Thursday, 20 November 2003
Seanad Eireann Debate
Tánaiste and Minister for Enterprise, Trade and Employment (Ms Harney): I thank the Leader and all the groups in the House for their agreement to give the Bill a speedy passage. The House has agreed to meet on Monday to deal with Committee Stage and I very much welcome the House's support for the Government's efforts to ensure this legislation is enacted rapidly.
The Bill provides for the establishment on a statutory basis of a body to be known as the Personal Injuries Assessment Board. The establishment of the PlAB is one of the central aspects of the Government's insurance reform programme. Its objective is to tackle the delivery cost of speedier compensation to genuine claimants while reducing the cost of insurance for consumers and businesses alike.
It is widely accepted that litigation costs add, on average, in excess of 40% to the cost of compensation. This has contributed to the high cost of insurance in this country and to the cost of claims against the growing self-insured sector, including the State itself. These costs are a threat to the health of the economy, to job security and to our competitiveness in an enlarged European market.
By eliminating the need for litigation costs where legal issues are not in dispute, the PlAB will significantly reduce the cost of delivering compensation to the benefit of all consumers. The PIAB will offer a lower cost and speedier means of finalising genuine personal injury claims than the current litigation system.
The Government approved the establishment on a statutory basis of a Personal Injuries Assessment Board in March 2001 and, towards that end, the establishment of an interdepartmental implementation group to progress the establishment of the PIAB with an initial mandate to address personal injuries claims arising from employers' liability insurance.
The implementation group was set up in April 2001, comprising representatives of relevant Departments. The group reported in 2002. A specific commitment given in the Agreed Programme for Government in June 2002 had the practical effect of re-confirming the Government decision of 20 March 2001 to establish the PIAB. On 27 November 2002 I appointed the members of the interim board of the PIAB under the chairmanship of Dorothea Dowling and tasked them with setting up the board on a statutory basis. The board has contributed enormously towards shaping the proposed operating procedures reflected in this legislation and also in progressing the logistical operations required to set up the new body.
The primary purpose of the legislation is to establish the Personal Injuries Assessment Board as a statutory body. The board will be charged with the making of assessments, without the need for legal proceedings to be brought, of compensation for personal injuries. The role of the PIAB will be confined to claims where legal issues are not disputed by the respondent. The board will commence operations early in 2004 with employers' liability claims before encompassing public liability and motor accidents in mid-2004.
The priority of the board will be to implement fair procedures in accordance with the principles of natural justice as they apply in this “documents only” system of assessment. In the current legal system less than 10% of claims reach an oral hearing in court and the 90% that are settled without a trial are considered to carry an excessive litigation overhead. The objective of the PIAB is to assess compensation at current levels more expediently while eliminating the excessive litigation overhead. The PIAB is not being set up to reduce the level of awards to genuine claimants.
While parties are entitled to seek independent legal advice at any stage, the PIAB will not award litigation costs for or against any party but special provision will be made by the PIAB to protect the interests of vulnerable claimants. It will not conduct oral hearings. There are limited opportunities for respondents or their insurers to attack the claimant's claim once the case has been accepted as one appropriate for assessment of quantum only. The PIAB will avail of its own expertise on its staff or from appointed independent consultants to assess the validity of a claim and will not indulge in an adversarial process between competing parties' experts. Regardless of whether a claimant has employed a lawyer, the PIAB will always communicate directly with claimants so that they know exactly how their cases are progressing through each stage of the assessment process.
Assessment of general damages for pain and suffering will be based primarily on medical reports from the claimant's treating doctor but, in some cases, the claimant will be examined by a member of the independent medical panel established by the PIAB. A book of quantum will be compiled and published as a guideline to general damages for various categories of injuries and from which parties can satisfy themselves as to the reasonableness of PIAB awards. The existence of this guide should also assist parties in reaching negotiated settlements without recourse to litigation. The existence of a similar book of quantum in England may be reflected in the fact that only 4% of cases there involve barristers compared to their involvement in 70% of personal injury cases in Ireland.
Assessors in the PIAB will calculate allowable special damages for items such as wage losses and medical expenses on the same basis as the courts, taking into account the pending amendments to legislation on credit for collateral benefits received and compliance with tax legislation.
In contrast to the current adversarial system of personal injury litigation, the approach adopted by assessors in the PIAB will be inquisitorial. This means getting to the facts of the extent of the allowable claim and ensuring that the claimant gets that to which they are entitled – no more and no less. This approach will be of assistance to claimants on many issues where they might currently seek legal advice even in “assessment only” cases which do not involve legal disputes.
From the planned effective date, all relevant non-litigation cases, which would currently require the issuing of legal proceedings, will be subject to mandatory referral to the board before they can proceed to adversarial litigation. If the respondent wishes to dispute legal issues or has reservations about the genuineness of the claim, the board will immediately issue an authorisation for the claimant to proceed to litigation, if he or she wishes to pursue the matter further. At the end of the PIAB process, the parties are entitled to reject the award if they consider that they would secure a more favourable outcome through the court system.
The PIAB will issue an authorisation for the claimant to proceed to litigation within a specified time frame, if he or she wishes to pursue the matter further. During the PIAB process, time will not run against the claimant for the purposes of the Statute of Limitations on the period within which legal proceedings must be issued.
The Minister for Justice, Equality and Law Reform is preparing a civil liability and courts Bill, which includes a number of measures to tackle fraudulent and exaggerated claims within the court system. Among the other tasks which I have delegated to the PIAB is a cost benefit analysis of the current litigation system. While the interim board had hoped to progress that project, it was denied access to the relevant data without the statutory powers, which are provided for in the legislation.
I will summarise the main provisions of the Bill. Section 3 outlines the type of civil actions to which the legislation will apply. It is intended that the legislation will initially apply to employer liability claims only but will be extended in due course to cover motor accident, public liability and other types of claims. The PIAB will not deal with cases involving medical negligence nor claims for which a specific statutory scheme has been established, such as the Garda compensation scheme.
Section 6 makes reference to the fact that nothing in the legislation affects legal proceedings brought before the commencement of this section. The section also allows for parties to agree a mutually acceptable settlement at any stage during the PIAB process. Section 7 provides that nothing in the legislation affects a person's right to seek independent legal advice in respect of a relevant claim.
