Wednesday, 8 March 1978
Dáil Eireann Debate
That Dáil Éireann, notes with grave concern the major increases from 35 per cent to 50 per cent from 1 March 1978 in the motor insurance premium rates of the PMPA sanctioned by the Minister for Industry, Commerce and Energy; is convinced that a radical reorganisation of the whole system of motor insurance in the State is long overdue and accordingly calls on the Government to set up, without delay, a State system of motor insurance together with a more rational and equitable State system to deal with the processing and settlement of claims arising from such a scheme of insurance.
To delete all words after “Dáil Éireann” and substitute the following: “notes that the increases in motor insurance rates of the PMPA Insurance Company recently approved by the Minister for Industry, Commerce and Energy after examination by the National Prices Commission were necessary due to the increasing rise in claims costs and to strengthen reserves consistent with growth; and also notes that the Government intends to have examined the effect of the present jury system on the level of awards and the legal framework generally within which motor insurance operates in Ireland.”
Mr. B. Desmond: In this motion we have advocated the setting up of a State-sponsored scheme of statutory minimum protection for motorists. In support of this proposition we cite the current situation whereby the State obliges all employees to hold a State insurance card. If one might draw the analogy further, that State insurance card provides a basic fundamental protection, for example, against personal illness in relation to employment  and also in relation to occupational injury.
I would like to see an extension of that type of scheme into the most difficult and complex area of motor insurance. The State, quite correctly, requires all motorists to take out minimum insurance cover. We feel that a logical follow-through from this basic legal requirement would be a statutory provision by the State, at a fair and reasonable annual premium, for minimum cover for a motorist against personal injury to either himself or his family in a car accident or to other motorists or innocent victims who might be injured in an accident. Having been obliged to take out minimum cover provided by the State, the motorist could take out additional policies for property damage in relation to his car, insurance against repairs and so on, just as in the health contributory insurance system there is no prohibition against joining the VHI or against obtaining additional private health insurance
We do not see any great complexity in the introduction of a system of that nature. The system is not particularly novel to this country. It would provide a real basic protection. It would be State funded and State guaranteed. It would be compulsory. It would do away with those many litigations we have in the courts against people who resort to evasion and who have disputed insurance cover claims. It would, as in the case of social insurance, prove to be much cheaper and to be entirely more efficient.
We already have the motor vehicle registration scheme in operation, and I understand it is being increasingly computerised at central level. The logical expansion of that system into minimum insurance cover as a basic requirement for every motorist should not prove too complex for the public service to operate; and, as the basic system is there, it should not prove too costly to introduce. Many Government Departments and semi-State bodies, such as CIE, provide their own self-funded motor vehicle insurance systems. If we have the kind of system  advocated it would be subjected to the ups and downs and to the arbitrary submissions by private companies of alleged underwriting losses. We have had this in relation to the PMPA, which, as we all know, have a monopoly in motor insurance cover.
It has been suggested that our proposal is unduly simplistic and that it is ideological. We are being ideological in this proposition. One single car accident can have catastrophic consequences for an individual or a family, or indeed part of a community. Determination in this case should not rest with a private individual; the State has a responsibility also. It should not be the exclusive role of the legal profession, or the exclusive assessment of an ad hoc jury system. Our demand is not only related to the State insurance system we are advocating. It would necessarily encompass also a root and branch reform of the legal system relative to claims and of the jury system of determination.
We submit that our proposal is radical. Without a radical change, we would be back here year after year dealing with the arbitrary and subjective submissions of private motor insurance companies. Therefore, I urge this motion as a serious proposition.
Mr. L. Lawlor: We have listened patiently to Labour Deputies speaking to their motion. I sympathised with Deputy Berminghan when he voiced his concern for working people who use private motor vehicles coming and going to work. In the main they are the people who will bear the brunt of this insurance increase. However, I do not share the Deputy's view that the impact is as severe as outlined and that policyholders covered by third party insurance are mainly affected. But I accept the sincerity of the Deputy and share his concern. I cannot say the same for Deputy Desmond's contribution.
Deputy Desmond gave no justification for the line of action proposed to be taken. For the establishment of a national motor insurance corporation the sole justification should be that the cost of insurance would be less to the  policyholder, that the services would be improved and that the claims would be better handled. Deputy Desmond gave no such justification. Instead the Deputy concentrated most of his speech on criticism of the PMPA, of its accounts, its investment policy and, secondly, a criticism of the Minister as the supervisory authority. There was also very severe criticism of the Department and its officials and the level of expertise which, in his view, they are able to bring to bear on a premium increase or a price increase application. There was also criticism levelled at the National Prices Commission. The National Prices Commission have had the best of consultants and experts in processing claims and the position in this case was no different.
As far as I am concerned, Deputy Desmond was laying a smokescreen. I suppose in his particular situation that is his job. If you do not have the facts or a reasoned case and, if you advance a proposition which is not sustainable, then there is no other course open to you but to lay a smokescreen and introduce a great many inadequacies and a great many irrelevancies. There is no great difference between the accounts of an insurance company and those of any other trading company. An insurance company takes in its income in premiums and it pays every year, actually pays, a proportion of the claims it has received. It does not matter if these claims have arisen in the actual year or in previous years. It still has a number—an even greater number probably—of claims still outstanding and it has to make an estimate of these. Contrary to Deputy Desmond's thesis, therefore, there is a very simple equation. On the one hand, there is a premium income and, on the other, there is the payment of claims and provision for claims which remain outstanding at the end of the financial year. It is in this latter figure that there is any difference, and not all that much difference, between the accounts of an insurance company and those of any other trading company. Because these outstanding claims have to be gone into, though perhaps not settled for several years because of litigation, that an estimate has to be  made each year for annual accounts so that, like the closing stocks of a shop or trading company, a figure must be put on claims outstanding. If the estimate for these claims is too low the company will show itself as having made more profit. If the estimate is too high it will show itself as having made less profit and will, indeed, conceal the real profit made or will make in the future and it will increase on paper its outgoings.
