Order of Business. - Motor Insurance Industry Report: Statements.

Tá sé mar chúis áthais dom bheith anseo ar maidin chun freastal ar an díospóireacht seo faoi tuarascáil an Bhoird Chomhairleach Árachais Ghluaisteáin. Déanaim comhghairdeas leis na hoifigigh agus an bord a chabhraigh linn i rith na blianta atá caite leis an tuarascáil forleathan, cruinn, beacht seo a chur faoi bhráid an Oireachtais agus na tíre.

As public representatives, we are all only too well aware of the increasing difficulties regarding the availability and price of liability insurance. A non-exhaustive list of the reasons for this would include in particular the level of claims; the increasing level of awards; poor investment returns; the substantial increase in reinsurance costs; the implementation of recent court judgments; legal costs and the method for determining them; foreign insurers opting out of the Irish market; the increase in the capital base of insurance undertakings required to support increased premium income; and the reluctance of parent companies to invest capital in insurance undertakings.

The nature and scope of these difficulties require a response which is multi-faceted in its approach and which would include the following actions: Government support for the excellent report presented by the Motor Insurance Advisory Board, with the preparation of an action plan for the implementation of its many recommendations within three months; with the Personal Injuries Assessment Board report nearing completion, a speedy Government response in due course to what will emerge, including taking a strong stance on any hostile reactions; further improvements in both health and safety measures; encouragement of the Irish Insurance Federation to adopt a policy that "any firm that has a claims free record, for a number of years, with a particular Insurance Undertaking will not face significant increases in Premium;" and pressing the European Union for greater action on making the Single Market for insurance products a reality across Europe.

Last week I was pleased to be able to publish the large report from the Motor Insurance Advisory Board, the most comprehensive study and analysis of the Irish motor insurance industry ever undertaken. I take the opportunity to reiterate my deepest appreciation to all board members. Thanks to their dedication, this huge report has been completed with professionalism and tenacity. It is clear that an enormous amount of work has been undertaken in the period since I first legally established the Motor Insurance Advisory Board back in September 1998 under Statutory Instruments 299/84 and 359/94.

The new board commenced its great challenge under the chairmanship of Ms Dorothea Dowling who previously worked for 16 years in the insurance industry in both Dublin and London. The board represents a wide range of interests, including insurance users and providers, consumers, road safety and road traffic interests, accident victims and young drivers. The report has clearly benefited from the combined wisdom of all board members. Among its key findings are the following.

The Motor Insurance Advisory Board is firmly of the view that, because motor insurance against third party injury and damage is compulsory, it must be open to public scrutiny. We would all agree with this view. The high cost of insurance here, compared to the rest of Europe, is underlined in the report. Motor insurance is one of the biggest bills a household faces in a year. The three main sections of the report reflect that the cost of insurance is determined by three main factors, namely, accidents in terms of both their frequency and severity, the cost of claims within the current compensation system and the operation of the insurance market. The board makes it clear that tackling one of these factors without giving the required attention to the others is unlikely to achieve better value for money for law abiding motorists, the majority of whom have never been involved in a culpable accident.

The report stresses that tackling the current cost of motor insurance is not a party political issue, since the state of affairs now obtaining was not achieved overnight. Successive Administrations have failed to tackle the vested interests and inefficiencies that collectively may account for as much as half the premiums paid by law abiding motorists. The board points out that, while its recommendations are not presented in any order of priority, many are interrelated to the extent that objectives are only likely to be achieved by co-ordinated action in a number of areas. It underlines the fact that long-term measures are required for success.

The board contends that the current situation suits too many interests. These include the State, which collects a 2% stamp duty on premiums and, presumably, appropriate levels of taxes from all the various parties who profit, the legal profession – the report records the refusal by the Incorporated Law Society of Ireland to make a submission to the board – and insurers, who regard returns on investments, at 4.2%, as too low. The report considers it a matter of interest that, although insurers in Ireland and the United Kingdom assert that returns to shareholders are inadequate, motor insurers in Ireland, where claims costs are among the highest in Europe, reported 11 times the total post-tax profit earned by their UK counterparts between 1983 and 1999.

This is the first and only Motor Insurance Advisory Board to secure access to insurers' raw data on premium income and claims costs, on which detailed analyses are presented in the report. However, insurers have not yet been able to submit to the board for analysis their raw data for 2000. When this work has been completed, a supplementary report will be provided by the board, which will also examine further the area of commercial motors, as well as providing any available indications of the effect that the introduction of the euro has had on premium charges and related matters.

The report confirms evidence that young male drivers aged 17 to 20 years with provisional licences produce very substantial insurance losses. They are involved in accidents resulting in most serious claims at a frequency disproportionate to their representation as policyholders. There is also evidence that charges for young female policyholders are not justified by their claims costs. These policyholders have been described by insurers as "subsidisers". The matter has now been acknowledged by the insurance industry and I am informed that this has already converted into reduced quotations for some young female drivers.

The board notes the complaints it received in written submissions from senior citizens and consumers with disabilities and predicts that, on the basis of demographic projections, the problems associated with insurers declining a risk on grounds of age, currently faced by young drivers, may in future be experienced by people who have retired. The report indicates that the consequences of uninsured driving are becoming more acute and the Motor Insurance Bureau of Ireland now estimates that they add 8% to the cost of claims in the aggregate motor insurance market. However, unlike other businesses, a substantial proportion of expenditure declared by insurers relates to reserves established to meet claims which will not be paid for many years.

The board does not consider that the market for private motor insurance is competitive. The fact that motor insurance is compulsory means that it differs from other products or services, since there is a limit to the usual market forces dictated by consumers, who may decide not to purchase or elect to substitute cheaper alternatives. The real choice available to the Irish consumer is dominated by a handful of legal entities, with three companies accounting for 67% of the entire market. The board states it has become aware of a practice, which it believes should not be permitted, of motor quotes being refused unless the proposer has his or her household or other insurance placed with the insurer.

The board is of the view that the imperfect state of the market is such that consumers' concerns are unlikely to be allayed without an investigation by the Competition Authority, which has the benefit of procedures not available to the board. In the meantime, the board counsels against consumer inertia and advises that it is absolutely essential to shop around before renewing insurance in order to obtain the most competitive quotation as charges between companies can vary by 200% for the same risk.

As the report makes clear, the free movement principle in European Union law means that no citizen can be compelled to purchase insurance from a particular provider or in particular circumstances. Equally, the pricing and underwriting of insurance are matters for individual companies and EU law has always prevented the Government from intervening to freeze, reduce or increase prices. According to the report, a major disparity with the rest of Europe is the fact that in the United Kingdom and Ireland motor insurance is based on driver use rather than on the vehicle, with usage being secondary to issues of cover. The report recommends aligning the position in Ireland with that of mainland Europe through appropriate amendment to the Road Traffic Acts.

The board recalls the continuing concern, which it has expressed, that an appropriate balance be struck between the rights of consumers and the objectives of solvency supervision which, until now, has been assigned the overwhelming priority. In this context, the report refers to the daunting task facing the Irish Financial Services Regulatory Authority, a body cleared by Government and about to come into operation, in regulating general insurance in the best interest of consumers. The report recommends that when IFSRA assumes responsibility for motor insurance, a framework of general insurance standards should be established incorporating the principle of good faith dealing.

The board believes that consumer knowledge of comparative prices could be facilitated by a consumer information service provided electronically by the IFSRA, which would set out illustrative tables for standard motor insurance for a range of common driver profiles. The Government's intention to establish a statutory office of ombudsman within the IFSRA is welcomed by the board, provided the statutory provision will not mirror the unsatisfactory state of affairs under the industry's ombudsman scheme, where the greatest proportion of non-life complaints relate to motor insurance and the vast majority fall outside the industry ombudsman's remit.

At the heart of all the 67 recommendations in this outstanding report is the question of balance between the complementary interests of the citizen and the insurer. On the one hand, policyholders must be satisfied the system is being managed efficiently and is fulfilling its primary function, namely, that of cost-effective delivery of compensation to genuine victims of accidents. On the other hand, there needs to be a healthy, vibrant insurance industry which is capable of competing in Europe in a cost-effective way. Ulti mately, the policyholders pay all claims. There must be a balance between those who attempt to allege injuries or exaggerate claims and those policyholders who are wrongly sued and who are entitled to have their constitutional rights upheld.

Up to now the focus has been virtually entirely on the regulatory end of the sector. There needs to be a balance between prudential supervision and consumer protection, including accountability and transparency, which will arm consumers with the relevant information. I have had an annotated version of the recommendations prepared, a copy of which can be found at www.entemp.ie/cr/miab.pdf. For ease of reference, the annotated document extracts the 67 recommendations from the report and in each case indicates the issues addressed and the body responsible for their implementation. The Government is fully supportive of the broad thrust of the recommendations and has every confidence that their implementation should result in a fairer system for everybody.