Sections 9 to 18, inclusive, deal with the PIAB application process from claimants covered by this legislation. Applications for assessment will be made in a prescribed form and accompanied by prescribed documents, such as a medical report from the claimant's treating doctor, copies of the original letter of claim and receipts in respect of outlays for which special damages are sought. Liability issues will not be raised by the PIAB. A claimant cannot bring court proceedings in respect of a personal injury claim without first going to the PIAB. The PIAB will notify the respondent of a claimant's application and ask whether the respondent consents to an assessment being made. If the respondent intends to dispute legal issues, then the PIAB will issue the claimant with an authorisation which will permit him or her to institute legal proceedings. Otherwise, the case will proceed to assessment.
In cases where there are two or more potential respondents, the PIAB process permits one of the respondents to allow the case proceed to assessment without prejudicing any of the respondents in any subsequent proceedings to seek an indemnity or contribution from other parties. A respondent's agreement to a claimant's submission for PIAB assessment will not constitute an admission of liability, nor will it be used in any other manner to prejudice legal arguments in subsequent court proceedings. The PIAB will have discretion not to proceed with a case which is more appropriate to the courts, for example, new medical conditions upon which there would not be sufficient legal precedent, or if it is of a particularly complex nature.
Sections 19 to 38, inclusive, deal with the assessment procedure. An assessment will be made by assessors employed by the PIAB on the same basis as an award of the courts, calculated by reference to the principles which govern the measure of damages in the law of tort and any relevant statutory provisions. Assessments will be made by reference to information and documents provided by the claimant. There will be no oral hearings. Assessors will make reference to the book of quantum in assessing general damages. Payments will be made by a single, once-off lump sum, as is the current position in the courts. In cases arising from fatal accidents, the assessments will state the amount to be set aside for each of the dependants of the deceased, but such cases will be subject to the ruling of the court.
The PIAB will have the power to levy charges. Funding of the PIAB will be primarily on a case by case fee, payable by the respondent, as the most transparent and equitable distribution of costs. Respondents will pay a standard administration fee as well as the costs of experts' fees necessarily incurred by the claimant, such as the cost of independent medical examination in certain cases. Claimants will pay a small, refundable administrative fee which must accompany their application to the PIAB if they have not been able to secure a satisfactory settlement directly. Claims will initially be made directly, in the usual way, against the respondent.
The PIAB will be able to request such information from claimants, respondents or third parties as is necessary to make an assessment. The board may initiate an examination of the claimant by a practitioner from the independent medical panel where the claimant's medical report is not comprehensive or conclusive, or where the claimant's medical condition is disputed by the respondent. The board will have the power to request from other bodies, excluding the Revenue Commissioners, such information as is necessary to properly validate losses claimed, as well as benefits received, which will be deducted from the assessment. This includes access to the national vehicle file recording the identity of the vehicle insurer for cases arising from motor accidents.
The board will also have limited powers to request from the Revenue Commissioners such information relating to the income of the claimant for the purpose of verifying any item of financial loss alleged by the claimant. The board will make special provision for vulnerable parties and will take steps to ensure the application process is straightforward and that PIAB staff will provide assistance to either party where required and explain the consequences of a party either taking or not taking a step during the process.
The board will issue details of the assessment to the claimant and respondent showing, separately, the amounts for special damages and general damages. Parties will be requested to reply within a specified timeframe as to whether they wish to accept the assessment. The claimant will have 28 days to decide whether to accept the assessment and the respondent will have 21 days. If a claimant neither accepts nor rejects an assessment within a specified period, the claimant will be deemed to have rejected the assessment. If the respondent fails to respond to the assessment within the specified period, he or she will be deemed to have accepted the assessment. This proposal is in line with the service of legal proceedings, where failure to respond within a specified period results in a judgment in default. If an assessment is not accepted by either party, then the claimant will be authorised to take proceedings within a specified timeframe if he or she so wishes. The acceptance of the assessment by both parties is binding on them as full finalisation of the claim.
These provisions also provide for a situation where there are multiple respondents and not all of them accept the assessment. Regardless of acceptance by the parties of the PIAB award in cases where the claimant does not have full legal capacity, a ruling is required by the court. Where the court does not approve the assessment, the claimant will be authorised to take proceedings within a specified timeframe. Nothing in the PIAB process is to prejudice any of the parties in any subsequent litigation. Where assessments are accepted, the PIAB will issue an order to pay to the respondent.
Sections 39 to 43, inclusive, deal with the legal status of an order to pay, which will have the same status as a court decree. Payments to a claimant, on foot of an order to pay, constitute satisfaction of the claimant's relevant claim. Part payments constitute partial satisfaction. Provision is also made to enable the injured party to receive the compensation to which he or she is entitled, leaving the apportionment of liability between potential co-defendants to be decided by subsequent litigation or negotiation, without prejudice to the right of the respondent or respondents. The discharge of a claimant's claim by the participating and accepting respondent will not prejudice that respondent's right in any subsequent litigation. The respondent may be seeking recovery of his or her outlay, in whole or in part, from another party who had a liability in respect of the accident which caused the claimant's injuries.
Section 44 allows that, in certain situations, the board may direct that where a claimant incurs an expense, this will be borne by the respondent. An example might be where a complicated medical condition follows an accident and updated medical or other experts' reports are required to reflect the full extent of the claimant's claim in terms of medical prognosis or the extent of financial losses. In such a case, the PIAB will direct that such expenses are necessarily incurred and are to be paid by the respondent.
Section 45 recognises that where a claimant lacks full legal capacity because of being a minor or of unsound mind, a ruling of the court is required and the claimant's legal representation will be directed to be paid by the respondent. Section 46 permits the board to make rules, which will be in separate regulations. These rules will outline the detail of the procedural operations of the PIAB, including the amount of fees to be paid by the claimant and the respondent. Section 47 provides for a claimant to withdraw his or her claim if he or she so wishes. If they do so, they may not make a fresh application or bring proceedings. This will be fully explained to claimants by PIAB staff.
Section 48 gives the PIAB the facility to make assessments on an ad hoc basis for cases where litigation proceedings have commenced, but where both the claimant and any other parties make a joint application for assessment. Section 49 provides for the making of assessments by the PIAB within specific time limits, unlike the current litigation system where no such target dates are set for completion of cases. Section 50 provides that the period from the date of application to PIAB and ending six months from the date of issue of authorisation to commence proceedings will be disregarded for the purposes of the statute of limitations period. Section 51 provides that PIAB assessments shall not be admissible in any subsequent proceedings unless the proceedings concerned are in connection with the enforcement of any assessment that is being accepted.