Now if the PMPA were being accused of concealing profits by over-estimation of claims, then Deputy Desmond might have some cause for complaint. But the reverse is the case as all public commentators in the welter of criticism directed at this particular company in the Press, and from many other sources over the past three or four years, have said. The Minister for Industry, Commerce and Energy and his predecessors have always had to analyse the claims provisions for this company and ensure it is not making too low an estimate for outstanding claims. There was nothing deliberate or misleading in any instance or too low an estimation by the company. It was simply that in a rising trend of inflation the claims estimator in any insurance company has had enormous difficulty in putting a figure on a death or personal injury case which may be settled as far away as five years from today. Insurance accounting at its best requires that the full cost of settling claims be put down in the books in the year in which the provision has to be made. In practice there is often a degree of upwards revision each year thereafter but the purist's theory is that the full figure must be provided for and the accounts must be shown in that given year.
The normal flexibility in this particular area is accepted at 1 to 2 per cent of excess provision for outstanding claims and, with a static portfolio, a low level of claims and a policy of quick or early settlement, as far as that is possible, the problem of long-tailed claims is reduced. With a massively growing portfolio such as the PMPA have had and with inflation running at the rate it was over the last five years and particularly with personal injury  or death claims calculated relevant to the earnings of the injured party which, with inflation sometimes accounted for up to 20 years forward particularly in the case of juries making awards, the problem of estimating claims outstanding to within 1 or 2 per cent accuracy, and we are talking here of a company the size of the PMPA, could quite easily mean a loss of £1 million profit or or a profit of £1 million in trying to underwrite outstanding claims. The claims estimator has, therefore, a very onerous task in coming to a positive conclusion as to the outgoing of the company.
As to the Minister's ability to know the real situation in an insurance company's accounts. Deputy Desmond's comments are honestly quite astounding. In the first place he should be reminded that the company have their own professional accountants. They have to lodge audited accounts in accordance with proceedings, as have any other registered company, and as an insurance company they have to lodge these accounts with a detailed list of schedules including a run-off statement for the payment of claims with the Department each year. The PMPA seem to be singled out but they are not the only company. Every company has to do this. It is normal practice and has been over the years. The Department have at their disposal independent professional accountants which they can put to work on any insurance company's accounts lodged with them, and they do, and the figure for the provision of claims outstanding is a matter of normally special professional analysing whereas a statistical selection of claims is examined in detail to see whether these independent experts agree with the figures in the books of the insurance company. Companies accounts are compared and the average cost of claims is compared company by company. The Deputy opposite can be fully satisfied that, unlike the cloud cuckoo land in which Deputy Desmond seems to think, the Minister carries out his responsibility in very different fashion from the vague, inadequate and amateurish  manner Deputy Desmond described yesterday evening. The examination has obviously to be through. Deputy Desmond should be reminded that in the welter of analysing the PMPA over the past years an intensive study was carried out and reported on in The Irish Times in May 1976. That independent look at the facts available reached the conclusion that, when dealing with the latest published accounts of the company for the financial year 1974, the company were indeed solvent and a UK organisation writing about the same time seemed to reach the grudging conclusion that the company were solvent by existing standards but then hurried on to point out that, in its opinion, it might not come up to the EEC pending change in regulations.
Deputy Desmond seems to join in the chorus of comment suggesting that the company must have been insolvent to seek an increase of 35 per cent. To say the least this is mischievous and misleading. There has been no question, and the Minister under his responsibilities has to ensure that there is no question of any insurance company ever operating under his authorisation being in or even tending towards a situation where they might not have assets to cover their liabilities. That is a built-in responsibility of the Minister and his officials in that section and therefore they go to great pains to ensure that no such situation develops.
Therefore it is worth while to ask Deputies opposite to show the level of responsibility that one would expect of them particularly when speaking of an Irish company of this size which have been most progressive in motor insurance and to leave behind all the talk of an insolvent situation and to face the fact that in 1978 claims will have to be paid by this and every other insurance company for which a premium may have been paid in 1975 or 1976 and that inflation will have increased the cost of the claim. Deputy Desmond did not point out that during his party's term in Government they probably went no small way towards creating that inflation which has affected the PMPA and many other organisations.
 For premiums paid in 1978 provision must be made for payment of claims arising in 1979, 1980 and as experience has shown, due to legal complications, these can go into the mid-eighties. There is a vast difference—and it is with this the Minister has to deal— between providing for increased costs of claims on one hand and dealing with inadequacy of funds which, I repeat on what information is available to me, does not arise, on the other. There is also the point that free reserves over and above assets equal to liabilities must be strengthened in any growing company. Statutory Instrument 115 of 1976 enacted the first non-life directive of EEC that this margin must be at least 16 per cent of premium income as a top-up on assets over liabilities. Prudent insurers see to it that this statutory solvency margin is not only held but held in some cases two or three times over. Fluctuations in market values of assets when insurance funds are invested could sometimes result in losses which might be temporary but losses nonetheless at the close of any accounting year.
Deputy Desmond must know that a company cannot go below the level of assets plus the statutory solvency margin over liabilities even in the technical accounting sense and if they did steps would have to be taken. Therefore, it is not prudent to sail very close to the wind. The PMPA have not done so and are not now doing so. The increase granted to them is to cover costs of claims and to ensure that solvency is not weakened by an excessive loss on the underwriting account.
