. Once it comes into the system, we have a sophisticated timeline and workflow process, and everything moves along within these timelines. This facilitates keeping the overheads to a minimum. As it stands today, there are 49 permanent staff within the PIAB. We did not rush out to fill our halls with people. These people have broad shoulders and deep hearts. These are the people members should thank for what has happened in the PIAB.
Absolutely.
I join Deputy Hogan is saying it is refreshing to have a group that gives the impression of "can do". They saw a task and are willing to undertake it. It has also been pointed out that it is a very powerful female team which is presenting the case to us and, unfortunately, we are not gender-balanced on this side of the room.
I wish to signal my enthusiasm for what the PIAB wants to achieve. As we dealt with the legislation in detail, we are very familiar with it. Having got to grips with the legislation, is there anything Ms Dowling or Ms Byron would like to see changed through us as legislators? How is the legislation working and does it need tweaking? We are willing to do that. I am interested in hearing now or in written form of any barriers to the smooth running of the PIAB because of whatever legislative flaw or indelicacy we may have crafted into the legislation.
We need to get to grips with the juxtaposition between the PIAB and the legal profession. There is an ongoing residual battle, but we cannot comment too much on the courts procedure. I am interested in the restricted mandate from the Law Society — I suggest the society should be invited to the committee to deal with the issue — and would like to hear more of what is going on and the implications as perceived by the PIAB.
My next question is concerned with numbers. The PIAB has said that in the June-July period of 2004, after it was set up, there was a rush to the courts of some 16,000 cases. However, from then until now there have only been 15,500 cases.
Ms Dowling
I said the High Court and Circuit Court got 16,000 cases.
The PIAB has only dealt with 15,500 since. It has only had that number of applicants. I do not understand. I understand that in June and July some 16,000 applicants chose to go the court route, but from then the PIAB has dealt with 15,500 applicants and only some 400-odd writs have gone into the court system since. Can Ms Dowling give me a better view of the balance between the two?
The PIAB has indicated that its average costs are 10%, with an outcome of 8.7% actual costs. What is its target cost or does it have one? Does Ms Dowling think the costs should be a percentage? Why should they be a percentage if there is a fixed cost process? If injuries are serious and there is a significant claim, why should the costs be a percentage? I am surprised that Ms Dowling would express it should be such. Has she an objective in saying a percentage cost rather than a fixed cost would apply in general terms?
Ms Dowling
I will take the questions in order. We have discussed legislative changes at board level, depending on the various scenarios that might emerge from the family's Supreme Court appeal. We are firmly of the view that the legislation as passed in both Houses of the Oireachtas is correct and gives us the express powers we require. A High Court judge did not agree with that but agreed with the Law Society. It would be a mistake to rush into the legislative process until we have exhausted the judicial process.
Given the current situation, we would like to change the culture so that people no longer need to use lawyers in straightforward personal injury cases. We want to be able to tell people directly that they do not require a lawyer for these applications, that if they do, they may be charged a fee but it cannot be a percentage of the compensation, and they must be given an estimate at the first consultation in accordance with section 68 of the Solicitors (Amendment) Act. When we were in a position to tell people that, many of them told us they had been told they had to have a lawyer and that he would take 10% but that now that we had explained the process to them they were capable and willing to do it themselves.
All we want to do is to give consumers informed options. We could do that in the early days, but only for a month or so because the judicial review was launched at us a little over a month after we opened our doors. Even if we stood on our heads that would not have changed. When we could inform people of those options, 50% of people came directly to us and did not incur unnecessary fees. While many people would argue that our role is solely the assessment of personal injury compensation, we have a duty to citizens to protect them.
Without being indelicate, it is obvious to this committee that there have been criticisms in recent days of the redress board not making direct contact with claimants. We tried to do that and were stopped. We have no desire, nor would it be in our interest, to undermine solicitor-client relationships in any way. What we want to do is give people options and let them know we are there to assist them. We can fill out their form for them and ensure they know within a maximum of 90 days whether it is a case that will go to court and they will need a solicitor. That has happened in 3,500 cases. People get clarity at an early stage, something they did not get previously. This area is the biggest barrier to our original mission. We hope to resolve it by either winning the Supreme Court appeal or by the necessary legislative amendments.
On the matter of the brickbats between us and the Law Society, it is important to be clear what the PIAB is about. It is about changing the culture in the country. We have changed the culture in other areas such as drink driving, smoking and plastic bags. There are organisations with a self interest that do not want the culture changed, but want the status quo which is understandable if they see that as their role. However, it is inconsistent that the walls of heaven could be papered with circulars issued by the Law Society resisting the alternative being offered to people of making their claims directly through a low cost system with no oral hearings and a low fee — the €50 claimants pay is refundable at the end of the process. It is ironic this is the case when similar action is not taken in other areas involving more vulnerable claims.