In broad terms, the potential for reduction in insurance costs, arising from the implementation of the many recommendations, should impact favourably on the viability of enterprises and on job opportunities for young people. The availability of affordable motor insurance to run a private vehicle would contribute significantly to the economic and social well-being of people living in rural communities. Potential savings in the overhead cost of delivering compensation, which would have a favourable impact on the cost of all types of liability insurance, have been identified in the report. Implementation of the recommendations in the report overall would, therefore, have a beneficial impact in this area which is of particular concern to SMEs. I assure the House that there will not be any delay in preparing an action plan for implementation. The Government has mandated me to set up a high level implementation group to immediately progress the recommendations and to report to Government not later than three months from the inaugural meeting of the implementation group.

The implementation group which met for the first time yesterday, Wednesday, 24 April 2002, is chaired by the Assistant Secretary of the insurance and company law division of the Department, Mr. Corcoran. It is representative of the Departments of Enterprise, Trade and Employment, Finance, the Environment and Local Government, Justice, Equality and Law Reform and Social, Community and Family Affairs, the Consumers' Association of Ireland, IBEC and the MIAB chair, Ms Dorothea Dowling. The membership of the implementation group includes representatives from those Departments which will be primarily responsible for giving effect to the recommendations. Where the Department of Enterprise, Trade and Employment is concerned, 17 of the 67 recom mendations relate directly to us. Without wishing to pre-empt the outcome of the work of the implementation group, I am prepared to accept those 17 recommendations in principle.

In three cases, Nos. 39, 59 and 60, primary legislation would be required and in six cases, Nos. 9, 13 to 16, inclusive, and 19, secondary legislation would be required. I must now examine how best to give effect to recommendations Nos. 29 to 33, inclusive. Of the remaining three, I expect that the declined cases committee should meet on recommendations Nos. 20 and 21 to agree the necessary changes on an administrative basis. Action would not appear to be necessary in relation to recommendation No. 64 on the basis that the issue has been addressed, albeit in a different way, in the Competition Act, 2002.

In response to recommendations Nos. 13 and 14, I am pleased to inform the House that I will, with full Government approval, introduce new regulations requiring insurers to give adequate and proper notice of the terms of the annual renewal of each individual's motor insurance policy in the future. That will mean that the consumer-motorist will receive at least 15 days written notice of renewal terms, along with an official certificate of no claims bonus showing each individual's record of accident free driving up to the date of issue of the new certificate. I have already this week forwarded the draft regulations to the Attorney General's office for his approval. Many consumers become totally frustrated, as they do not get enough notice of the terms of the renewal of their motor insurance. Such late notice is an obstacle to the consumer's ability to shop around, at least for those who have a choice of service provider. These new regulations are part of a framework of supports which I have endeavoured to put in place to empower consumers. I urge all consumers to shop around when renewing their motor and other insurance. These regulations, when brought into force, will assist consumers to do that and I will ensure they legally get that choice.

As mandated by the Government, I have referred the report to both the Competition Authority in relation to recommendations Nos. 41, 65 to 67, inclusive, and the Equality Authority in relation to recommendations Nos. 6, 9 to 11, inclusive, and 45 to take any necessary action thereon. The Government has also approved referral of this report by me to the Irish Insurance Federation for its immediate response to the ten recommendations where responsibility for implementation lies with it. These are shown at pages 11, 13, and 24 to 26 of the annotated version of the recommendations. I am happy to inform the House that the board has agreed to my proposal for a six month extension of its remit up to 31 December 2002. The extension, which has the approval of the Government, is designed to enable the board not just to prepare the sup plementary report, which I mentioned earlier, but also to monitor and report on progress on its many recommendations in the report. I also confirm that both the implementation group and the Motor Insurance Advisory Board will hold joint discussions on the report on 2 May.

My Government colleague, the Minister for the Environment and Local Government, Deputy Dempsey, is responsible for implementing eight of the recommendations of the Motor Insurance Advisory Board report. The publication of the MIAB report is timely in that it follows the recent passage through the Oireachtas of the Road Traffic Act, 2002. That Act contains a range of measures to be delivered within the policy parameters established in the Government's road safety strategy. That strategy presented for the first time a co-ordinated approach to the pursuit of specified goals in relation to road safety nationally. It set challenging targets in terms of reducing road deaths and serious injuries and it is clear that, as a result of the pursuit of the policies set forth in the strategy, significant progress has been achieved in realising those targeted goals. However, the strategy must be seen not just in the context of those targets. Its greatest strength is the fact that it promoted a serious of policy initiatives which will encourage a changed approach to driving and the need for a greater appreciation of safety.

There is clear evidence that the commitment of the Garda in carrying out its enforcement role has yielded results. Detections for drink driving in 2001 were 53% higher than in 1998, while on-the-spot fine notices for the non-wearing of seat belts, introduced in 1999, were issued in respect of 59,000 people in 2000 and 64,000 people in 2001. On-the-spot fine notices for speeding offences issued in 2001 are 165% higher than in 1998.

The provisions of the Road Traffic Act, 2002, will further augment and support the enforcement of traffic law. The introduction of penalty points, the replacement of the on-the-spot fine system with the more structured and certain system of fixed charges and the extended use of cameras to assist in the detection of offences will help to promote further the precautionary approach to driving that will lead to sustained improvements in road safety. As regards the use of cameras for unsuspecting motorists, the cameras are only temporarily fixed in specific locations. They are moved at irregular intervals to ensure we cover all the national routes. The Act will also specifically extend the preliminary breath testing of drivers where they are involved in a road accident or a breach of road traffic law, provide a framework for implementing the European Convention on Driving Disqualifications, which permits the imposition by member states of driving disqualifications for offences committed in another mem ber state and increase certain financial penalties for road traffic offences.

There is no reason that Ireland should not rank among the best states in Europe in terms of road safety and the new Act, together with the application of the other initiatives in our strategy, will progress our realisation of that goal. The driver theory test has been operational since 11 June 2001, and tests knowledge of topics such as the rules of the road, risk perception, hazard awareness and good driving behaviour. This test should encourage a deeper understanding by novice drivers of information and behaviours that will assist them to become safer drivers on the roads of Ireland.

In relation to the driver testing service, I am pleased to say that we have met our customer service target of 10 weeks. This is a major performance by the Government. The resources made available have reduced the average waiting time for a driving test from 18 months when the Government came into office to 10 weeks or less. The insurance industry gave a firm commitment that, if the Government delivered on that, it would deliver on huge premiums. The industry response is awaited. This is a significant achievement in the face of a continuing and unprecedented high level of demand for the service and is the result of significant additional resources which have been allocated to the driver testing service by this Government during its time in office.

The recommendations in the report call for the introduction of a road safety and driver education syllabus in schools. The question of introducing such a syllabus into schools is a matter for my colleague, the Minister for Education and Science, and is currently being examined by the National Council for Curriculum Assessment which has commissioned a study of this very important issue. In the area of driver education generally, the National Safety Council has launched special educational programmes for both primary and secondary schools, and major publicity campaigns targeting drink driving, seat belt wearing and speeding have been produced.

A number of the recommendations in the report deal with the relationship between compulsory motor insurance requirements in this country and the four EU directives on the topic. The particular recommendations make a number of salient points about ways in which the position of victims of road accidents might be improved. The Department of Environment and Local Government is working on the implementation of the EU Fourth Motor Insurance Directive at present and this provides a good opportunity to look at new ways to implement more quickly the recommendations in question.

Some of the recommendations will need to be explored further by the implementation group before they can be acted on, for example in relation to the recommendation that a car could be confiscated if the driver is not covered by insurance. It may well be that the existing legislation provides sufficient authority for official seizure of a vehicle. Similarly, the right of an injured party to proceed directly against the other party's insurance company seems to be substantively provided for in the Road Traffic Act, 1961, which is now over 40 years old. The question of whether the vehicle or the user should be insured is raised in the MIAB report. As the report records, there are a number of significant cost and liability concerns in such a change. These will have to be explored by the implementation group before a decision can be made on such a fundamental alteration to insurance law in Ireland.

My Government colleague, the Minister for Justice, Equality and Law Reform, is responsible for implementing 16 recommendations, some of which have been overtaken to an extent by recent events. One example of this is recommendation No. 42, which is to the effect that the legislation on accrual of 8% interest on legal costs from date of trial should be revised in a manner consistent with the Prompt Payment of Accounts Act, 1997, with a significantly reduced rate of interest and a reasonable period allowed from the date of bill presentation for payment or the resolution of legitimate queries. This is very important.

Section 30 of the Courts and Court Officers Act, 2002, responds to this recommendation in that it provides for changes in the manner in which the interest on costs associated with judgment debts is calculated. In particular, it provides for the application of a rate of 2% per annum from the date a judgment is given to the date when the parties agree costs as between themselves, or the date a certificate of taxation issues, whichever is appropriate. Thereafter, the interest applicable to judgment debts, which is 8%, will apply to the outstanding costs until that amount of costs is fully paid. I am aware of the view of the Motor Insurance Advisory Board, expressed in its report, that no interest should be payable until a reasonable period has expired after presentation of the solicitor's bill, but it must also be acknowledged that the changes made by the Courts and Court Officers Act, which are already in force and which apply even where the proceedings in question were instituted before the Act was passed, represent a considerable improvement on the position up to now.