Deputy Desmond also adverted to the fact that on the underwriting side the company would still make a loss of close on £1 million. This is the best estimate experts can give the Minister. The company will have considerable investment income and it will be naturally expected that it or any other insurance company would dip into the profits from its investments to meet a shortfall on whatever claims may arise from motor insurance. This is only right and proper and provided solvency is not impaired, and it should not be. For this reason, on the criterion of the  cost of the product—the well hallowed maxim that premium income should meet the cost of claims—the remainder should go to strengthen reserves, possibly towards dividends for share-holders, hopefully towards payment of taxation and towards the operating costs of the company. Would Deputy Desmond care to tell me what he finds wrong with this and why he talked about the Minister making the company carry on with less than the full cost of the claims in the premium increase?
On the investment side the company were again criticised severely. The House should be made aware that the spread of investment of the PMPA is broadly a mirror reflection of that of all other insurance companies. They lay out their policyholders' funds in gilt-edged investments, normally in fixed interest securities, loans and mortgages of a short-term nature, property investments. All prudent investors do likewise. Deputy Desmond seemed to think that the PMPA were doing something incorrect in doing what would be commercially desirable and required.
The Minister has regulations in force in his Department which regulate the maximum in each of a list of categories of investment which may be held by insurers. The PMPA and all other insurers will have to honour the conditions laid down for their investments. On the fundamental question of the company making these investments I find the criticisms very hard to understand. All insurers invest the policyholders' funds and, hopefully, by their expertise and prudence make gains on them, gains in the income derived from them and on the capital increase in the values. Both sources of gain to the company, while admittedly going partly to the company's free reserves and perhaps ultimately to shareholders, do, without question, strengthen the situation of an insurance company, enable it to be more competitive and grow and to quote premium rates lower than what they would otherwise be if these gains were not there.
Is it seriously suggested that the PMPA or anybody else should leave  their policyholders' funds lying in short-term interest bearing investments or deposits and nothing more? The Minister as supervisory authority, must regulate the spread and nature of these investments and I assume can call for and possibly has called for an annual valuation on current market value basis of the investment of insurance companies when he thinks fit, particularly over the past three or four years when what should have been very sound investment probably have undergone devaluation. I believe the Minister in the case of the PMPA and other companies has requested such information. This should be a regular feature of insurance control. I am sure the Minister will note particularly that the details of investments by the PMPA have been questioned here and ensure that a watchful eye is kept on the diversification of insurance company funds.
Deputy Desmond and Deputies opposite do not have to be reminded that while gains from these investments are possible, losses can also easily result, sometimes short-term losses such as the drop in the values of gilt-edged investments which must return at maturity to par values if insurance companies can hold on long enough and do not have to liquify. That may be acceptable. I think the House should recall briefly the share price index which for January 1973 was 6.95 and in January 1977, 4.21. On gilt-edged in January 1973 it was 78.5 and had dropped by January 1977, when Deputy Desmond and his colleagues were in Government, to 55.
There has been a welcome recovery on both. In the interim, however, investment income has to be deployed to shore up this drop in values. The alternative is to call on shareholders to subscribe additional capital. The PMPA and many other insurers have done this, the PMPA twice in the past three years. That is to be expected particularly with a company which is growing as rapidly as that organisation. What I do not expect of any company, nor can any reasonable Deputy expect from any company, is that shareholders should be expected  to chip in to make short continued losses without the prospect of making a profit. I will leave that type of an expectation and that type of an approach to business and economics to those with doctrinaire ideas who, no matter how often the results of insufficiency and non-economic investment share them in the face, still return to these tired formulae and proposals.
What, however, made me angry when listening to Deputy Desmond's contribution last night was his extra-ordinary volte face towards the end of his contribution in the House, where he said, contrary to all the elements and basis of his thesis up to that point in his speech, that “of course we all know that the PMPA are in this to make money, that they do in fact and have made money and that all these losses quoted by the Minister of State are so much wool over the Minister's eyes”. He did not use those few final words but what he said was to the same effect.
It was not a question after all that the company was doing badly or was nearer to the insolvency level than was happy or safe. The accounts, prepared by their professional staff, submitted by them to their auditors who approved them, or to the Department's officials, in Deputy Desmond's eyes, were totally irrelevant, could not be depended on and could be dismissed. Deputy Desmond was able to assure the House they made lots of profits and that all he had said up to then had been incorrect. He argued that they had made profits but realising his own inconsistency, then said with an insight apparently known only to himself, that there was a difference between the PMPA making profits and “they” or “them” making profits. What the implication of this is I do not know. He knows the levels of dividends paid to shareholders by the PMPA. They have been available in every published annual account of the company.
The motion put down by Deputy Bermingham and Deputy Desmond has not been supported or substantiated by one shared of reasoned argument. As I said at the outset, the Minister and the Minister of State are concerned at the size of this increase and expect  that it, or anything like it, should not have to be repeated for this or any other company. It is part of a catching up process and of a strengthening process for a company with a growth rate such as this which has played an honourable role in taking all types of insurance virtually without restrictions, contrary to the closed shop policy of most other motor insurers for the past five years.
Happily, competition is now entering the market and a better, more healthy situation should develop. From this policyholders will gain more competitive terms and better service. The Government have an open mind on whether a national motor insurance corporation should be established. There is no doctrinaire opposition to this whatsoever. The cardinal question is whether the private enterprise, can deal with this situation efficiently.