Section 53 provides for the establishment of the PIAB which, subject to the provisions of the Act, will be independent in the performance of its functions. Section 54 provides for the functions of the PIAB, including making assessments of relevant claims, preparing a book of quantum and carrying out a cost benefit analysis of the current system.
Sections 56 to 62, inclusive, provide for matters relating to the membership of the board and conduct of business by the board. The board will consist of members representing the interests of employees, employers, consumers and insurers, as well as the chief executive. The board will also include members with relevant expertise, such as in the legal and medical field.
Sections 63 to 66, inclusive, provide for the appointment of a chief executive office, the functions of the chief executive officer and the terms and conditions applying to the appointment of the chief executive officer. These sections further provide for the answerability of the chief executive officer to the board, the power of the chief executive officer to delegate functions to staff and the accountability of the chief executive officer to the Committee of Public Accounts and to other Oireachtas committees. The recruitment process is currently being progressed by the interim board.
Section 67 provides for the appointment of staff to the PIAB. Staffing numbers, grades and remuneration will be determined in consultation with the Minister for Finance. Section 68 provides for the setting up of a superannuation scheme in consultation with the Minister for Finance. Section 69 provides for indemnification from actions and claims arising out of members of the board or staff of the PIAB carrying out their functions.
Sections 71 and 72 provide for the disclosure of interests by members of the board and staff of the PIAB and also matters relating to such disclosure or non-disclosure. Section 73 provides that members of the board, or staff or consultants engaged by the board, shall not disclose confidential information without the consent of the board.
Section 76 provides that the chief executive of the board will keep accounts of the board's income and expenditure and submit estimates of same as required by the Minister. Section 77 provides for examination of the accounts and records of the board by any person appointed by the Minister in respect of any financial year. Section 78 provides that the board, as soon as practicable after the establishment day and within six months before each fifth anniversary, will produce a strategic plan. Such plans will comprise the key objectives, output and related strategies, including use of resources of the board.
Section 80 permits the board to engage consultants or advisers as it considers necessary for the performance of its functions. Section 82 provides that a member of staff of the board who is a lawyer may appear on behalf of the board in an application under section 27 or section 35.
The cost of PIAB will be covered by fees levied on respondents on a case by case basis at a standard minimum rate plus any actual outlay incurred on experts' opinions in more complex cases. Fees will be set with a view to the PIAB breaking even financially. PIAB fees payable by insured defendants will be covered by their insurance policy. An original proposal that the PIAB should be funded by a levy on the insurance industry was rejected by the interim board as this would merely be passed on to policyholders whereas the State and the self-insured sector will also benefit from the assessment service available from PIAB.
The annual running costs for the PIAB when fully operational were estimated at between €7 million and €8 million in the report of the implementation group set up to progress the establishment of the PIAB. Exchequer funding will be required to cover the establishment costs of the PIAB, estimated at €2 million in the implementation group's report. Cash shortfalls in the initial period of operation will be covered by Exchequer funding until the PIAB starts to break even financially. Exchequer funding requirements have been agreed in consultation with the Minister for Finance in the context of the annual Estimates process. Some €5 million has been put aside in the context of the 2004 Estimates but Exchequer funding beyond 2004 is not envisaged.
The establishment of the PIAB is a key element of the Government's insurance reform programme. Ireland's reform initiatives are being watched closely by the UK where the court reform programme introduced in 1999 has failed to reduce litigation costs and businesses there are now facing a growing insurance cost crisis. I am convinced the introduction of the PIAB as well as the other reform initiatives being undertaken by the Government will lead to a properly functioning market that will attract new entrants into the market and provide the much needed competition to drive premia down further. I commend the Bill to the House.
High insurance costs have been the bane of consumer and business life in Ireland since 1999. In that period we have seen premiums for motor, household and all forms of liability insurance rise by exorbitant amounts. As a member of the Oireachtas Joint Committee on Enterprise and Small Business, I have heard first hand harrowing testimony from business people who have had to curtail their business plans or cease trading directly because of insurance increases being forced through.
There have been suggestions that some premia have increased by more than 100% per annum for each of the four years since 1999. This is a shocking level of increase for any business to sustain and it is particularly galling for a business that has had a claims free record.
For consumers, the high cost of motor and household insurance has been a serious imposition. Faced with major increases in the cost of living and the rising level of stealth taxes, motorists and householders have faced exorbitant demands from insurers for increased premiums across the board. There is no doubt that premiums have started to come down already, even without the enactment of the reforms contained in this Bill and the Bill promised by the Minister, Deputy McDowell. However, the levels of the reductions and the inability of the insurance companies to commit to specific levels of reductions is of concern.
At a hearing of the Oireachtas Joint Committee on Enterprise and Small Business last week, the chief executive of Allianz would not say if premia would come down as a result of the establishment of the PIAB. Members of this House need to send a clear and strong message to the insurance industry that we expect a clear and discernible quid pro quo for the reforms being brought about in this Bill. We should demand that the insurance industry delivers cheaper insurance and does not try to fudge the issue by passing on reductions to consumers and businesses. I hope the Tánaiste has got some bankable guarantees from the insurance industry and the Irish Insurance Federation that they will deliver cheaper insurance for policy holders immediately the savings from the PIAB become apparent, which I hope they will. If these savings are passed to shareholders by way of increased profits and not passed on to the consumer, the Tánaiste will have some explaining to do.
Unfortunately, the insurance industry has form in failing to pass on savings as a result of reforms that the Houses of the Oireachtas enact. Measures that were previously identified as panaceas to the ills of high insurance costs were enacted by the Houses of the Oireachtas previously, in particular the abolition of juries in most civil cases and the removal of the two senior counsel rule. Yet we find ourselves with a new insurance crisis.
I recognise the role this Bill should play in reducing insurance costs by reducing the cost of delivering compensation to people involved in accidents. There is no doubt the current system of litigation has been costly, in particular for cases where liability is not at issue between the parties.
We are all aware of cases where friends, relatives or constituents have been injured in an accident and have gone to court to seek compensation. I note from the Tánaiste's press release yesterday that Irish claimants tend to wait six times longer than their UK counterparts for a settlement to be negotiated before receiving compensation. I would be interested to know the extent to which this is due to lawyers for the claimant delaying matters or due to the insurance companies refusing to negotiate.