As regards the continued application of an 8% interest rate to legal costs after they are agreed by the parties or determined either by the Taxing Master or the county registrar, while this rate may appear high by reference to interest rates generally, it must be borne in mind that the charging of interest has the purpose of encouraging prompt payment by the liable party. A further recommendation which has been responded to in part is recommendation No. 43 to the effect that the draft legislation on advertising by solicitors should be progressed. In fact, this legislation, the Solicitors (Amendment) Act 2002, was enacted just two weeks ago.

The provisions on advertising require a commencement order, which the Minister for Justice hopes to make shortly. This recommendation and recommendation No. 44 propose a requirement that all advertisements by solicitors quote a summary of section 68 of the Solicitors (Amendment) Act, 1994, which provides that solicitors are prohibited from calculating their charges as a percentage of any damages that become payable – this is critical. The Minister, Deputy O'Donoghue, is of the view that it would be of benefit to draw the attention of the public to this important rule as its existence may not be widely known. It is important that we constantly bring this to the attention of the people.

Recommendation No. 57 is to the effect that the Courts Bill should be amended so as not to increase the civil jurisdiction of the Circuit Court and District Court beyond expressing the existing figures in convenient euro amounts. In fact, this Bill is now an Act, the Courts and Court Officers Act, 2002, but requires a commencement order to raise the jurisdiction limit of the Circuit Court from £30,000 to €100,000, and that of the District Court from £5,000 to €20,000.

The Minister believes that increased jurisdiction limits do not necessarily mean increased claims and increased damages awards. He believes there is a strong case for revising the limits. Consumer prices have risen by about 30% since the limits were previously set in 1991. Inasmuch as damages compensate for such elements as loss of earnings, more expensive vehicles etc. which reflect rapid real economic growth, it could be argued that consumer price inflation does not fully mirror the increase in damages over this period. This means that leaving jurisdiction limits unchanged would have the effect over time of pushing cases of a given level of seriousness into higher courts, with higher costs and negative implications for access to justice for all. The increased jurisdiction will also enhance access to justice in the sense that the District Court and Circuit Court are courts of local jurisdiction, located conveniently to those members of the public who need to have recourse to them. Having said that, the general jurisdiction provisions in the Act will not come into force until the Minister has made a commencement order to that effect.

The mechanics concerning the establishment of the Personal Injuries Assessment Board, which should have a significant impact on the number of cases that go to court, is well advanced. It is planned to co-ordinate, in so far as it is feasible, the commencement of the jurisdiction provisions with the coming into operation of the PIAB.

There are a number of recommendations in the report which require consideration by the Courts Service. In this regard, it is understood that the board of the Courts Service has decided to table consideration of the report of the Motor Insurance Advisory Board at its next meeting. I am pleased with this and see the Courts Service having a crucial role in exposing rogue claimants who create a major problem and compound the situation for everyone. Their views on such matters as specialist judges, an extended role for the Small Claims Court and the introduction of a book of quantum should be interesting and enlightening. The Minister has promised to act quickly on any recommendations that he gets from the Courts Service for legislative amendment. The Minister's record shows that he has put through a greater volume of legislation, Bills culminating in Acts, than any of his predecessors and, cumulatively, more than many of his predecessors combined.

In recommendation No. 47, the Motor Insurance Advisory Board proposes that stringent measures be introduced to tackle fraudulent and exaggerated claims with a loss of all compensation entitlements and appropriate criminal sanctions. It will be necessary for the Government to consider carefully any measures in this area.

In recommendation No. 50, the MIAB proposes that the system of lump sum compensation payments be reviewed on the basis that the long-term needs of the seriously injured may be better served by guaranteed annual payments. Recommendation No. 51 is that a system should be introduced to facilitate pre-trial interim payments to the seriously injured in cases where liability is not a substantial issue, but there is a financial need to replace lost earnings or seek medical treatment. Recommendation No. 52 proposes the introduction of awards of provisional damages where there is a substantial risk that the injured party's medical condition may deteriorate in the future.

These three recommendations concern issues which were the subject of a 1996 report of the Law Reform Commission. Its recommendations have not been addressed by the Department of Justice, Equality and Law Reform to date due to the substantial programme of legislation in which it has been engaged over the past five years in particular.

In brief, the Law Reform Commission proposed a system of structured settlements to replace the award of damages in the form of lump sums and that there should be provision for both interim and provisional awards, with certain conditions. Significantly, however, the commission recommended no change in the way awards of damages are calculated by the courts. In other words, these changes would perhaps deliver compensation in a more appropriate way, while being neutral in their effect on the aggregate amount of compensation paid in the long term.

Much comment has been made, both before and after the publication of the MIAB report, on the role of the legal profession in relation to litigation and insurance costs. It is of significance here that the Government, as part of its response to a report by the OECD on regulatory reform in Ireland, which was published in April 2001, asked the Competition Authority to undertake a study of professional services. Among the professions which are being studied by the Competition Authority is the legal profession and we await its report with interest.

In common with every Member of this House, I have been concerned for some time about the high cost of motor insurance, particularly for young drivers. I do not pretend that this report provides some sort of quick-fix solution which will immediately bring about significant reductions in insurance premiums but the report provides a road map which will enable us to address a state of affairs which is unsatisfactory and of long standing as well as being a cause of considerable public disquiet.

I promise, therefore, a commitment on the part of myself and my Government colleagues to ensure that the necessary action is taken to give effect to the many recommendations contained in this report. I firmly believe that these 67 wide-ranging recommendations chart the way to a system of insurance that is fairer for all and more equitable in terms of the relationship between the risk and premium paid by the user. They signpost the way ahead to make the system serve the 21st century consumer.

I believe that the issues involved will have to be tackled without delay and I wasted no time in establishing the implementation group to oversee our response to this report. My intention is that the comprehensive action plan to be prepared by the implementation group will be presented to Government and then published in the interests of transparency and public information.

I am sure the House will join me in wishing the implementation group every success in its task of bringing this work to the next stage. Both the group and the Motor Insurance Advisory Board will continue to have my full assistance and support. I feel sure that this historic report from the Motor Insurance Advisory Board will be the catalyst for effecting positive change for motor insurance in Ireland in the years ahead.

I welcome the Minister of State to the House. His speech was like a breath of fresh air in relation to this issue. The Minister of State is very constructive and motivated and it is obvious that he did not even need to read the brief. It was an excellent idea of the Minister of State to set up this board and it has produced a fine report which highlights many very important issues. These issues are important to all drivers and to everyone in the country. It is very depressing and upsetting to think that the people who are making the most money out of this situation are not prepared to make a submission – I refer to the Law Society. Very serious questions arise as to why that was not done. I congratulate the board and the Minister of State on not pulling back and ensuring that it was noted.

There is no doubt that vested interests exist and it is appalling. Every week there are court cases concerning car insurance claims. People go from one room to another and decide this, that and the other, but it is the vested interests who make the most at the end of the day. The Minister of State is well aware of that. I ask the Minister of State to ask the senior Minister to convey to the Law Society the concerns of the Members of both Houses at its failure to make a submission to the board. There should be a demand for its submission, not just a recommendation that it should make one. The Law Society is better placed than anyone to know the situation as regards insurance.

I am pleased that the board looked at particular issues and that the members are experts from varying backgrounds. They are not holding back on recommendations; the Minister of State's Department was given 16 recommendations and I note that it is prepared to implement seven of those immediately. The Minister of State plans to set up an implementation group but in my view the board has provided all the information. The implementation group merely has to examine the report of the board. That report points out everything that is happening. It is a very sad reflection on the country.

We should examine the cost of insurance in other countries. In Ireland, 67% of all insured people are covered by three insurance companies. We must press for greater action from the EU because we cannot compete nationally or internationally. There must be transport companies in this country who are insuring their vehicles abroad. If I was a transport manager, that is what I would do. In the shipping business, vessels are registered abroad because that is the cheaper option. That is how business works.

I will give an example which the Minister of State may find amusing. It is cheaper to buy chocolate in Ireland and sell it in England and the same applies in the insurance business. I know a person who bought a container of chocolate in Ireland that was made in Yorkshire. It was transhipped from Yorkshire to Ireland and sold in euro. It was sent back to the UK to be sold there. The person in Ireland made money out of the transaction as did the person in England. That is a cartel in operation. It will be the very same in the insurance business and rightly so, in my view. I compliment the Minister of State's sincerity and his highly motivated application of pressure.

It is not a fair situation. If a person is the innocent party in a road accident and he is hit from behind, causing damage to his car, a claim against him will be made because both insurance companies have agreed to pay the cost between them. That is not fair to the totally innocent party but that is what happens. The Minister of State knows it is happening.

The board strongly notes the cartel structure in its report. The cartel structure is very similar to that of the banks. The Minister should apply strong pressure to allow us to get the same cover as our EU counterparts. They are the same as the Minister and I, we are all Europeans. I count myself as a European second and an Irishman first.