The Minister of State mentioned yesterday that it is the intention of the Government to examine carefully the effect of the jury system on awards. The previous Minister had a report suggesting such a change in the legal procedure but he did not appear to deal with it very efficiently. The case has not been made for the radical course of action which the proposers of this motion have in mind. The absolute certainty is that the cost of claims would remain as it is, if not worse, and that motor insurance, isolated and carried on as a single class of insurance, divorced from all other classes which the expertise of the private sector has now and brings to bear on it, would become even far more costly. As the Minister of State said yesterday, if the proposal had been that the State should carry on not only motor insurance but other profitable lines of insurance as well, there would be some semblance of justification and grounds for serious consideration of the proposal. As it stands there are none. It would simply be getting the worst of all worlds. It is not always pleasant or easy to face facts and I would urge the Deputies opposite to deal solely in facts. I ask the House to reject this motion.
Mr. Kelly: I will begin my speech  with something Deputy Lawlor said because I agree with it. We in this party equally have no ideological or doctrinaire objection to the suggestion made in the Labour Party's motion. If we were convinced that a State insurance system would be more economical for the motorists, while at the same time not representing a burden ultimately on the taxpayer, we would be very favourably disposed to go along with the motion. I listened to Deputy Lawlor's speech with a great deal of interest and learned a good deal. I noticed he did not address himself to the substance of the amendment in the Minister's name. It is the amendment more than the motion I would like to deal with this evening.
The amendment envisages a change in the jury system. It speaks about the examination of the effect of the present jury system but it does that in a context that makes it plain that a change is envisaged. Otherwise why should it have been mentioned? It does not make it plain how far such a change should go. It is a simple thing to say “scrap juries” when you see how juries have made handsome awards in favour of an injured plaintiff. The question is, is that the just and proper thing to do? Are you taking liberties with justice and equity in order to achieve the short-range effect of holding back the rise in insurance premiums, which I agree is the result of the accumulation of mounting awards?
A politician, or a Minister, has no business tampering, for a purely political or economic end, with a system which dispenses justice. Unless we can be convinced that our jury system actually worked, injustice, in the sense that it was unjust to the defendant, who is nominally the person against whom negligence is alleged in a motor accident but who in substance, as we all know, is the insurer, and they have rights too—we should be very slow to do away with it.
Time and time again I have complained in the Oireachtas about the ineradicably Irish habit of running after the English in everything we do. No sooner do we run our own flag up the pole than we look back over  our shoulders anxiously, terrified that we will not be able to make out on our own, that if we try to stand on our own feet we will fall over. We watch the English amending their legislation, their administrative structures, and we copy them anxiously, usually because of our incompetence, 25 or 30 years afterwards. I could produce example after example in the field we are now talking about, that of the civil law, the law of torts, the law of negligence.
I will give an example. In 1945 the British changed their common law which had provided that if a plaintiff was to even a minor degree to blame for an accident, although the defendant might have been largely responsible, the plaintiff completely failed. We did not change that until 1961. We changed it in the very same direction and for the same considerations, though Irish brains were capable of making up the equity or otherwise of the old law in advance of the British. All parties are to blame in this but the party opposite are the most appalling sinners in this respect. Patriotism is only skin deep. They have not the guts of a flea when it comes to striking out for themselves in an Irish way to find Irish solutions to Irish problems.
The British abolished juries in this type of case and we are thinking of doing it now—that is the long and short of it. If the British had not abolished the jury system in negligence cases I am damned if we would be thinking of it. I am certain no such suggestion would have come from the far side of the House. This is not the first time this type of thing has come from a Fianna Fáil Government. In the early sixties the Department of Justice, in the exercise of some kiteflying activity, made this suggestion and canvassed the opinions of the two legal professions and the law schools. The response which they got uniformly was a negative one.
It has been and is being said that the legal profession have a vested interest in the continuance of the system as it is, but the point is not all that simple and I will return to it later. However, that kite was flown ten or 12 years ago but we did not hear any  more about it because professional opinion, which is not all dishonest or interested only in the number of pound notes it can stuff into its pocket, was against it. Academic opinion which had no axe good or bad to grind was against it.
The question of a jury operating in this field falls into two sections. There is the deciding of liability—the question of deciding whether a defendant should or should not pay up for a plaintiff's loss, pay 100 per cent or, as the law has been since 1961, pay up in part. Then there is the question of measuring the plaintiff's loss. It is a question of deciding, supposing the defendant is to blame for the accident, how much the defendant should pay. It has not been made clear whether the Department's intention is to confine those two issues to a judge sitting on his own. If the intention is that both these issues should be decided by a judge sitting alone, I believe the Government will do very serious injustice. A case can be made against the scale of jury awards, plausibly and perhaps quite rightly, but it should be argued separately from the issue of whether a jury or a judge is the better, more just form for deciding the issue of liability.
No matter which party appointed them, judges in this State maintain a very high standard of integrity and without exception do their best to administer justice according to their lights. Having said that, it is recognised, not only here but in all countries, that there is such a thing as a plaintiff-minded judge or a defendant-minded judge. It has got something to do with his inner nature, his temperament. It may have something to do with the way he was brought up or the sort of practice he did when he was at the Bar which has predisposed him in spite of his best efforts to be more responsive, more susceptible. to the plaintiff's side of the case or to the defendant's side.
In the few years in which I was in practice I encountered judges with whom it was far easier to win a case in which liability in a road accident was an issue—judges without juries try these cases in the Circuit Court. There were other judges who were defendant-minded and it was almost impossible  to extract from them a judgment that the plaintiff was entitled to recover against the defendant.
My opinion, which I believe to be shared by a large section of the practising profession, is that if this issue of liability is left to judges alone there will be a public uproar. Apparently there has not been such an uproar in Britain, but the British are more sheepish people than we are in a lot of ways: for example, they put up with anomalies in their electoral system which we would not stand for. I believe there will be an uproar if issues of liability are left to judges sitting alone.