While there are doubtless cases where some lawyers have milked the system to maximum benefit from a costs perspective, there are also situations where insurance companies have been slow to concede liability and negotiate settlements. I hope insurers will adopt a constructive approach to the PIAB and not seek to test the waters in cases before the PIAB and then decide to fight the cases if they do not like the award the PIAB issues, but that is their entitlement if they so wish. All that will do, however, is to introduce another layer of bureaucracy and cost into the system for delivering compensation to genuine claimants.
I hope this Bill achieves its purpose. I hope it will lead to a reduction in the cost of delivering compensation to claimants and that this in turn will lead to cheaper insurance. It is important that we have ambitious expectations for the PIAB, but that the introduction of this Bill should not be the sum of our efforts to control the cost of insurance. We must continue our focus on every other area that contributes to high insurance costs. We must tackle fraud, reform court procedures, prevent any further mergers between insurance companies in Ireland, attract new entrants to the State and ensure the market is competitive and customer focused.
In this regard, it is disappointing that the Government has been so tardy in implementing the recommendations of the MIAB. A renewed effort is required. I frequently hear comments from those campaigning for the introduction of the PIAB, that just because someone is injured does not mean that they are automatically entitled to compensation. This may be the case and certainly false or exaggerated claims must be contested by insurers.
It is also true that accidents are not an inevitable consequence of working or driving. Employers, particularly in the construction sector, must redouble their efforts to ensure accidents do not happen. This is the best and most effective way of reducing claims. Allied to the proposed measures, we should also ensure health and safety legislation is updated to ensure there is a strong incentive for employers to maintain a safe place of work. Too often we adopt a one track approach to resolving difficult issues and fail to address the myriad of factors which cause a problem.
There have been recent comments in the media suggesting the interests of genuine claimants have not been taken into account in the formulation of this Bill. I expect that my colleague, Senator O'Toole, will take exception to such suggestions given his involvement in the interim PIAB board.
It is important nonetheless to recognise that this area is full of vested interests. The lawyers have a clear vested interest to maintain an involvement in representing clients. The insurance industry has a clear vested interest to minimise payments to claimants, reduce costs and keep profits at a healthy level. The business lobby has an interest to ensure premia are kept low so that operating costs can be controlled and profits can be maintained. As legislators, we must rise above the vested interests and bring in legislation which addresses the cost of high insurance. It is in the public interest that we try for a system that minimises the costs of delivering compensation to genuine claimants. However, we must do this in a way that is fair to claimants and which does not undermine their rights and entitlements.
I am concerned at suggestions that claimants will not be able to have a solicitor represent them in dealings with the PIAB. There has even been the nonsensical suggestion that if a person decides to retain a lawyer to advise them, the PIAB will still communicate directly with the individual claimant. This is wrong and cannot be justified on any basis. It is a person's decision to involve a lawyer. An individual, particularly one with poor literacy skills, needs independent advice and assistance in dealing with agencies and State boards. Of course, the insurance industry will be resourced and funded in their dealings with individual claimants before the PIAB. An individual will not have the same ease and comfort and may need the support, advice and assistance of a lawyer. If they make that choice of representation and advice, then the PIAB should respect it and not try to ride roughshod over such a fundamental entitlement. A far more mature approach would be to facilitate representation, and to introduce some fixed cap on the charges that can be paid to lawyers in respect of such assistance provided.
Unless this is addressed, the PIAB will be fundamentally flawed from the outset and will be perceived as one-sided and unfair. In the absence of permitting representation, I assure the Tánaiste that Members of the Oireachtas will be assuming a new clerical role in advising claimants filling in forms for the PIAB. We have enough to be doing without becoming barrack room lawyers or insurance claims handlers, which is a prospect.
It is important the PIAB does not become another layer of bureaucracy. Its role, effectiveness and functions should be continually reviewed and monitored. Its efficiency in dealing with claims and the response of the insurance industry by way of reduced premia must be continually reviewed. Indeed we should probably carry out a root and branch assessment of its performance before extending any new category of claims to it.
Over the last ten years the Oireachtas has created many new regulators and statutory bodies that we were promised would lead to cheaper electricity, lower telecommunication charges, more competition and better services. Many have become self-justified oligarchies providing lots of analysis but little benefit to either consumers or business. This must not happen with the PIAB. We must keep on their case to deliver on the mandate this House will give them.
I welcome that the PIAB is for genuine cases only. It has many good features, such as the fact it will be document-based with a book of quantum, with its own assessors. The lawyers have concerns and Senator O'Toole has threatened he will deal with the communication from the Bar Council. Rights of access to the courts, fair procedures and equality before the law are a sine qua non of our constitutional protection. I hope the fears of various parties will be allayed.
I will be tabling amendments on Committee Stage to address some imbalances and shortcomings in the Bill. I broadly welcome the Bill and hope it will achieve its objectives in addressing the problems associated with high insurance costs.
Mr. Leyden: I extend a warm welcome to the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney. I congratulate her for bringing the Personal Injuries Assessment Board Bill 2003 so speedily to the House. I am confident it will be given a speedy passage. She has the full support of the Government side of this House.
The Tánaiste is known as a courageous politician. This is evident in that she has taken on both the Law Society and the Bar Council at the same time. Both societies have been in existence since Cain killed Abel, but they will continue to exist because many lawyers want to work in areas besides personal injuries. People going before the proposed Personal Injuries Assessment Board can consult solicitors and many will when completing the board's application forms. Lawyers can arrange a fee for this work. The Bill has the potential of reducing insurance costs for consumers. There has been a 300% increase in public liability premia over the last several years. Many industries, particularly small-sized ones such as the hotel industry, are under threat. The Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney, has particular responsibility in this regard. She set out as one of her main political priorities in this Fianna Fáil-Progressive Democrats coalition to bring down the costs of insurance. This was a brave commitment to make. It is one that she could easily fail in, but I believe she has taken the proper course of action in tackling this matter.
I compliment the then Minister of State at the Department of Enterprise, Trade and Employment, Deputy Treacy, who established the Motor Insurance Advisory Board. The Government appointed Ms Dorothea Dowling, a formidable lady, as chairperson to that board. I also compliment the important role of the Joint Committee for Enterprise and Small Business in holding public hearings and publishing a report in July 2003 on the matter. Under the chairmanship of Deputy Cassidy it has worked hard. The members of the committee also include Deputies Callanan, Tony Dempsey, Hogan, Howlin, Conor Lenihan, Lynch, McHugh, Murphy, Nolan and Wilkinson along with Senators Coghlan, Hanafin, Ross and myself. All these Members, and others who have substituted at times, have played an important role in the preparation of the interim report that was published last July. The hearings are still in progress. This has given an enormous opportunity for both sides of the industry to put forward their case.