It is ironic too that we have no law which would prevent an insurance company from contacting claimants directly, whether they have a solicitor or otherwise, with regard to resolving their claim, but that a statutory independent body is barred from contacting a claimant to explain how the process works, how the claim is progressing, provide details of contact with the claimant's solicitor to get details of the claimant's wage loss, explain it got no response and therefore cannot progress the case. We are hampered in this regard.
On the last question, I will leave the statistics to Ms Byron who is the expert in that area. We do not have a target cost percentage because it would not be appropriate. The percentage mentioned, 10%, is merely a comparison to the 46% that did apply.
Is that the actual cost? Is that figure considered to be high or low?
Ms Dowling
The target in the overall operations of the PIAB is not to be a drain on taxpayers. Our objective, which we would have achieved this year were it not for the judicial review, is to break even. Whatever medical examinations are required to ensure that the full extent of a person's claim is apparent in the compensation assessment will be undertaken and the costs paid by the respondent. The only money we have required from the State has been because the lawyers have launched a judicial review to try to prevent the changes which have occurred.
Will the board break even within three years?
Ms Dowling
We would already have broken even were it not for the judicial review. We have achieved that in fact because the judicial review is not a cost for the PIAB but a cost for the Minister in defending the legislation.
What is the timeframe for the judicial review?
Ms Dowling
We understand the waiting list in the Supreme Court is 13 months. We have no control over that. On that basis, the review should arise early next year.
On the issue of costs generally, percentages are inappropriate. In a class action type situation for example — I know the Law Reform Commission and this committee is examining such an action, the Army deafness cases — it is probably quite difficult to establish the precedent and argument in the initial case. After that they are——
A conveyor belt.
Ms Dowling
Precisely, they are a conveyor belt. Not only were substantial costs paid by the State to the solicitors dealing with those cases but again, as brought to the attention of the Law Society in 2002 by the MIAB, and again in 2003 and 2004, there must be a concern that those clients also paid a percentage of their compensation. Ms Byron has the full breakdown of the figures of litigation volumes versus the PIAB's cases.
Ms Byron
The legislation has served the PIAB very well and we have provided the service. We have received anecdotal feedback from claimants through the service centre which shows they may have found themselves in a process with a solicitor in the background and did not realise they could have dealt directly with the PIAB. They sometimes ask for correspondence to be sent out to them but we are unable to do so because of the mandate and the bit of blocking that occurs. The future arrangement should provide a window in which the PIAB can tell it like it is to the claimant. This is needed at the beginning of the process in whatever way it can be achieved. The Supreme Court was the first step in that regard.
As head of operations in the PIAB, I am convinced that people are not fully aware of the implications of going into a solicitor's office and signing a mandate which means they will no longer receive any communication to do with their personal injury claim. In my experience, anyone involved in a personal injury claim wants to know what is happening with their claim. It is most likely the one incidence in their whole life of a personal injury happening to them. Claimants should be entitled to monitor the service they are receiving from any agent they appoint and this is impossible to do if they are blocked out of the communications link. This is a key issue and it is not unsurmountable, in my view. It is a sign of success that after all that has been achieved, this is the remaining issue to be resolved as the system matures and progresses.
When a person is unfortunate to have an accident, how do they find out about the PIAB?
Ms Byron
The PIAB makes its existence known by means of public fora such as libraries and websites. Communication through the media is somewhat effective but not necessarily the best tool to——
Is the PIAB in dialogue with the trade unions?
Ms Byron
Yes. We have a very structured communications programme in which we meet with the trade unions and with IBEC and ICTU. Our executive team is somewhat worn thin because as well as running operations the members spend a lot of time on the road meeting with representative groups. I have invited representatives of all facets of the community into my office for briefings. I usually speak for approximately two minutes and then allow them to speak about their attitude to the PIAB and how it affects their lives, their employers and their children. This has kept the organisation focused in its delivery of the service for its customers.
Does the PIAB use television or radio advertising?
Ms Dowling
That is a very difficult one, Chairman.
Ms Byron
We do not consider it appropriate.
I am curious to know how people find out about the agency, particularly those in rural areas.
Ms Byron
We have had to strike a balance. The website has been very effective but like many things in life, one must go out and speak to the people and spread the message and that is what we do.
Two or three years ago the interim board projected volumes of 27,000 personal injuries claims in a year. When I was given this responsibility I examined the aspirations of this group in terms of the combined insurance reform programme. On reflection I considered that if everybody believed the combined insurance programme would bear fruit, then those volumes were only going to go down. I asked myself why would I build an organisation that was top heavy in terms of costs if all was going to bear fruit. From the very beginning I took a cut on those volumes of approximately 25%. I decided if we were a bit pressed in the early days and the claims frequency is higher than expected, it will ultimately go the right way. I believed in the proposition being put there.
I predicted the figure of 27,000 would fall to a figure in the low 20,000s and it is now looking like 18,000 with 15,500 in the pipeline at present. I do not believe 18,000 claims will be assessed by the PIAB. We are influencing resolution of claims.