A judge could be 100 per cent honest and a man of integrity but he may by nature be not inclined to see the case from a plaintiff's point of view, and that will lead to dissatisfaction—perhaps I should not have used the word “uproar” earlier and I should like to withdraw it if it is not too late. It will lead to dissatisfaction. It may have the effect of sparing insurance companies but it will not be just. A Government should not propose a reform like this merely in order to save money for defendants who should be paying out the money if justice were being enforced.
The question of assessment is a much more difficult one. I concede that one is surprised occasionally at the size of jury awards. However, is not this a mistake in the right direction? We can look at the kind of awards British judges sitting without juries have handed down in negligence cases. There is a big difference between the kind of award an English judge may find appropriate for a young man who may have lost half his arm or the use of a leg and what an Irish jury would award. Who is the Minister for Industry, Commerce and Energy to decide that damages which an English judge would award are more appropriate than what an Irish jury would award? English awards made by judges are to the Irish sense of fairness and fitness extremely mean. They are ungenerous and too small. As between the too small awards that English courts tend to make and the occasionally perhaps over-generous awards that Irish juries  tend to make, the balance of preference for me anyway would fall on the jury's side. In addition, there is a court of appeal in the form of the Supreme Court. I agree that all of this would involve extra cost but at least there is a forum consisting of three or more judges who will interfere with a jury award that is outrageously high but who are not likely to interfere with any other award made by a jury since the jury are supposed to be the best judges of the facts put before them and argued. However, it is a safeguard that there can be interference by the Supreme Court in the case of an exorbitant award.
Regarding the judicial mentality on the question of estimating the value of money, I can give the House only a second-hand view but it is the view of legal sociologists and so on in America and elsewhere. Judges tend to be appointed when they are in their forties, fifties or even sixties and their ideas about money are by then somewhat out of date. Anybody in his forties and still more so in his fifties or sixties will have formed for good 20 years earlier his idea about a pound note. I do not wish to overdrive a point like this but reference should be made to the question of a generation gap. The stronger the influence of inflation the more pronounced will be that gap. The people who make studies of judges and of how they behave are of the view that they are the worst possible people to measure awards, particularly in personal accident cases. But a jury drawn from the different age levels and which will include people younger than a judge as well as people his own age are far more in touch with what money means and with what may be an appropriate award in a case of personal injury.
When I hear this talk about the reform of the jury system I should like the Minister or whoever is advising him to let the public know in detail what kinds of awards are thought to be too high. Perhaps the Minister would point to an award or to a set of awards which he thinks were too high and which the Supreme Court have refused to interfere with. It is on that level that I would wish  the matter to be debated. In the event of a jury awarding, say, £120,000 to a man who as a result of an accident is paralysed from the neck down, who is the Minister or anybody else to say that the award is too high? I agree that the award must be borne by the premium payers, perhaps the people who have been careful drivers. That is an important factor, but to attack jury awards merely on the basis of their being too high is a wrong approach. Any examination of the jury system in this regard should be undertaken in the light of day and not in the Department. Let us not forget the experiences we have had with the Department of Justice in the sixties in relation to the Succession Act and the Criminal Justice Act. Unbelievable results could emerge from that Department because the matters concerned were not sufficiently threshed out in public beforehand. I trust there will be no repetition of that in this instance. I am not talking necessarily of a full public inquiry but of some form of public debate that will satisfy the people that any interference with jury awards will not have an effect in regard to the determination of liability and will not have a mean or an anglicising effect in the direction of the assessment of amounts of compensation. I should like to be sure also that the English professions and academics who study these matters in that country do not wish that they had the jury system back again.
What has happened here is that the Government have been caught in the short wind by a very heavy increase in what is a staple of life for many people. This is the Government of whom it was said that the sun would pop up over the horizon on their return to office.
Mr. Kelly: Within eight months there is this very large increase in insurance. I am not blaming the Government for the increase but they have worked the people into the frame of mind whereby they tend to blame governments for everything that goes  wrong, while the Government expect to be thanked for everything that goes right.
Mr. Kelly: Even with these increases in premiums it must be said that the Irish motorist is paying less than his Italian, German, Belgian or French counterpart. I was surprised that Deputy Lalor did not mention that. Motoring here is relatively not as expensive as it is in most continental countries but it is a good deal dearer than it is in most parts of Britain. Those British insurance companies who still deal in motor insurance here divide these islands into regions for insurance purposes and they calculate their premiums on the basis of areas of risk. Some of the areas in Britain for reasons that I know nothing about and have no wish to explore are categorised as low-risk areas and accordingly the premiums are low but Ireland is in the highest risk bracket. The reason for this is that in Ireland there is an enormous number of very bad drivers. In addition Irish roads are inadequate as are regulations both in relation to the roads and to the condition of cars, while the regulations we have are insufficiently enforced. If the situation were different, if Irish drivers were better, if there were regulations in regard to seat belts, age and condition of cars and so on, there would not be the spectacle we see every day of speed limits both inside and outside the city being disregarded. Every possible liberty is taken with the law by motorists and the overstretched police force are not in a position to do anything about the situation. It is very rarely that people are pulled for offences or that any serious check is made of cars in regard to the condition of brakes, tyres and so on. In relation to road signs we cannot even take the trouble to put a notice at yellow crosshatch junction boxes to say that the box must not be entered by one driver while there is another already there. Even the British managed to put up such notices but our attitude is slovenly and slipshod. The traffic facilities are extremely inadequate. We have neither  a fast-road nor a slow-road system. We would be much safer if we had nothing but a network of boreens. However, we have deceptively fast-looking roads that are death traps. They are crossed by tractors, cattle and old bangers at right angles.