I can drive in other countries where the person selling the car must tax it. That is a brilliant idea. If I want to pay a person for the car, I pay him for the tax too, but the car is taxed before it comes on the road. A person buying a car must make sure it is taxed and, if it is not, the seller is liable. I find that a very encouraging, impressive and simple structure. We must broaden our views and ideas.

There are so many issues I could mention such as novice drivers. The Minister made a point about the use of cameras. I am on the road for over 40 years as I have been driving since 1958. I make no apology for the fact that I love driving. I have a fine car but I have had very bad cars and trucks at different times. Our road structure must allow traffic to flow, otherwise our businesses will deteriorate and costs will get higher. I recently heard that truck drivers are now getting on the road at 5 a.m. because it is the best time to drive. If I am travelling to Dublin, I leave Cork late at night and stay overnight. I will not travel by day because it takes an hour and a half longer and I can be busy elsewhere. The types of roads we are building are appalling.

There should be a single traffic authority. Responsibility for the regulations should not lie with particular groups. There should also be a traffic authority within the Garda. One person should be responsible for our traffic authorities or one regulator as is the case in other countries. In America, there is a particular traffic authority within each state. In other words there is a traffic cop and he is only one responsible for traffic. Such police can move traffic as well as stop it. They are responsible for getting traffic moving. In this country, local authorities look after moving the traffic but the Garda is responsible for traffic regulations. There should be one traffic authority in the State and we should not have everybody and anybody saying we can do this that and the other thing.

I am particularly interested in the legal cost of claims. I am thrilled that the Minister is applying an interest rate to legal costs and I congratulate him on that. The Minister will obviously make sure that people are paid faster. Recommendations Nos. 50, 51 and 52 are brilliant. I do not agree with everything in the report but these recommendations will look after the needs of people who are sick in the long term and should ensure the legal people will not make all the money.

In 1960, there was only one court in the city of Cork but now there are four. The District Court used to sit on Tuesdays and Fridays in the 1960s. Now it sits every day in four different courts. People have unrealistic expectations of claims and this must change. We have a responsibility to ensure the innocent are protected. We have also a responsibility to the insurance groups. If we can assure them that novice drivers will be tested after ten weeks, people will congratulate the Minister. People have had to wait as long as two years and were queuing up at one depot in Cork. I know of a person who could not get a job because he had not sat his driving test. If the waiting time can be reduced to ten weeks, we should subsequently reduce it to five weeks or even one week, but we must make sure it is done properly and that we watch those people.

A significant number of learner drivers are causing accidents. Some of them turn around to see what is happening behind them. They have three mirrors and they must be taught to use them. Many people do not know what they are doing when on a roundabout. These things are costing us a small fortune and point to the fact that some drivers do not know what they are doing and are covered by insurance in any event.

We are putting billions into broadening main roads and some novice drivers hold the crown of the road. A traffic authority should have the responsibility to ask them to pull in. In the United States, a person holding up eight cars is summonsed. They must pull in to allow traffic to move. When I travel to Cork on a Friday, I travel at 27 miles an hour for the five hours and 40 minutes it takes me to cover the 160 miles and that is not acceptable. Occasionally, I come out of Cork and drive beyond Fermoy and it will be ten miles before I meet another car because the wrong person is in front and I cannot get past.

Two thirds of the road from Cork to Dublin has a hard shoulder, yet nobody will go inside the yellow line. We are building roads with 3.7 metres on each hard shoulder and 5.7 metres on each side of the road so one third of the road is gone. People will stay on the crown and will not move in and this can cause accidents. I do not say people should drive at 70, 80 or 90 miles an hour, but they certainly should be driving at 60. We must move traffic along. If we build roads without moving traffic, there will be higher insurance costs and it will cost the State more. The Minister knows the way insurance companies can bring in costs.

It is appalling to think that 67% of the total car insurance market is made up of a cartel of three. That is not fair competition. The Minister recommends that people should shop around. The requirement for people to receive 15 days written notice of renewal terms is a very good idea and we must ensure all brokers provide this. The Central Bank should tell the brokers to do so because all brokers are now licensed by the Central Bank.

The Minister has said that 8% of drivers are not covered by insurance. That is a very high number. It is not fair to blame a young fellow who buys a car and does his best. I have four boys and three girls and some of them are paying £5,000 or £7,000 per year or £140 per week which is €180. This represents a week's wages and it is not fair. If there are people who are guilty of causing accidents, they should pay the costs and I have no objection to that.

The Minister referred to young boys speeding and I agree. They are taking cars on roads that were not built to take such speeds. They pretend they can drive well. We did that ourselves even though we did not have the cars at that time. I can imagine what young boys think they can do, but when they hit a ditch they find out that it is much harder than the car. We then have to go to more funerals. I see this so often that it is frightening and we must put a stop to it. I would be delighted if we could install governors on car accelerators, but that will not happen.

We have a responsibility to safe drivers who deserve credit. For instance, there is no such thing as a no claims bonus because premiums are increasing. Earlier this year we debated the issue of insurance costs which are causing inflation. I am in business and can see that insurance costs are rising to the extent that I am almost working for the insurance companies. One has to ask the reason this is happening. While I am not an expert on the matter, I am trying to approach this trend in a logical way. There is no doubt that the increase in reinsurance costs has been substantial.

The Motor Insurance Advisory Board went into every detail of the matter. I congratulate the Minister of State on having posted the report on his Department's website. I have never seen that done before. It is good that people can obtain details of the report and its recommendations on the departmental website. It would be an excellent idea to make the departmental website address known by way of public notice. Yesterday we discussed data protection, but such website addresses should be brought to the attention of young people, in particular, in order that they will be made aware of such recommendations. In this way they would feel more confident that the legislators are trying to provide them with better protection.

Can we take any steps to deal with the reluctance of parent companies to invest capital in insurance undertakings? My business must be covered for public liability, as every business must be, but it is sad to think that we cannot place demands on parent companies to invest more in car insurance. For instance, if I insure my property or business with a particular company, can I ask that company to provide my car insurance also? I can, but it can quote such a high premium that I will have to go elsewhere. I find this very disturbing. Insurance companies are making a lot of money. So are the banks, but they waste it elsewhere and we do not even ask questions about it.

It is heartening to see the report of the Motor Insurance Advisory Board that at long last has investigated this matter. It was long overdue. It contains recommendations, in particular on the environment and road structure, which concern every Department. Its authors were prepared to say what was wrong. At times we do make stupid decisions about roads and make mistakes, although no one is prepared to admit it.

The installation of CCTV cameras on roads is a very good recommendation. If a particular road structure is in good condition, traffic should not be limited to 60 mph. A properly constituted traffic authority could oversee speed limits, safety and improved traffic movements, and insurance costs would fall as a result. I congratulate the Minister of State on the report.

Ar dtús ba mhaith liom fáilte a chur roimh an Aire go dtí an Teach, agus roimh an tuarascáil atá os ár gcomhair. This is the first time a Minister has taken a hands on approach to trying to solve the problem of high insurance costs. For ten of the 16 years I have been a Member of this House I have been raising this issue, as has my colleague, Senator Dino Cregan. The House has debated this matter on many occasions. I thank Senator Cregan for the positive way in which he has examined the report.

Many steps have been taken during the years to try to reduce insurance costs. The driving test was introduced to curb road accidents and, thus, insurance costs. When it was claimed that worn tyres caused accidents, we introduced laws providing for a minimum tread. We then introduced speed limits to solve the insurance problem and, later on, seat belts were introduced as the ultimate answer. We then got rid of juries in order to reduce insurance costs. If I had more time, I could add to this list of measures taken during the years to reduce the cost of motor insurance premiums. I have seen many such initiatives, but none of them succeeded in reducing insurance costs. Why? It was because none of the measures attacked the vested interests involved.

I have been driving since 1946 and, thank God, have never had an accident in all those years. I have worked as a travelling salesman and drove a truck drawing turf during the war years. At the time it was easy to obtain insurance cover. My first car was a little bull-nosed Morris 8 which cost me £25. The insurance cost £10, tax was £3.10s and I was on the road. Those were the good old days, although, admittedly, wages were only £1 or 30 shillings per week. Nevertheless, one could get on the road.

The reason insurance costs have gone out of all proportion nowadays is very simple – it is because the legal profession is making a fortune out of claims. The ambulance chasing syndrome about which we used to read in America is now apparent in Ireland. Everyone trips and falls down now. In the past month I had a minor accident when I tripped in Store Street, but I will not be making a claim as a result of it. Why should I blame the corporation if I was stupid enough to trip on a street where thousands of others do not? We must ask ourselves where personal responsibility ends and public liability begins. We will not discover the answer until we face the challenge of this dilemma.