The Bar Council and the Law Society both appeared before the committee to put forward their points of view. The Bar Council believes the Personal Injuries Assessment Board will not be a success. To allay fears the Minister should consider having a review of the board after a five-year period. It should not be a permanent fixture unless it proves to be successful. All the issues put forward by the legal profession, both solicitors and barristers, indicate they believe it will not work.
The Minister and Members of this House believe it will work. It is our response to the rising cost of insurance claims. The board provides those who are affected with the opportunity to put their case and get a speedy settlement. While we believe it will be a success, in the event that it is not, it would be wise not to institutionalise it into an organisation that will continue irrespective of its impact. It must have some criteria for success. Its objective is to bring down the cost of insurance. If it fails to do that, it should no longer have the right to exist.
It is a major step for the Minister to establish another semi-State organisation. More than 100 people will be employed in suites of offices and it will have costs and overheads. In that regard the board should be located outside Dublin. If it is a paper-fed organisation without the need to hold interviews, there is no need to travel long distances and cases can be made through the Internet and paper applications. Most of us would be happy to have such a board in our constituencies.
Mr. Leyden: No. I would swap nothing for Roscommon County Hospital, not even the location of this board in Roscommon. A hospital is the most crucial part of the infrastructure for the people in any area. The location of a board would not be proper compensation for such a loss.
The Government has a policy of decentralisation. Before a new board settles down in its suite of offices in Dublin city centre or CityWest the Minister should consider locating it in the BMW region. I am sure the Leas-Chathaoirleach would not mind having it in the west.
I also recognise the work of Senator O'Toole, who has made a major contribution to the introduction of the Bill. I note the legislation does not preclude Oireachtas Members from being members of the board. There is no reason why an elected public representative, such as a councillor, Senator or Deputy, should not play a part in its deliberations.
Dorothea Dowling is an extremely talented lady, who will ensure this will be a success. She is giving a great degree of commitment to the board. Is it necessary to prevent a person from meeting or being interviewed by members of the board? People would feel more assured if they had that opportunity. While the majority of cases should be settled without personal contact with representatives of the board, I do not see why this should be excluded.
Motor claims cause great problems and should be dealt with by the board as quickly as possible. I am pleased the Minister has indicated that the board will deal with such claims by about June 2004. Many reforms have already been carried out and the Minister and her colleagues in Government have been actively working on the action plan to implement the recommendations of the report of the Motor Insurance Advisory Board. Many of the recommendations have already been implemented by the Government and have brought about results. It is believed that 77 lives have been saved because of these and other steps taken by the Minister for Transport. However, there are many other areas in which action can be taken.
The recommendations by the joint committee are also worthwhile. The Minister and her officials have contributed by attending some of the meetings. Many recommendations will assist in bringing down the cost of insurance. It is imperative that premiums are reduced. It is also important that young drivers be given the opportunity to get insurance, as the cost of it is now prohibitive for them.
I acknowledge the contribution of the “Prime Time” programme and the work of Pat McDonagh and others who have highlighted the occurrence of false claims. “Prime Time” showed that an individual in Cork made, I understand, seven consecutive claims, yet nobody was prepared to challenge him. More exposure of such false claims will help to bring about improvements.
I commend the Personal Injuries Assessment Board for its work on preparing a book of quantum, which will outline exactly the compensation levels applicable. This should be available when the board is established on a statutory basis in January 2004.
The Bill is comprehensive and worthwhile. Once it is found to work well in its first year it will attract additional business. A major publicity drive will be required to inform the public that this is the best route to take in terms of getting the earliest possible compensation for legitimate claims. The Law Society and the Bar Council should not discourage claimants. Ultimately, if claimants are not satisfied with the level of compensation they will continue to have a right to go before the courts. The majority of claimants will find they will get a speedy settlement. Legal costs are estimated to constitute approximately 40% of the overall settlement amount. Ultimately, this must be paid by the policyholders.
The Law Society has rules preventing advertising. For good reasons of competition a previous Government permitted advertising on radio and television. However it reached a stage where solicitors placed advertisements in the Golden Pages advising people they could get compensation on a no foal, no fee basis. This attracted a considerable number of claims and added to the cost of insurance. Some companies are still advertising. On Shannonside Radio on Monday I heard an advertisement from a company in Athlone. It was not advocating that it would get compensation, but the general tone of the advertisement was to encourage people to go to that company to put in a claim. The Law Society will have to clamp down on this type of practice. There is a ban on no foal no fee advertising, but there are numerous examples of it being practised. It is important that it is stamped out. If a person risks nothing in going to law and putting forward a claim, there is no incentive for him or her not to claim on the basis that legal fees are covered and compensation is paid by an insurance company.
Representatives of the insurance companies will have to ensure that the Personal Injuries Assessment Board will work. In fairness, the Law Society and solicitors put forward a case to the effect that all the power will lie with the insurance companies. They will have the backup to fight claims, but the person lodging the claim will not have the support that he or she would be entitled to through a solicitor or barrister. Most of the companies represented at our meetings indicated they would ensure a level playing pitch and would not stack the opposition to claims. It will be a fair assessment. The PIAB will ultimately bring about a climate of equity and fairness and this is what we want. If a person has a claim, let him or her get genuine compensation, no more, no less. It will, however, be speedier and more cost effective. This is the objective of the Bill and that is why we support it.
This is part of the programme for Government which the Tánaiste is implementing and she has given enormous time and energy to it. No previous Government or Minister for Enterprise, Trade and Employment was in a position to tackle this problem the way the Tánaiste has done. I have served in that Department, although not with responsibility for insurance which was the bailiwick of the then Minister, former Deputy Desmond O'Malley. Insurance costs at that time were not as high. They have escalated in recent years due to the cost of claims. Everyone has argued about this particular issue. The return of the Government, the establishment of the Joint Committee on Enterprise and Small Business, chaired by Deputy Cassidy, and the work it put in over the summer, as well as the work of the Tánaiste and Dorothea Dowling and her committee, have all come together in the last 12 months in the formulation of this Bill. It is part of an overall package to try to bring down the cost of insurance.