Mr. Kelly: In these circumstances it is obvious that people have to pay higher premiums to meet the carnage, desolation and wrecking of cars. We are left with masses of broken tin. Unless the State takes over the responsibility, the premium holder will have to pay for all this. Instead of blaming the jury system it would be more seemly for the Government to look at the standard of driving, at the traffic laws and at the level of enforcement of the regulations that are there.
There is a minor aspect of this question that I must emphasise. I refer to the role played by the legal profession in this whole area. I note that the Minister has put in a little phrase about the legal framework generally. Although he has not favoured the House with an explanation of that phrase, I think what he means is something to which he referred recently in a speech, namely, the habit of employing on both sides of a negligence case a set of counsel which, he said, add up to eight. He would be wrong about that in most cases; they would add up to six in the average case. I am certain that there are practices within the Irish Bar, as there are within every profession, which could do with examination. Barristers are not angels any more than anybody else and their self-interest plays a certain role, but there is something to be said for a system of multiple counsel. It may not seem a very appealing argument and it is a hard one to put across in three or four  minutes, but there is something to be said for it. Work arrives in a barrister's letter box in an uncontrolled stream. He does not know when the case in which he is settling the originating summons or the civil bill will come to hearing. It may come to hearing within six or 18 months on a day on which he has three other cases. Is he to write back to the solicitor saying that he cannot accept the case because he may have to let him down because he may be involved in some other case? That is the reason for the acceptance of all work and the employment of multiple counsel, so that at least one man in a light case and two men in a heavy case will be there. In order to secure that it is necessary to employ three.
I am fully aware that the public would laugh loudly at that explanation being put forward by any other profession. I am quite aware of the vulnerability of this line of argument, but before the Government decide that this is a legitimate target for them I should like them to make an inquiry about the level of fees in Britain where commonly such cases are done by one senior counsel and one junior, or perhaps a junior counsel by himself. I think they will find, though I do not assert this with certainty, that it costs as much or nearly as much to employ one man in Britain as to employ two or three men here. Before being too high and mighty about the funny old restrictive practice which the Bar impose, let us compare it in terms of what it costs the State, the insurance companies and the clients and what it costs in England and then carry out an inquiry into the level of legal costs on the Continent. I know what an aunt sally the Irish legal profession is, what a soft target it is and how it seems, oddly enough, to be incapable of making a defence for itself, but I will not be surprised if the conclusion is that the Irish legal profession provide a service of a sort cheaper than any other legal profession in Europe.
I believe that the question of traffic is central and the question of the state of our roads and the way they are used, and I would be sorry if that question were fudged by the Government  in making a wild assault on the jury system, without having seriously considered what the effect of abolishing it would be by comparison with what has been done in our neighbouring country with a similar legal system, or in regard to the question of the multiple employment of counsel.
Mr. Kelly: I should like a cost study to be done on these things before we become too revolutionary or too radical in changing a system of our own merely because the British do it a different way. If the State is so death down on multiple counsel and if it is really a restrictive practice which the State under a Fianna Fáil Government would be ashamed to countenance, let the State show good example and begin by ceasing ever to employ more than one barrister in State work.
In the last years of the Fianna Fáil administration about £500,000 a year was being handed out in State work and it went exclusively—unless there was some kind of queer case about patents or admiralty law or the law of the seabed in the Pacific and there was no member of the legion of the rearguard fit to do the work—with barefaced regularity to the supporters of the Fianna Fáil Party.
Mr. Kelly: If the State is so death down on the multiple employment of counsel, let there be a good example. I am glad to see that they are apparently keeping up the reform which we introduced of employing counsel without regard to political affiliation.
I recognise that they appear to be doing that and I am glad. Let them save the people money by employing  only one barrister. Test this theory out in the Central Criminal Court or the Special Criminal Court, test it out on the State side in habeas corpus applications and in certiorari applications and in cases in which the Attorney General is the defendant. Let them see how far that will get them. See what that one barrister will charge and the level at which he will refuse to work unless he is paid. If he is told that he must be there come hell or high water no matter what other case drops on his desk, the level of his fees will rise very steeply. I do not want to make too much of this. I freely concede that the question of the employment of counsel is only a tiny aspect of the matter and I would not have thought it worth mentioning to the House had it not been dragged in by the scruff of the neck by the Minister when speaking at a meeting a couple of weeks ago in which he joined in his attack on the jury system this question of the multiple employment of counsel.
Minister of State at the Department of the Taoiseach (Mr. P. Lalor): I am interrupting at this stage to try to avoid the last seven minutes being taken up with a continuation of a legal lecture. I see my colleague, Deputy Enright, was offering. I had not intended to contribute to this debate at all, but it struck me that Deputy Enright had, perhaps, noticed that Deputy Kelly left out something when defending the legal people and that he wanted to speak. I am anxious to speak on insurance.
Mr. P. Lalor: Deputy Kelly referred to the amendment and he hung a lecture on the changing of the legal system on an insertion in the amendment which asked the House to take note that the Government intend to have examined the effect of the present jury system on the level of awards. He talked about this being a Fianna Fáil hare rising again and quoted precedents for such a chase some ten years ago. There has been a suggestion that there should be a radical reorganisation of the whole motor insurance system. My incursion arises from the fact that when I was Minister for Industry and Commerce I instituted an inquiry and asked for recommendations and almost the first thing that arrived on the desk of my successor, Senator Keating, who was then Minister for Industry and Commerce, was this recommendation. I did not come prepared to speak but my recollection of one of the recommendations made by the commission over five years ago was that some radical reorganisation of the whole system of motor insurance should take place and this should include taking a look at the awards system. It is rather remarkable that two Deputies who had the benefit of having a colleague who was Minister for Industry and Commerce for four-and-a-half years should all of a sudden wake up at this stage and discover that the House should consider seriously the radical reorganisation of the whole system of motor insurance on the basis that it is long overdue. Obviously Deputy Horgan is going to conclude on behalf of the Labour Party.