I spent some time with my executive team and asked them to discuss what the PIAB is about. Our business is claims resolution; we are trying to make good things happen, get people to be transparent, to admit to wrongs. Smaller insignificant claims should be resolved without the PIAB. We have kept ourselves lean and will continue to do so. The more claims settled up front, the better. Deputy Howlin referred to the juxtaposition of the 16,000 and the answer is those claims went back many years.
Ms Dowling
I wish to emphasise a point about direct access option as an attempt has been made to use this against us. The PIAB does not have a hidden agenda. It does not make a whit of difference whether or not solicitors are involved as the assessment is exactly the same. It is very important to stress that to date, 80% of claimants who have accepted awards retained solicitors. It is not the case that the people who did not have legal advice are the ones accepting awards; the situation is 80% with solicitors and 20% without.
The committee could assist the PIAB by making recommendations that the barriers to the direct communication between PIAB and citizens should be removed in a way that did not offend either the High Court or the legislation. This would not entail communicating with a person about their claim in a way that might give them different advice to what their solicitor would give them. We wish to explain to a claimant how the process works so that they understand it. Our leaflets have been written with the assistance of the National Adult Literacy Agency and they are as straightforward as possible. We would explain the time line to claimants, ask them to provide vouchers for expenses and supply a letter from their employer showing loss of earnings. We explain we are happy to contact an employer directly if there is a difficulty. We will explain the process to them, giving them the option of doing it directly with the assistance of our service centre or alternatively making it clear to them they have the option of obtaining independent legal advice. If they choose to do this, under the 1994 legislation they must be given estimates from day one of the potential charges and no charges must be based on a percentage of the compensation; it is as simple as that.
The committee will take that on board.
I welcome the delegation and compliment the PIAB for its statement of "delivering three times faster and four times cheaper", which says it all. I hope further reductions in insurance costs will come about as a result of the good work the PIAB does and as a result of other Bills passed by the Oireachtas.
I welcome the delegation. A lot of things have happened since Ms Dowling and her colleague took up their positions. Reform of the courts has made them more efficient. The insurance reform programme has resulted in the public becoming more aware of being ripped off by insurance companies.
My only disappointment with the PIAB is that all the claims are based on precedent. I have noted over the years the high level of claims being paid out and local authorities were being ripped off by high claims. Many claims were rogue claims and substantial moneys were paid out. I thought the setting up of the PIAB would result in a substantial reduction in settlements. The PIAB seems to have gone after the legal profession but this takes away from the constitutional right of the citizen to have someone representing them. As a politician people come to me for representations——
This is old-fashioned stuff.
I am a bit more left-wing than Senator O'Toole.
Please allow the Deputy to continue.
I find myself in that position these times. I wish to hear the reason the PIAB have accepted claims as per the status quo rather than reviewing them and making newer settlements. People were ripped off in their claims. The status quo remains.
We have had a professional presentation and I congratulate my colleagues on the board. I also offer my congratulations to this side of the table. The PIAB came about as a result of the efforts of all the political parties. It has been difficult to get it implemented and it has proved to be effective. While the issues seriously raised by the Deputy are fair points, he is wrong. The Personal Injuries Assessment Board does not exist to reduce settlements or to outlaw people who would have would have gone to court anyway. Our job is not to deal with the rogues, but with the honest people who have a problem they want addressed. This is the most significant message we need to get across. It is faster and cheaper, and it means that honest people can certainly gain from it.
I expand on the point about rehabilitation made by Patricia Byron. Trade unions have repeatedly found that people felt reluctant to go back to work for fear that it would affect their claim when it went to court, which might take three or four years. They do not like the tension of appearing in court and sitting around the Four Courts. One of the most joyful aspects about the new system is that people have come through the process and feel it is great to do it that way. There will be problems as we go along, some of which may have been mentioned by Deputy Ned O'Keeffe. The constitutional right to go to solicitors is not being interfered with by us in any way. There is no confrontation in this process; there is no hearing. This is about paper.
Ms Dowling
I can add very little to what Senator O'Toole has said. The level of compensation is a matter for the Judiciary. On the matter of tackling rogue claims, judges will now have the opportunity to establish legal precedents under the Civil Liability Act. Neither of these matters is for the PIAB.
I thank the delegation for updating us on the PIAB's programme. We will come back to the legal profession in our deliberations before finalising our third interim report on our inquiry into insurance. We await with great interest the progress of the PIAB in the next 12 months. If amendments to legislation are required we will not be slow in ensuring that the Government addresses the issue before the end of this Dáil. We have seen reductions in motor insurance premiums and commercial motor insurance premiums. However, in other areas we remain very concerned. We are closely scrutinising public liability insurance and employer's liability insurance at present and they will be addressed in the next interim report. I congratulate the PIAB on what it has achieved to date.
The joint committee adjourned at 10.55 a.m. until 9.30 a.m. on Wednesday, 26 October 2005.