We must ensure fraudulent claims are done away with and that those who make them are legally liable and the State will pursue them. I commend the Bill to the House. This side of the House is fully supportive. We will have an opportunity to review the Bill on Committee Stage next week. I know the Tánaiste is anxious to get the Bill into the other House as quickly as possible and have the legislation passed before Christmas. That was a commitment she gave and she has honoured it. In difficult times she has secured €5 million to get the board up and running, which is a big commitment. There were question marks here when she spoke about insurance on a Private Members' motion a few weeks ago. The Tánaiste gave a commitment and she got the resources. The board will be up and running and she has a tremendous chairperson in Dorothea Dowling, supported by her able team. I compliment Senator O'Toole for his input in this particular regard.
The composition of the board is representative of consumers, employers, the legal and medical professions etc. Everyone has an input. It will be a success, but whatever provision the Tánaiste makes – she will have the power to remove any board at any time – I believe a five year period will indicate significant change. In terms of cost, the Tánaiste indicated a figure of between €6 million and €8 million, which will be self-financed over the next few years. Those are the current calculations, although the Law Society came up with the enormous figure of €28 million or something like it. Time will prove it was the correct initiative. The Tánaiste will still be in office when the review of the PIAB is done in five years time. I will then ask for a detailed cost analysis to see if we were right to bring forward this Bill and if it has brought down the cost of premiums.
I appeal to the insurance companies to work with the Bill and the PIAB, pay compensation as quickly as possible and prove that it will work by bringing cases to speedy settlement after the board begins to operate next year. The legislation is a step in the right direction, a quantum leap in the whole area of insurance.
Mr. O'Toole: I congratulate the Tánaiste on bringing this Bill forward. Everybody in this country is currently an expert on the problems of insurance. There is not a house in Ireland without a young driver who cannot get insurance. We are not specifically dealing with that problem today, but this legislation will deal with that issue, we hope, on 1 June 2004. Everyone knows about the businesses that are unable to pay for insurance. Some of them are operating on self-insurance, without any cover. The problem of insurance is huge.
This is an issue for all parties, which have put forward points of view on it. In 1986, a committee chaired by the former Deputy Ivan Yates of Fine Gael looked at it, produced a report and did things which are reflected in this legislation. In 1996, another committee chaired by Deputy Rabbitte did something similar and said things that are reflected in the proposed legislation. In 2002, the then Minister of State at the Department of Enterprise, Trade and Employment, Deputy Treacy, published the report of the Motor Insurance Advisory Board. That led directly to this Bill. The Tánaiste has been as good as her word in dealing with this issue and bringing forward this legislation against all odds. There has been nothing but objections, obstacles and blocks in the path of this legislation. It is now before us and I believe that, in the long term, it will mean easier access to insurance, lower premium levels and a more honest society in dealing with insurance claims.
Having thanked the people who put this together, in particular Dorothea Dowling, chairperson of the committee who has worked morning, noon and night, including at weekends, to get this done, I ask the Tánaiste to convey our thanks to the staff of her Department who worked so hard to enable this legislation to be brought forward. It is important to recognise that point. I am aware of some of the work they did, but I only know the tip of the iceberg.
The crucial question raised by Senator Leyden, the Bar Council, the Law Society and everyone else is whether it will work. This is the easy part. It is like “Mission Possible”. It will self-destruct and wither on the branch if it does not work. It never needs to be stood on – either it delivers or it will die. It is as simple as that. If it is not doing the business and cases are not being settled at the level proposed in four or five years, it will no longer have a function.
I have set benchmarks for the PIAB, on which I believe every member of the board will support me. Those benchmarks include, first, the question of time. Will this begin to shorten the time period between someone having an accident, lodging a fair claim and receiving money? Before anybody comes back at me on that, I have taken the trouble to look at the dates of accidents and the initiation and conclusion of litigation in every case that has gone through the Irish courts over a number of years so I know what I am talking about. The amount of time cases take is disgraceful. The Bar Council informed us this morning that things are working efficiently and I will come back to that point shortly. I have the lists and the times and I will show them to anyone who wants to see them. The gap between putting in a claim and receiving money is unacceptable.
The other issue is the question of costs. Will insurance premiums drop in the future for young drivers, and will they drop now for people establishing businesses? This is probably the clearest, safest and most easily assessable benchmark. Senator Leyden is right to say that we should look at this again in a couple of years to see if, in fact, this has happened. If it has not happened, there will be a problem.
The cost of dealing with claims is the other significant issue. The percentage of the cost of settling a claim that goes to the claimant was not indicated in the documentation we received from people opposed to the legislation, which in some cases is greater than 70%. Medical and legal costs combined far outstrip the cost of the award to an individual. That is the reality and we need to examine this issue.
In response to Senator Leyden, it is fair to say that ordinary people will decide. If this does not deliver, people like us will say in the House that the Personal Injuries Assessment Board, which will operate for three or four years and which everybody is required to go through, is not producing results and we should revisit it. That is the way it should happen. I would not have a problem with this approach.
I have an interest in this matter as a member of the Personal Injuries Assessment Board. I want to put this on the record of the House as is required. The Personal Injuries Assessment Board will wither on the branch if it fails to deliver. It will self-destruct.
I am not sure if the Bar Council is aware that every line of the Bill has been examined by lawyers in the Attorney General's office. They went through drafts of the legislation and changed elements of it which the Personal Injuries Assessment Board wanted to include. The lawyers' advice was that the legislation needed to be framed as it is to ensure the protection of constitutional rights, fair procedures and that people would be held equal before the law. The legislation before us reflects this position.
Every attempt has been made to view this through the filter of constitutional rights. If it has reached the end of the process of scrutiny without constitutional rights being fairly, honestly and properly protected, we will soon know it. The people who will know are those who wrote to us this morning. I am sure they will run to the courts seeking a judicial review on the first case in which they believe constitutional rights are denied. We do not have to worry about that aspect. There are plenty of people in the Law Library, the Bar Council and the Law Society who will make sure that such cases are thoroughly checked.
While we do not need to worry, we need to look at the issues raised. We need to know how the Personal Injuries Assessment Board will work and what the difficulties might be. I want to examine the implications of the issues raised in the Bar Council's communication that arrived this morning. The first issue relates to the question of rights. The Bar Council is concerned that justice will not be delivered in public and that the Personal Injuries Assessment Board is a paper based system. Some 90% of claims never get to the courts and so are not delivered in public. These claims are dealt with using a paper based system; lawyers look at a piece of paper and come to a conclusion. This is misleading and unfair. I am an advocate and lobbyist and will argue the point with anybody on an issue. I will also go through what anybody has to say, clearly and in detail. I object to the implication that, in some way, the Personal Injuries Assessment Board is different. It has been designed precisely because 90% of cases never get as far as the courts. In response to the point that there is no right to oral hearings, it is also true of 90% of cases in the current system, unless claimants want to push their way through the courts. The Personal Injuries Assessment Board will not change this right.