Mr. P. Lalor: It is appropriate that the Labour Party should send in Deputy Horgan because the two Deputies whose names are to the motion— Deputy Desmond and Deputy Bermingham—had the ear of the Minister for  four-and-a-half years and they should have told him that the review was overdue. However, it was only when the recent announcement was made in connection with insurance that those two Deputies and the Labour Party generally discovered that there was need to change radically the whole system of motor insurance.
I listened today to Deputy Bermingham being interviewed on radio. He admitted he was a shareholder in PMPA. He indicated they have a different title now and I think he said he would like the actual words to have a different meaning. As Deputy Kelly conceded, motor insurance here is cheaper than motor insurance in any other country. The PMPA have done a wonderful job for motorists during the years. I listened to Deputy Bermingham slating this capitalistic group which is one of the biggest co-operative movements in the country. Everyone who takes out insurance with PMPA becomes a shareholder, in a sense becomes a capitalist. Share-holders fall down on their responsibility if they do not attend the annual meetings and take an interest in the affairs of the association. Although we all subscribe initially to the co-operative movement, eventually we pull out—this happens among farmers and others—and we criticise the movement.
Mr. Horgan: It is a sign of the sensitivity of the Government on this issue that for the sheer pleasure of denying Deputy Enright seven precious minutes of Dáil time they sent in the Minister of State to waffle along in this fashion and to drag red herrings across the path of this debate.
I take particular exception to his idea that, because I was not a member of the Labour Party until 1975, somehow I had been put in here because I am not associated with the sins or omissions of the previous Minister for Industry and Commerce, now Senator Keating. I can assure the Minister of State who is sitting on the opposite benches today that if the then  Minister did not get around to doing this, and perhaps many other things that still need to be done and will not be done by the Fianna Fáil administration, it was because he was involved, among other things, in operating at least a 180º reversal of the policy on natural resources that he inherited from Fianna Fáil, a policy Fianna Fáil have not the courage to reverse back to their original position. Nobody knows that better than the Minister of State——
Mr. Horgan: I wish to deal with the motion and this weak and pusillanimous amendment tabled by the Minister for Industry, Commerce and Energy. It is true that the price rise applied for by the PMPA has been the germ of this motion which allows us to discuss the insurance industry in general. It is an extraordinary fact that the insurance industry, especially in connection with motor cars, is inefficient and time-consuming. Deputy Bermingham gave an example yesterday  of his own experience and mine is no better or worse than his. I can remember an occasion in the not too distant past when my car, which was parked lawfully by the roadside, was totally demolished by another car and it took me—and I could hardly be described as being at fault in that situ-ation—two-and-a-half years to get the money from the company that was insuring the vehicle that crashed into my car. If it takes two-and-a-half years for a totally innocent person to get his money out of the system, it is obvious that the system relies on long delays in order to save money to make money. That is a system that militates against people who cannot afford lawyers and who cannot get their case to court rapidly enough.
When I was preparing to discuss this motion I did some basic research. Really the only basic research that exists in this area is the report of the Committee of Inquiry into the Insurance Industry, with specific reference to motor insurance, which was published in 1972. This was a very high-powered committee. It was headed by Mr. John O'Connor who was referred to by Deputy B. Desmond last night and the committee also had that ubiquitous rent-an-academic, the person now in charge of planning, targets and similar things, Professor Martin O'Donoghue. He is now Minister for Economic Planning and Development and he became chairman of the committee when Mr. O'Connor left.
The interesting thing about the committee was that even though it did not come up with any radical solution to the problem it certainly hinted at them. It also contained a minority report signed by, among others, the present Minister for Economic Planning and Development, which suggested the introduction of a no-fault system. It also pointed to anomalies and inadequacies in the present system that continue to this day.
 Motor insurance business is not scientifically based. In particular, industry-wide statistics are not available for calculating the premiums appropriate to particular risks. The loading of premiums is, therefore, conducted on a relatively arbitrary basis, and more recently appears to have also become a device for circumventing price control on the basic level of premium.
The profit and loss figures arrived at from the Annual Summary of Statements deposited with the Minister for Industry and Commerce (the Blue Book) must be viewed with caution (since dividend income arising from premiums is not taken into account).
The accounting conventions used by the motor insurance industry and accepted generally by supervisory authorities, do not permit an adequate assessment to be made of the industry's profitability and performance.
That is why we put down this motion, because the situation is still fundamentally unchanged and because something needs to be done about it. We do not see any evidence from the amendment that anything will be done about it.
This afternoon the PMPA, naturally enough, have come to their own defence. In a statement quoted in this evening's Evening Herald a Mr. Dore, the joint managing director of the PMPA, is quoted as saying about the references to the company's solvency in the Dáil last night that:
...what was being talked about there was not solvency in any accounting sense. It was solvency standards required under EEC rules which broadly meant that there should be 16 per cent of premium income in free assets.
 I may be unenlightened about the higher reaches of accounting practice but, if the PMPA are £2 million to £3 million above the average, they must be considerably more above the minimum. What we want to know is why funds, assets and reserves, which are not only above the minimum but substantially above the average, cannot be used in a cyclical situation in which underwriting losses occur to reduce premiums or at least to maintain them at present levels.
One of the final inexorable laws of capitalism is that capital is what you spend when you have nothing else left to spend. On the evidence of that statement, the liquidity situation of the PMPA is very healthy indeed. It seems extraordinary to us that we have this enormous contrast between the allegedly very strong—and I would prefer to accept that it is strong— liquidity position of the PMPA and this very large increase in premiums.