I am glad the Minister of State has decided to establish a personal injuries assessment board, but must sound a note of warning. The Minister of State will be entering cowboy country when he takes on the legal profession. Mark my words, they are a law unto themselves, as we have seen during the week. It is only right to make some comment upon the matter. Because they are above reproach, Seán citizen is not allowed to write letters to them and if he does, it is considered to be a serious offence and they will not even reply. Nobody should be beyond having the courtesy to reply, through their secretaries if necessary, to simply say, "I received this letter, but cannot entertain it," or some such answer. Why should anyone be so high and mighty that if Seán citizen writes to them, they will not reply? Why should the wigs and gowns in the Four Courts be above everybody else? The Minister of State will have an awful job in taking them on.

While one could do with divine assistance on the road at times – one says a prayer to one's guardian angel every day – questionable compensation claims constitute a racket about which I am sure the Minister of State is aware. A colleague of mine was driving one day and pulled up at a stop sign. His car skidded a little, however, as a result of which it just touched the bumper of the car in front. A young lad of about 12 years then jumped out shouting, "Daddy, daddy, I have whiplash". They took a case against my colleague and received a settlement for whiplash, although the cars had barely touched and no whiplash had occurred. This is the sort of racket going on.

The medical profession is not above reproach either because doctors are providing certificates in such cases. We know that some medical people are looking after clients seeking compensation in the law courts, rather than caring for the sick and infirm. Such big vested interests are adding to the insurance costs of motorists, as well as putting small firms out of business. We cannot continue to pay such high insurance premiums.

In my view, those who pay insurance should have greater authority to decide whether to defend their cases in court if they so wish. Insurance companies often refuse to allow people that right. They settle out of court and the insured loses his or her no claims bonus. That system must be challenged and I urge the Minister of State to look into it very seriously with a view to reducing the insurance companies' power of decision in that regard, rather than allowing them carte blanche as at present. He should take on the vested interests.

Perhaps, instead of issuing summonses to people who are caught in the act of drink driving, their cars should be confiscated, leaving them to get home on foot, or in whatever manner they wish. Indeed, if they are drunk and incapable, maybe they should taken into Garda custody until they sober up and then released, without their cars. If drunken, careless or dangerous drivers had to part with their cars for a week or two, they would have a better appreciation of the value of their cars and licences. The proposed points system will not make one iota of difference. Very often, it is those who drive carefully and conscientiously who are caught by speed limits, merely for the sake of Garda statistics. Recently, while travelling near Roosky in company with another disabled driver, I was stopped by the speed cops for doing 38 miles per hour just as I approached the 40 miles per hour speed limit sign. At that point, just beyond the village, there is not a house on either side of the road and the Garda car had reversed into a private roadway. Stopping me in those circumstances served no purpose other than increasing statistics.

Speed limits should be reviewed. On a dual carriageway with a normal speed limit of 70 miles per hour, it is quite ridiculous to encounter a stretch of road where one has to drop back to 50 miles per hour. Yet, on country roads, one can drive freely at 60 miles per hour in situations where the limit should not be more than 40. Modern cars are equipped with ABS, EMS, servo-assisted braking and so on. On purchasing a 1963 car, I was concerned about the brakes and had them checked by a friend in the motor business. I was informed that the brakes were as good as when the car originally came off the assembly line. It had only 21,000 miles up, having been owned by an elderly lady. The difference in braking systems then and now is unbelievable, as anybody who has driven a vintage car will confirm. Modern cars can be brought to a stop without skidding. The present speed limits should be reviewed to avoid restricting drivers to 50 or 60 miles per hour in situations where one can safely drive at 70 miles per hour. On most continental roads, the limit is 120 kilometres per hour, which is roughly 70 miles per hour.

I welcome the suggestion of paying people a weekly or monthly rate of compensation instead of a lump sum. That is something which I advocated years ago. The lump sum approach is something of a racket. It is not unusual to find people who have received large compensation awards making an apparently miraculous recovery a short time afterwards and dispensing with their crutches or walking sticks. In a recently reported case, four people were caught on security camera while staging an accident in the toilets of a fast food premises, following which they called an ambulance for one of their number who was supposedly injured in a fall. The case went as far as the steps of the court before the claimants admitted there was no point in arguing with the video evidence against them. They should have been prosecuted for attempted fraud. Why were they and their legal personnel not charged with false pretences? Why should anybody be above the law?

This monstrous issue of the compo culture must be confronted head on. While insurance companies are undoubtedly making money, businesses and individuals are being robbed. Every day, one sees advertisements inviting accident victims to contact legal firms for "free interview". In reality, there are no free interviews, as is patently obvious from the report which we are discussing today. I have been told, although I cannot verify it, that claimants who have agreed to settle their claims out of court and accepted cheques for a certain figure, actually had no idea of the total amount of the settlement figure agreed by their legal representatives. They might have received, say, €20,000 out of a total settlement of €50,000. The amounts of all settlements out of court should be published and I suggest to the Minister of State that that should be a legal requirement.

The gross amount should be published.

The gross amount, yes. There should be no under-the-counter payments.

A high proportion of accidents occur between 12 midnight and 4 a.m. Where are the Garda patrols and speed cameras during those hours? There should be much greater attention to safety, policing and accident prevention on the roads during that critical period. There should be a dedicated highway patrol service which, among other things, would deal with drivers who hold the centre of the road while travelling at 40 or 50 miles per hour, causing traffic to back up behind them. On the continent, such people are directed by the highway patrol to get out of the way and allow traffic to move freely at a reasonable speed. A similar approach on our roads would improve road safety by avoiding accidents resulting from attempts by frustrated drivers to pass out relatively slow moving vehicles, often with tragic consequences. I have seen many narrow escapes in such situations, simply by the grace of God.

In summary, I would welcome the seizure of cars in cases of drink driving, if that were possible, a firm approach to the compo culture and a move to a new weekly or monthly payments system. Of course, a person who is badly injured must be properly compensated but, instead of giving them €1.5 million or whatever figure, the award should be €500 or €700 per week, as appro priate, for the remainder of the person's lifetime, subject to evaluation as time goes on. In case of recovery, the person concerned should be grateful to be in a position to forego the compensation thereafter. Such an approach would be very effective in counteracting the compo culture. The report before us today is excellent and I congratulate the Minister of State on being first to adopt a hands-on approach to the problem. I hope he will not be tripped up or sidelined as he is taking on powerful vested interests. He will have the backing of the great majority because they know that their sons and daughters cannot get a job without a car, yet they cannot get insurance. Something must be done about this. The Minister of State is making a wonderful effort to address the problem.

I intended to make other points but know the Minister of State has other commitments. Given what is happening today, I thank him for attending the House. Many of his colleagues would have pleaded lack of time to attend. He will have the backing of us all to take on the vested interests and once and for all halt the "compo culture" that will close small businesses and put many out of work.

When asked his opinion on the establishment of a tribunal of inquiry, a former colleague, John Wilson, replied it would be a barrister fattening exercise. It is time the barrister fattening exercise in the insurance industry was brought to a halt and that the people can get insurance at reasonable cost.

I wish to share my time with Senator Quinn.

Acting Chairman (Mr. Moylan): Is that agreed? Agreed.

I could listen to Senator Farrell all day. He is one of the great jewels of this Seanad. We should have heard more from him. Perhaps we will in the future. His oratory is arresting and refreshing. He, Senator Cregan and others have beaten this drum for a long time. In the report they are finally getting the kind of reward they deserve. The attitude of the Minster of State has also been the subject of deserved applause.

It is difficult to address this subject without sounding nakedly populist and part of a chorus which has grown in recent days. It is also difficult to acknowledge that the insurance companies and the lawyers have a case, although I cannot find it. I have been briefed by various groups and people and do not find the pleas of any of the vested interests under attack in this report convincing.

We are dealing with a very big honey pot and an enormous amount of money in the insurance industry. The honey pot is being divided up among various vested interests and this superb woman, Dorothea Dowling, who is responsible for exposing this situation, has shown that it has been going on for a long time. We have not been aware of where the money has gone, or its extent, but the result is that young drivers, especially young women, have been bearing the brunt of what is close to an institutionalised scam.

This is different from other scams because car insurance is compulsory. There is no market economy for it. One must have car insurance. People are ripped off by banks to which there is a voluntary aspect. However, in the case of insurance they are being robbed against their will. When the kind of money involved is handed over, many want a lot of it because it is easy money.

Senator Farrell rightly referred to the "compo culture". Given that it is so lucrative, it starts with some of the more unscrupulous garages. I am one of the worst of drivers. I have more experience of crashing cars than any other Member. If there is a lamp post in front of me when driving, I hit it. As I regularly hit my car in the same place, I go to different garages. If I do not know them, the most common question I am asked is if it is an insurance job. By this they mean that if so, they will load their charges in the knowledge that they can rip off the insurance company which will not contest them. That is how the honey pot is built up and all those involved get a nice slice of it. Ultimately, the consumer pays, especially young women drivers, for this con job that starts at the bottom of the ladder. That is what is so wrong about it.