Nobody in the Bar Council attempted to explain its point that the Personal Injuries Assessment Board is weighted in favour of the defendant. This is not true. One person from the insurance industry has membership of the board. I can see how one could raise a principled argument against there being a representative from the industry and I could make a principled argument against it. In practical terms, however, such a representative should be there. It would not be likely that this person could convince 11 or 12 people, including zealots like me representing the trade union movement, zealots from the IBEC representing business, the Director of Consumer Affairs, people from the financial services sector and a variety of other people who have no connection with the insurance industry. If this one voice will drown out all those others, good luck to him or her. It would take a mighty advocate to do it. This is a case of 11 against one, assuming that the person has a biased view of the world as is suggested in this document, which I have not seen, from representatives of insurance companies. He or she would have to drown out all the other voices who will be there trying to move the process forward.
We are told that the right of access to the courts, the right to fair procedures and the right to be held equal before the law are affected. When I first read this submission, I was resentful that people would assert that I am involved in something that would deprive people of those rights, for which I have spent my life fighting. I am not about to change at this stage. I have calmed down since I saw that part of it. All I will say to people who feel that way is that they should go to the courts when the first case comes before the Personal Injuries Assessment Board. They can hang this out to dry and if somebody wins a case against us through a judicial review or some other way, fair play to them, we will have been wrong. I am prepared to wager a significant bet that this will not be the case.
I do not know how anybody can come to the conclusion that awards will be less than court awards. I represent the voice of workers on the Personal Injuries Assessment Board and I am not interested in trying to ensure people will be awarded less than they would receive by going to court. That is not what this is about. To ensure this does not happen, the Personal Injuries Assessment Board has done a study of every award made in recent years in the courts, inasmuch as we could access that information. We also looked at what has happened in similar judgments in the UK. We intend to produce a book of quantum.
The decision on who will work on this will be made in the next week. This book will indicate the amounts of money awarded to a person following a successful claim for a particular type of injury. The book will record what was paid to an individual for a broken finger and also the slightly higher award made for a more seriously broken finger. The same holds true for a broken arm or leg, brain injury or whatever other injury. All injuries will be listed, as well as the severity in between. A range of awards will be available, therefore, for a broken arm depending on the severity of the damage. The Personal Injuries Assessment Board will use this guide. It is not intended to reduce the amount, but it will reduce the current cost of achieving those sums.
In the current system everything has to be matched. If a claimant gets legal or medical support, then the other side has to do it. Let us call a spade a spade. In observing cases going before the courts, we all know the expert witnesses who are most likely to be there on the defendant's and claimant's sides. That is the way of the world.
The Bar Council also said that there is no legal representation, that the Personal Injuries Assessment Board is a lawyer-free zone. That is right. I am not sure if it is a criticism or considered a good thing, but it is a fact. It is a lawyer-free zone. I would like the Bar Council to put that at the top of all its statements on this matter. People should know this; it is one of the biggest selling points we have in terms of understanding how it works. I am a great supporter of lawyers; they are an important part of a democracy. We have looked at how cases are dealt with here and in the UK. Here, 70% of cases require the involvement of a barrister – a member of the Bar Council – that is, seven out of every ten cases. In contrast, only four out of every 100 requires a barrister in the United Kingdom. If the professionals involved had taken the interest in the matter ten years ago that they are taking in it now, it might never have been necessary to introduce this Bill. That did not happen. Like Terrence O'Neill they have done too little too late which is where the criticism comes from. These are facts.
There are other points I wish to make in relation to benchmarking and time. In Ireland it takes, on average, six times longer to conclude a case than in the United Kingdom. Everybody agrees it is a basic legal principle that justice delayed is justice denied. These are some of the issues which have driven us to the point we are at today. I am quite happy to discuss these issues with the Bar Council, the Law Society or anybody else. If they make fair points, we should respond to them as such. Where they make incorrect points, we should rubbish them. It is crucial that we take these issues on one by one.
I ask the Bar Council to take what I have to say about costs into consideration. The council contends that no cost-benefit analysis of the Personal Injuries Assessment Board was carried out by the State. I read two reports though I am not sure if they were produced by the Bar Council or the Law Society. One was compiled by Des Peelo and the other by Dr. Peter Bacon. I read those from the perspective of my role in respect of auditing and accounting work. I approached Dr. Bacon's report with some interest as I have great admiration for his work, but I was devastated and disappointed by what he had written. I stopped reading when I realised the report was misleading on the matter of the cost-benefit analysis. I do not know whether the Minister has seen the report, but it included as part of the board's annual costs the actual establishment costs. I also record that I saw three further errors. That is not the way to do business. There are claims in the report which do not stand up to scrutiny. The costs outlined are simply incorrect.
It has been stated that the PIAB will be an additional layer in the process and all cases will have to be brought before it in the first instance. The second part of this contention is correct. Whether it will constitute an additional layer in the process remains to be seen. We go back to Senator Leyden's view. We will find out if that is the case in four or five years. If everybody goes through the PIAB and then to the courts, the board will have proved to be an additional layer. It will have failed to fulfil its role.
The Bar Council tells us there is no clarity in the modus operandi of the PIAB. It is a question of how legislation is drafted. I am sure the members of the Bar Council know better than anybody that the worst legislation is legislation which attempts to anticipate a specific case such as an elephant walking into a court. The Bill before the House is enabling legislation. We have produced a document, A Lay Person's Guide to the Personal Injuries Assessment Board, to indicate roughly how the new structure will work. By “modus operandi” I presume the council means the detail of the board's operations. The Bill requires the board to outline the various steps in its operations. The board will have to ensure all of the rights referred to by the eminent members of the Bar Council are protected in the course of its proceedings. That will happen. There are reasons the process is not included in the legislation. One of the most important is that the operation of the board will, of its nature, be organic. There will be issues of learning through the experience of making marginal changes. This happens in the courts and elsewhere. There will be different emphases in the process as things develop. With experience, it will become clear that certain aspects of the board's operations require different approaches, which is as it should be.