I seem to remember also the Minister of State's colleague, Deputy Geoghegan Quinn, making a statement about the profitability of the PMPA within the very recent past on which a gloss had to be put later by the Government Information Services. So, there are at least two sides to that story. It is also true—and Deputy Kelly and other speakers referred to it—that part of the expense of motor insurance is in relation to legal costs.
On page 66 of this report—and again I doubt that the situation has changed very much in the intervening five years—we see that the average amount of legal fees as a percentage of the claim cost was 16 per cent. In 2 per cent of the claims, those dealing with claims between £1,000 and just over £2,000, the percentage claimed by legal fees was a horrifying 33. In fact, in virtually one-quarter of all claims the percentage claimed by the lawyers amounted to more than the average 16 per cent.
Yesterday the Minister of State talked about the possibility of minimising expense without affecting legal rights. With all due respect to the Minister, this is milk and water stuff compared to what his boss said. I was listening to the Fianna Fáil Ard-Fheis on the radio.
Mr. Horgan: I listened to the swingeing attack made by the Minister for Industry, Commerce and Energy on the legal profession at that Ard-Fheis. It was not the first time I heard that Minister attack the legal profession. When I was in the other House, and not a member of this party, I remember him saying almost the same things in almost identical words. More, there-fore, is the tragedy that he has never yet found a Government with the guts to back him and take on the legal profession in this matter. Another great Irishman, George Bernard Shaw, in reference to another profession once said, I think in the Preface to The Doctor's Dilemma, that all professions are a conspiracy against the laity. Some of my learned colleagues on the Fine Gael benches might not agree with that, but I am prepared to disagree with them on it.
Among the many other defects of the present system, defects which need a radical approach, is the defect caused by the fact that most injury damages are allocated in a lump sum. The obvious conventional wisdom is contained in this report on page 69:
In cases involving death or personal injury where the damages suffered are of an ongoing nature...this can be a serious defect. Compensation for loss of income should be payable weekly or monthly, as appropriate, rather than in the form of a lump sum. Where compensation is based on an injured person's life expectancy, once the payment has been made the case is closed and from the insurer's viewpoint the actual duration of life is then irrelevant. If, however, the injured person lives longer than expected, he loses out financially and conversely, if he dies prematurely, a benefit passes to persons not involved in the accident. Such problems would not arise in the case of regular payments tied to actual rather than expected duration of life.
This is a major defect which the ministerial amendment does not attempt to cope with. I would argue very strongly  in favour of a radical revision of the system which would emphasise the need to pay people on a continuing basis over a long period of time and perhaps also on an agreed scale relating to particular injuries. We already have an occupational injuries scheme. There is no reason why a State-sponsored insurance scheme could not adopt the same kind of criteria. Something similar to that was referred to in that part of the report, a minority report, which was signed among others by Deputy O'Donoghue, the Minister for Economic Planning and Development, who is now in a position to do something about it. I quote from page 92:
We favour a system for the payment of scheduled benefits in cases of death or personal injury to victims of road accidents. These benefits would apply up to stated limits and, save for some possible exceptions...would be paid regardless of fault.
This is plain speaking. This is not the milk and water stuff we got from the Minister of State the other night. I must reject the implication put about by the Minister of State that the tax-payer will pay the losses motor insurance throws up. First, we are not at all certain about the losses. Secondly, this motion does not say, and this party do not say, that the losses caused and incurred by the motoring public should be borne by the nonmotoring public. In fact, that is what the Fianna Fáil Party have done in their motor tax proposal and decision which was totally regressive. They are accusing us of wanting to do the same kind of regressive, anti-social thing. We do not believe in that. We believe the cost of motoring, including the cost of insurance, should continue to be borne by the motoring public. We believe a simple system such as a fuel surcharge could very well meet this difficulty. If any motorist feels he has a life which is more valuable to insure, let him add extra insurance to the cost.
I should like to refer again to the Minister of State's allegation that we are interested in this only and we are not interested in nationalising the more  allegedly profitable sectors of the insurance system. We are interested in a State system of insurance for one major reason, and for one basic fundamental reason, that is, in relation to third party insurance. Third party insurance is compulsory in this country and that is the greatest single reason why it should be organised by the State on a basis which would reduce the present high level of costs and inefficiency and spread the cost of such a scheme over all road users ideally, by a petrol surcharge which would have the effect of making those who do a higher mileage pay more proportionately towards the cost of administering an insurance system.
 Instead of this, instead of all the radical ideas contained in this report, even though they are only advanced as options and were not finally decided on by the people who wrote them, we have a muddling through amendment by Fianna Fáil which basically says: “No change. We will fiddle around a bit. We will cut a little off here and there, and try to make it better.” If it is to be two years to a settlement instead of two-and a-half years, I can assure the House and the Government that the people will not be satisfied until they get a decent system, and a decent system is what we propose in this resolution.
Burke, Raphael P.
de Valera, Síle.
Fitzpatrick, Tom (Dublin South-Central).
Fitzsimons, James N.
Fox, Christopher J.
Lalor, Patrick J.
Murphy, Ciarán P.
O'Connor, Timothy C.
Wilson, John P.
Woods, Michael J.
Clinton, Mark. Desmond, Barry.
Donegan, Patrick S.
Donnellan, John F.
Enright, Thomas W.
Fitzpatrick, Tom (Cavan-Monaghan).
Harte, Patrick D.
Mannion, John M.
Conlan, John F.
Cosgrave, Michael J.
D'Arcy, Michael J.
Deasy, Martin A. Mitchell, Jim.
Murphy, Michael P.
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