The insurance companies are making excuses and, like all excuses, some are to an extent justified. They refer to legal costs which they do not contest. The lawyers are a vested interest, which the Irish Insurance Federation has not opposed. Instead they have co-operated because they know that if legal costs are high, not only will the lawyers do well, but their costs will be passed on the consumer. They are all in it together. They only fell out last week when the report was published, at which point they started to eat each other like sharks because they did not want to take the blame. Until then they had been running a legal and insurance cartel as the consumer suffered. The increased costs were part of a conspiracy. We should not blame only the lawyers for this. They were all at it.

We should not accept the excuses about the extraordinary finding, quoted widely in the newspapers last week, that for over 17 years the insurance companies made nine times more profit from motor insurance than their colleagues in the United Kingdom. The response of the companies was to point out that in the last three years they have made losses. If the report had not been published, they would be returning to profitability.

The report exposes the most extraordinary practices in the insurance industry. The Minister of State acknowledges that in addition to the lawyers and the insurance industry, another vested interest is the Government. I applaud him for the fact that, implicitly in the report, the Government accepts responsibility and guilt for tolerating this situation, although it is unfair to attribute blame to this or any previous Government. I cannot say the reason for this is that many Dáil Deputies have a connection with the insurance industry. I consulted Nealon's guide and discovered this is not the case. Very few Deputies have a connection with the industry. Nevertheless, the industry is a powerful lobby and has been able to bring enough pressure on politicians of all parties to consolidate itself.

The problem is self-regulation. It is a massive problem in all the professions and many service industries in Ireland. I cannot understand how self-regulation is tolerated in any profession because, by definition, those who regulate will tolerate. I saw it in the Stock Exchange for years, but that is now regulated to a great extent by the Central Bank. Those who regulated had a vested interest in allowing the malpractices and abuses taking place to continue because they made profits from them. There is such a clear conflict of interest in any system of self-regulation that the first measure which should be taken is the termination of self-regulation for all professions and service industries in Ireland. There is no way that the people concerned can be trusted to regulate themselves, not because there is anything inherently wrong with them, but because they are immediately challenged by a conflict of interest which forces them to perpetuate abuses.

When is the implementation group due to report?

Three months from yesterday.

I thank the Minister of State. I did not hear him mention it. My time is limited, but I wish to make a further point. I am not sure that we should stop with motor insurance. What has happened in this report is dramatic and welcome and young drivers can look forward to a better future because of it. However, the insurance industry beyond the motor insurance sector should be examined. The lack of transparency exposed in the MIAB report extends to all areas of insurance. It can be found in life insurance, where people invest money in life insurance units but cannot find out where their money is. That is a scandal. The insurance companies will not tell them where their money is and people are forced to sell—

And the banks.

Yes, it also applies to the banks. People are forced to sell their life insurance policies because they do not know in what it is invested. They ultimately give up.

I hope that in the next Dáil – let us hope the Minister of State is still in his position or promoted because he has a commitment to this issue – we will see the end of the exploitation of young drivers and young people generally by vested interests such as insurance companies.

I thank the Senator for his kind remarks. Is it agreed that the sitting be suspended until 12.40 p.m.? Agreed.

Sitting suspended at 12.35 p.m. and resumed at 12.40 p.m.

I welcome the Minister of State and the opportunity to debate this matter. This topic is clearly one which hits everybody in the country, individuals and businesses. I can think of one small business in County Kildare whose very survival depends on steps being taken in this area and there is a representative of that business in the Visitors Gallery. Our hearts are with businesses but also with individuals.

I compliment Ms Dorothea Dowling, who chaired the Motor Insurance Advisory Board, on the fact that it made 67 recommendations. I was impressed by the words used by the Minister of State today and I hope that even if he is elevated to a new position in the next Dáil, he will be able to ensure that these are implemented. Too often reports by advisory groups either fail to get to the root of the problem at which they are looking or get to the root of the problem but the recommendations are not applied by the Government.

This report gets to the heart of the problem. There is little doubt about that and today's debate shows that. Due to the impact of the report over the past week in the press, I feel confident that the next Government will have no option, no matter who is returned to office, but to implement the report in full and with enthusiasm rather than with any reluctance.

They say a week is a long time in politics. I have always said that too, but it is also a long time in the sphere of public reputations. In just a few days the insurance industry has acquired what I call pariah status. It was never exactly loved, but now it is enemy number one. No doubt some of this reaction is overdone, but nobody who has read the report in detail can emerge from the experience still believing that the insurance industry has played straight with the people. On the contrary, it is clear that over a long number of years it has carefully mounted a campaign to hide the true facts about the insurance industry in Ireland. If nothing else, the level of obstruction it offered an official advisory body is enough to put it in the dock.

This leads me to the main point I want to make. For the past week most of the focus has been on motor insurance and rightly so because that is the subject matter of the MIAB report. Senator Ross spoke earlier about wanting to widening the debate. I would also like to widen it because the collapse in the creditability of the insurance industry should prompt us to broaden the focus to include all insurance. While we all know there is a problem with motor insurance, equally there is a problem with other insurance, particularly the insurance which businesses must pay.

I had occasion to speak about this issue recently on Report Stage of the Bill which is now being signed into law as the Solicitors (Amendment) Act. On that occasion I concentrated on the legal side which is a major contributor to the high cost of claims. Senator Farrell and Senator Cregan spoke about that with great strength of feeling.

Following the publication of the MIAB report, I feel the time has come to take a similar close look at the subject of general insurance, not just motor insurance. If insurance companies have been leading the public up the garden path in regard to motor insurance, then there is at least a chance that they have been doing exactly the same across the whole insurance market. We should take the trouble to find out. That is one task to lay on the desk of the incoming Minister, whoever he or she may be.

It was interesting to hear what Senator Ross said about insurance. I call it a grudge purchase. We regard it as a necessary evil. Senator Ross was very good when he spoke about the banks – I do not think I would have the neck to say what he said – but there is little doubt that there is a need to ensure that the evil, however necessary, is no bigger than it should be. It is a grudge purchase. We do not have an option; we must have insurance. However, we must make sure it is not any bigger than it needs to be.

There are a number of reasons for this, such as that the cost of insurance is a significant factor in the overall cost of living, not just in one aspect of it. For several years mine has been virtually a lone voice warning about the dangers of letting inflation get a grip on the economy once again as it did back in the 1970s and early 1980s. I am interested to note that this theme is now being taken up by some of our leading economists. We are now beginning to hear talk of inflation which we have not heard in the past couple of years. Our inflation rate has been running at double the European average and to a certain extent we have been ignoring it. We cannot continue that way without eroding our international competitiveness, which is already under attack in a number of other ways. However, the cost of insurance has an additional impact to the problems it creates via the whole route of general inflation. As I pointed out on the last occasion, the cost of insurance has a direct impact on the costs of every business trading in this country. A good example of this is the business in County Kildare of which I have just learned and how its very survival depends on it.

Competitiveness gets hit from two sides, first from insurance costs through general inflation and, second, through the direct impact on business costs. When these two elements are combined, they add up to what I call a time bomb which could have a devastating effect on the pros perity of the nation as a whole. Therefore, we must do something about it.

About a year ago the Minister for Finance told the people it was time to party. I am not sure if that was true then – I doubt very much that it was – but it is no longer true. Over the next five years the country faces a critical task. The sooner we wake up to that fact and behave accordingly, the better it will be for us. In fact, our very survival will depend on it if we do not wake up to it quickly. That task is to address the problem of how to maintain our competitiveness in an environment that is becoming less and less favourable with each passing day. All our prosperity depends on our competitiveness. If we continue to erode it, one day it will collapse in front of our eyes as quickly as the reputation of the insurance industry collapsed in the past week.

By implementing this report fully and quickly we will take an important step towards maintaining competitiveness. That is why I was impressed with the words the Minister of State used. He said that what he can promise is "a commitment on the part of myself and my Government colleagues to ensure that the necessary action is taken to give effect to the many recommendations contained in this report". Unfortunately, he will not be able to do it in the next three weeks but he also stated at the end of his speech that "I firmly believe that these 67 wide-ranging recommendations chart the way to a system of insurance". Those are the words we need to hear the next Minister using. If we can broaden our approach to include the whole insurance market, I believe we can take another step. Over the life of the next Government we need to take many such steps if we are to maintain our prosperity in the future.

I wish the Minister of State well and I hope he will be in a position to do something, but whoever is in that position in the next Government must grasp the issue and use the same words. We will expect the new Minister, whoever he or she is, to use the words used today by the Minister of State, Deputy Treacy, when a new Government comes into office.

Acting Chairman

Senators O'Brien and Chambers are sharing time. Is that agreed? Agreed.

I commend the Minister of State, Deputy Treacy, for commissioning the report of the Motor Insurance Advisory Board. Its findings provide much food for thought, and I wholeheartedly endorse the Minister of State's decision to extend the remit of the board and to establish an implementation group to act upon its recommendations.

The report offers proof, if further proof were needed, that the cost of insurance premiums, particularly for young drivers, has risen to an unacceptable level. The rise in premiums has given cause for increased concern in recent years, but it seems to have escalated enormously in the past 12 months. A by-product of the economic growth and development the country has enjoyed in recent years has been increased ownership of motor vehicles by young members of the workforce, but the insurance quotations young drivers are receiving are frightening in many instances.

The insurance companies seem to punish our young people for the country's prosperity, a prosperity they have been integral to creating. Huge profits are being generated in the insurance industry. I hope the findings of the advisory board's report are referred to both the Equality Authority and the Competition Authority for their observations and for any actions they may deem fit to take. New regulations have already been announced by the Minister of State, and these should broaden the choices available to the consumer in the motor insurance area. The requirement upon insurers to give at least 15 days notice of the terms of a renewal policy is welcome, as is the need to provide official certification that a motorist has been accident-free.

Increased insurance costs are having adverse consequences for more than just the users of motor cars. The agricultural sector has been affected by the cost of insurance to sales yards, public liability on farms and so on, a situation which has serious implications for farmers, including those in my own Cavan-Monaghan constituency who wish to sell livestock at local outlets. Growth in the agri-industry sector is in danger of being crippled because the insurance costs confronting those who wish to develop new industrial activities or expand existing ones are very severe in many cases. My constituency has survived throughout less favourable economic climes thanks to its backbone of small and often family-based industrial units providing steady local employment. It would be ironic in the extreme if, at a time when the country as a whole is perceived as being on the crest of an economic wave, unacceptably high insurance demands were allowed to threaten job creation in rural communities, including the Border region, which has had to battle against disadvantage for many years.

Hopefully the initiative the Government has taken to examine the insurance industry will result in a situation where more competitive premiums are available to motorists, in particular young drivers. I thank the Minister for State for introducing this wonderful document on insurance, and I wish him well in the weeks ahead.

I welcome the Minister of State to the House and welcome the report. He presented the interim report here some time ago and outlined the progress of the advisory board that was investigating the insurance industry at that point. The report is very interesting and timely because there was not a lot of commitment nationally to really investigate this industry until such time as the public at large decided it was fed up with it. On every doorstep one visits during pre-election walks, one hears of enormous increases in car insurance, private insurance for small business and home insurance.

One man with three sons who, in the changing economic climate, need cars to get to work, told me that very few insurance companies will even offer quotations to young drivers, and his sons are now paying something in the order of £3,000 each for a small car. It is not by choice that they have to have a car, it is essential for attending work. Things have now reached the stage where politicians and the public at large are beginning to seriously examine the issue.

I welcome the work being done by the Minister of State because there was not much interest in examining this industry up to recently, aside from the work of his Department. There was not a huge push by any politicians to examine the issue to its full extent.

There are legal practices that work full-time on insurance claims. Look at the back of the telephone directory and you will see them advertised, which is galling. They can have up to ten cases in the circuit court on any one day, and if they win two of them they cover their costs. People go to court taking claims, often spurious, and seeking settlements or damages. The most galling aspect of all, which can be seen from the telephone directory advertisements, is that most cases are settled on the steps of the court. That is a shocking indictment of the business.

I compliment the chairperson and the board members who examined the issue in depth. The insurance industry must put its house in order, it must serve the interests of the public and the same time maintain viability. The whole issue of standing up to vested interests must be faced up to and we, politically, will have to see the process through. I welcome the fact that the Minister of State's implementation body will act upon the 67 recommendations of the advisory board, which are wide-ranging but which are firm and constructive and will put the interests of the consumer first, over and above those of the professional vested interests.

It is important that there is competition within the insurance industry, and it also important that young drivers are given the opportunity to attain reasonably costed motor insurance, whether by means of a points system or whatever. Young people should have access to reasonably priced insurance premia.

I agree that the insurance industry as a whole must be investigated. Now that we are examining the possibility of the insurance industry becoming involved in public private partnership, it is important that we have a clear knowledge of how that industry operates. Rather than a reduction in the number of companies offering this service, there must be more opportunity for open competition within the insurance industry. It is in everybody's best interests that the 67 recommendations in this report are implemented. I look forward to seeing this report monitored in the future. I thank the Minister and his Department for conducting this investigation into the insurance industry.

I welcome the Minister of State at the Department of Enterprise, Trade and Employment, Deputy Treacy, to this House. I thank him for dedicating so much of his time to the discussion of this important matter with us.

As public representatives, many of us are familiar with the difficulties associated with acquiring car insurance. Parents of young men and women often contact me in relation to prohibitive motor insurance costs. Young people need access to a car in order to reach their emloyment. Public transport does not suit the needs of those who work shifts.

Many speakers have referred to the rise in home insurance costs. Attention should also be drawn to the increasing difficulties experienced by those who build our houses. Developers, carpenters, bricklayers and plumbers are finding it increasingly difficult to get public liability insurance. Even those who have a solid track record of safety in the workplace are having significant difficulty getting insurance. People who have never made any claims against their policy still find that their premia are rising to prohibitive levels. Insurance companies continue to cite the events of 11 September 2001 as the main reason for increasing the cost of all premia.

The possibility of a speedy settlement of small claims must be examined. Members of the legal and medical professions frequently present insurance companies with large bills. I recall one occasion on which I was in attendance at a court case involving an insurance claim. It reminded me of a cattle fair, with all of the wheeling and dealing that took place. Having taken up the time of the courts services and insurance company representatives, most of these cases are settled on the steps of the court house.

The cost of farm insurance is also a cause of concern. Farm safety has improved greatly over the years yet the cost of public liability insurance for farms has continued to rise. This same issue also affects the running of marts. The area of road safety must also be investigated. Insurance companies told us that when road safety improved, insurance premia would be reduced. This has not happened. The introduction of the national car test and the consequent improvement in the safety of vehicles has not brought about any reduction in our insurance costs either. Premia have continued to rise despite all of these improvements. The Minister has spoken about the confiscation of cars driven without insurance. Irrespective of who forms the next Government, this idea should be pursued. Why should anyone go to the expense of insuring their car when others drive around without it?

It is vitally important that the 67 recommendations made in this report are implemented. On "Questions and Answers" last week, a representative of the insurance industry attempted to make a case for the huge increase in insurance premia. It was a case that did not stand up in the face of challenges from the audience. I welcome the Minister's recommendation that insurance companies must give 15 days written notice of any increase in insurance costs. In the past, young people have been given only a few days notice of any increase and they have had no option but to go to the credit union and take out a loan in order to meet the increased cost.

The introduction of speed traps is to be welcomed. The use of cameras to catch drivers who break the speed limit is very effective. Such cameras should be mobile and moved regularly to ensure maximum compliance with road safety regulations. People who overtake on continuous white lines must also be caught by these cameras. People who drive dangerously must be dealt with efficiently and severely. Those who repeatedly offend must not be allowed to continue to drive because they are the main cause of road accidents. Such behaviour brings about an increase in everybody's insurance premium. Those who drive safely are shouldering the costs for those who are reckless.

I compliment the Minister on his work. He has stated that, in common with every other Member of the Oireachtas, he has been concerned about the high cost of motor insurance, particularly for young drivers. We all recognise that the Minister does not pretend this report provides a quick-fix solution to this problem. This report provides a road map enabling us to address a long-standing and unsatisfactory state of affairs which has been the cause of much public disquiet. Many people have paid lip-service to solving this problem. The Minister said that he would address people's concerns and he has delivered on that promise. It is up to others to ensure that this report is delivered on.

I wish the Minister well in the forthcoming general election. I have no doubt that the people of east Galway will re-elect him. On the strength of this report, I believe that the Minister will be appointed to a senior position in the next Government.

I sincerely thank all of the contributors to the debate for their dedication, oratory, sincerity and commitment. The way they focused on the report shows that they are committed professionals. I always enjoy coming before Seanad Éireann because there is a tremendous professional attitude among Members to politics and problem-solving. This House does not have to engage in the same sort of conflict resolution that occurs in the Lower House. I have been a Member of the Dáil for the past 20 years and I want to remain a Member. I have no desire to enter the compe tition for a place in this House. However, I hope I will return here in some role in the future.

I appreciate the contribution the Seanad makes to politics. I have stated publicly on many occasions outside the Parliament that Seanad Éireann makes a huge contribution in terms of fine-tuning legislation and putting a finesse and shine on it. As a result, we always produce quality legislation. I am serving in my ninth ministry and it has been a pleasure to have attended in the House on many occasions. This debate has been another occasion of fulfilment and enlightenment for me.

I wish to refer now to a number of points Senators raised about the report. Senator Ross put his finger on it when he stated that it is all about money. Insurance is a financial protection system under which we pay for the protection to carry the risks to ensure that there are reserves – the Senator referred to them as a "honey pot"– available when liabilities occur. The major question to be asked about those reserves is where does the money go?

If we add everything together, we arrive at a figure of 103 units. Members may wish to know how this calculation is arrived at. The 100% or 100 units represents the total amount paid in premia by all policyholders. When this money is invested on a short-term basis as premiums are paid throughout the year, it gives an annual average return of approximately 3% which means that, in total, there are 103 units of income. Where does this money go, how is it expended? A total of 3% or three units – the total amount accumulated in interest throughout the year – is paid out to brokers, the intermediaries who present us with a choice, who seek the market, who look to insurance underwriters to provide quotes and, ultimately, who provide advice. Of the remaining 100 units or 100%, 50 units or 50% is paid out to claimants. A total of 10% or ten units is spent on management expenses. I accept that this is quite high. The balance of 40% is paid to the wonderful lawyers who manage the interests of the clients.

The report of the Motor Insurance Advisory Board is one of the most outstanding of its kind ever delivered to the people of Ireland and to the Parliament. It is a tribute to Ms Dorothea Dowling and her outstanding board. There was a previous Motor Insurance Advisory Board which sat during the term of office of the Government before last. However, it never met during the term of office of my predecessor. That board comprised four people: one representing the motor industry; two representing the insurance industry; and an unfortunate civil servant.

On entering office in October 1997, I stated that I would have to establish a board which would include among its membership representatives – professionals and other interested parties – with experience of every aspect of motoring in Ireland. I was determined that people with experience of insurance, roads, law enforcement, car rental and coach hire and road haulage, representatives of the National Roads Authority and the Departments of the Environment and Local Government, Justice, Equality and Law Reform, Enterprise, Trade and Employment and Finance, accident victims, young drivers and women drivers would all be involved. A total of 20 individuals were appointed and they did an outstanding job in difficult circumstances. The insurance industry was also represented on the board.

People have criticised me for not coming forward with the report before now. Members will understand that there was major reluctance on the part of the industry to give us the co-operation, raw data and statistics we required. I and my officials interacted on a continuous basis with the industry and the board and it was only post-June 2001 that we obtained the information we required. I have been lambasted for not acting on the interim report, which was inconclusive, legally unsustainable and would not have allowed us to make an iota of progress because a judicial review would have buried it. We would then have been back where we started and I was not prepared to take that risk. I was prepared to take the abuse meted out by many people while awaiting the final report.

We concluded the work on the report and our analysis of the data on 30 November. Since then we have been in constant discussions with the insurance industry, the representatives of which are still on the board, which checked every word, statistic and document before signing off on the report at the end of last year or in early January of this year. Everybody agrees that the facts are unquestionable and absolutely accurate and they have all signed off on the report. This is the first occasion on which we have ever achieved such total agreement in terms of the sustainability and transparency of the figures, facts, information and data contained in a report.

If Members look at page 416 of the report, they will see that the figure for professional fees – including those of lawyers, doctors, engineers and others – is 40%. We have evidence to show that lawyers sought medical advice on 13 different occasions from 13 different medical professionals in respect of a particular case. It was only when the correct assessment was arrived at that the case could proceed. Under the Constitution, one has three years in which to take a case. In other words, an accident may occur today following which the cars of both parties involved will be repaired and everyone will walk away happy. However, two years later one of them might be in the pub complaining about a sore neck and a bar-room lawyer might say "Did you not have an accident? I know a good doctor and a good lawyer. You should go and have a chat with them." That person then has 12 months in which to compile data and file a claim.

To change this type of practice, we would have to amend the Constitution. I have tested the water in this area but there does not appear to be a great desire among people for such an amend ment. In my opinion, a person who is sick or injured in an accident will know after three months whether their condition will be lasting. If a person waits three years before taking a case, I suggest that there is some other reason for their condition.

Various Members referred to the high cost of insurance. The pay-out, in terms of professional legal fees, on employers' liability is 46%. In terms of public liability, when the taxpayer, the public sector, Departments, State agencies and local authorities are obliged to pay out, the professional legal fees charged are 56.5%. That is absolutely ridiculous.

I was a member of a local authority for six years. I happened to be elected as its chairman and saw firsthand what we were up against. Galway County Council, the local authority in question, had to appoint a very high-powered professional engineer, who is an outstanding officer, to take charge of all liability situations. When an accident occurs he is sent out immediately with his camera, measuring tapes, modern technological appliances, maps and documents to carry out an assessment. As far as I am aware, he has reduced the authority's liability in terms of pay-outs by up to 300% in the past five years. It is sad that such action must be taken but it is necessary in order to protect the public from the nefarious vagaries of the type of spurious claims to which Members referred earlier.

We have collective responsibility in this area. This is not merely a matter with which the Government alone or an individual Minister or Department should deal, it is also the responsibility of the population of Ireland and the collective membership of Oireachtas Éireann. We were elected, by means of universal suffrage and under the Constitution, to do a job on behalf of the people of Ireland. Together we must work to eliminate from society this scourge by which we artificially pay far too much for a service which is critical, both to our individual and collective security.

Senator Quinn referred to inflation, to which excessive insurance is a major contributory factor. If a person in business planning the year ahead receives an insurance demand 300% higher than for the previous year, all his or her costs are inflated. To meet higher overheads it is necessary to raise the prices of the commodities and products one sells which may lead to industrial unrest when capital is redeployed. Staff may also want a pay increase. If one does not have the resources required to meet this increase, it may lead to industrial relations problems, redundancies or even closure. Therefore, insurance premiums have a huge impact right across the board, from inflation and industrial unrest to company performance and competitiveness at both local and national level. As Senator Quinn also pointed out, international competitiveness is critical to Ireland going forward. We are a small open economy with a population of 3.8 million. Whereas in 1987 we had 777,000 people at work, today the figure stands at 1.8 million. We need every available person in employment to sustain the economy, for which insurance is currently a serious difficulty.

Senators addressed the issue of liability insurance. We have been in constant contact with the relevant organisations, with which I have had numerous meetings. On 17 June 2001 the British company, Independent Insurance, unexpectedly collapsed due to fraud, a matter under investigation. As many companies here were covered by the company, my job and that of my Department was to find alternative cover for them as rapidly as possible. I remember one particular day – I believe it was 20 June – when five of our biggest companies were under threat because we could not secure insurance cover for them. By that night, however, we had managed to obtain insurance through the Insurance Federation of Ireland. I wish to stress that the federation acted responsibly by providing, albeit at a much higher price, the cover which Independent Insurance had provided for some seven years. While it was difficult to protect these companies, we did the best we could. We are now confident that most of the companies in question have been saved and insurance has been made available to them.

As well as this huge engagement on behalf of companies in terms of dialogue and discussions, we have given business sector organisations considerable assistance, advice and recommendations. We have told them what needs to be done and provided some assistance to achieve this. We are confident they will be able to take significant steps in the next six months to ease much of the burdens facing many smaller businesses.

The report is a very important document which will make a huge contribution on all aspects of insurance. A theme running through it is that similar problems arise with regard to every area of insurance and liability cover. The Government means business. We established a large consultation group which met for the first time yesterday morning. It is chaired by the assistant secretary general of the Department, Mr. Corcoran, who is supported by a great team from the insurance unit of the Department. The committee consists of high powered people, including representatives of IBEC, the Consumers Association, the chairperson of the Motor Insurance Advisory Board and five principal officers from five Departments. We have, therefore, consumers working alongside professionals and civil servants, the distinguished group who work hard every day on behalf of the country. This mix will focus on the report and ensure implementation happens.

We all share responsibility in this area. My Department has responsibilities, as do all other Departments. We have crunched the report's recommendations into a clear annotated document which is available on the web and in hard copy. It shows who is responsible for what. We gave the committee three months beginning yesterday to provide the Government with a detailed report. We hope the next Government will take the necessary action to ensure insurance is available to all and sundry, covers all their risks at a reasonable price and ensures and eliminates discrimination on age grounds, irrespective of whether it is against young or old people, two groups to which the report refers. It is essential there is equality of opportunity, pooling of risk and reasonable rates going forward.

We have done everything we can. It is now a matter for the insurance industry and the professional bodies to act responsibly. We are all in this together in the interests of the country. Nobody is entitled to more gravy in his or her pot. We have to share it around. People are entitled to earn within reason. There is no justification for settling claims without reference to the client, whether this is the employer, the driver or the victim of an accident. Claims should not be allowed to be settled in this way and cheques should not be offered until the claimant is made aware of the precise details of the gross payment, costs, net payment and reason for deductions. I am confident the implementation group will deal with all these matters.

I thank Senators for their tremendous contributions. The Seanad has done an excellent job in analysing, debating and making recommendations on the report, which I am very proud to have brought before the House. I am confident that we can send out a message that the Members of the Oireachtas, on behalf of the population at large, mean business. If we work together professionally and with unity of purpose, we can deliver a fair and equitable insurance system in the years ahead.

I thank everyone for their co-operation. I thank the Clerk and staff of the Seanad and pay tribute to all outgoing Members of the House. I wish those Members who will not seek re-election continued success and thank them for the service they have given Ireland. I wish every success to the Members of the House standing in the Seanad and general elections. On behalf of all my colleagues in the Houses and our candidates, who are probably canvassing as we speak, I ask the population and the adjudication panel to be merciful in their executions.

The Seanad adjourned at 1.30 p.m. sine die.