It is hugely important that every issue raised by the Bar Council is examined. I ask that the Minister's lawyers look again at what the council has had to say. If there is something in what it has submitted which is different to my interpretation or if it has identified a provision which does not stand up legally we should, of course, table an amendment to the legislation next week. I would be the first to support that action. We are not in the business of railroading legislation through if there is any possibility that people will be worse off after it is introduced.
I had two comments to make about Conor Maguire's press piece on this but I will not raise again the constitutional concerns regarding right of access, equality and the right to fair procedures. It is my commitment and the commitment of Dorothea Dowling and the other members of the board to ensure those rights are adequately reinforced, protected and accessible.
It has been pointed out that if a case which has been before the board goes to court, the insurance company will have full knowledge of the other side's position. While I do not wish to address the point in detail, I refer Members to a recent judgment of Mr. Justice King concerning personal injuries actions. It was reported in The Irish Times law report on 13 October. Mr. Justice King said that a plaintiff who sues for damages for personal injuries by implication necessarily waives the right of privacy which he would otherwise enjoy in relation to his medical condition. Access to all medical records becomes available when proceedings are initiated. It is not true to say that a person who goes to the PIAB will necessarily disclose his or her case. The board will only consider what has happened and the person's medical condition. Information on that condition is the first thing available to lawyers anyway. There is nothing new in that.
The Bar Council has raised an issue which will be important if it is proved to be correct. It contends that insurance companies may put every case through the PIAB and subsequently reject the outcomes before taking those cases to court. If that happens, the board will have been a failure. I record my belief that the council is wrong on this point. That will not happen because it is in nobody's interest to act in that way. Unfortunately, I do not have time to develop in more detail the reasons for that.
To conclude, this legislation is mould breaking. It provides us with a new direction and it will prove to have been in everybody's best interest. Lawyers will deal in the future only with cases which should go to court. They will have the support of all of us in that. We will no longer have the problem of 90% of cases being settled on the steps of our court houses. The chancers who take fraudulent cases will be identified more easily. They will have to go to the courts. While there may be some who go to court having felt the PIAB has not treated them fairly, a balance among all interests has been struck in this legislation. It is in the best interests of the consumer, the Constitution and the community in general.
The commitment of the Government to insurance reform is evidenced by the Minister's presence and by the contents of her speech. There are times when the general public and the business community express dismay at Government inaction. Sometimes that inaction is the result of external influences acting on this country, but problems in the insurance industry fall to the Government to resolve. Ultimately, Government decisions on insurance reform have a huge influence on the lives of young and old as well as on every householder, car driver, community, community centre and business. Rising insurance premiums influence the job creation ability of businesses and ultimately the health of the economy in general, including the Government's purse.
In the past 12 to 18 months there has been criticism of the delay in bringing forward this legislation. However, when they read the 82 sections of the Bill, I am sure the Government's critics will acknowledge the extensive work required to bring the Bill before the House. The many provisions of the Bill are to be welcomed, especially in regard to expediting the outcomes of cases.
The reduction of costs and resulting premiums will be the benchmark against which the Bill will be judged in the long term. I hope the PIAB will not lead to bureaucracy, as has been suggested by some Senators and vested interest groups, but rather a speedy and efficient method of determining cases. Only in this manner will the PIAB receive the confidence of the public and the business community.
The introduction of the Civil Liability and Courts Bill by the Minister for Justice, Equality and Law Reform will also assist in cutting down the number of claims as claimants will have to sign an affidavit as to the truthfulness of their claim on day one. This will ensure that genuine claimants are protected and that fraudulent claimants are found out and penalised heavily. Ms Dorothea Dowling is to be commended for her work to date with the interim board and for challenging the many vested interests in the insurance market.
It is time we, as legislators, took the work of the interim board to the next stage of its development by enacting this legislation to establish the PIAB on a statutory basis. The reductions in premiums are of paramount importance and the costs of the PIAB must be carefully monitored in the coming years, particularly in the initial stages. I am delighted the concerns of business people and their representatives, such as Mr. Gerry McCaughey and Mr. Pat McDonagh, are now contained in the 82 sections of the Bill. We owe a debt of gratitude to the business community, which campaigned so vigorously for this reform. Often we may have thought the campaign too vigorous, but it was born out of years of frustration. I hope the campaign will now fully endorse the Government's action in bringing this Bill before the Houses of the Oireachtas for enactment before Christmas. I ask the Opposition to assist us in passing the Bill for the benefit of all citizens. I thank the Tánaiste for coming to the House and I commend the Bill.
Mr. Browne: I welcome the Tánaiste to the House and apologise for my absence yesterday for what appears to have been an excellent debate on stem cell research. Senator Morrissey and I were away on transport committee business.
All Members are in favour of the establishment of the PIAB. When the Tánaiste and Minister for Enterprise, Trade and Employment came to the House to answer a recent Private Members' motion, she informed us that she was bringing forward legislation. This was greeted with enthusiasm and we assured her that we would support her work in that area. I am glad we are now debating this important legislation.
Senator O'Toole raised some important points and brought home to us the reality of the situation. I heard of a car accident in which a vehicle was stopped in front of another stationary vehicle at a roundabout which tipped into the back of the first vehicle at what cannot have been more that 5 mph. Less than a year later, the woman driving the car in front received €12,000 in an insurance claim and her legal team received more than €3,000, about which the person in the second vehicle only found out by accident when she called her insurance company. That example brings home to me the reality of the situation.
We have been lobbied by males under 30, who are the insurance industry's real target audience, as well as business people who have been forced to go without public liability insurance or insure themselves in a way which places them under huge pressure. The measure we are debating today is long overdue.
Inflation in prices in the insurance sector is completely out of control and has not kept in line with ordinary inflation. The Government has done some work in this regard but has not been moving as swiftly as the Opposition would have wished. There have been major improvements in road safety in recent years. It is astonishing that 472 people were killed on the roads in 1997. This number has reduced by more than 20% up to last year as a result of the penalty points system. However, we have not seen the major reductions in insurance premiums that should have followed. Politicians need to put pressure on insurance companies to pass on the huge savings they are making thanks to legislation.
There is more we can do in this regard. We need to have a package including road safety and fraudulent claims. On the Order of Business this morning, I raised the need for the introduction of a drug analyser, similar to that which is being introduced in the UK. We have made great progress in regard to drink driving and reducing the number of fatalities in that area, but we have not addressed the serious issue of drugs. I was appalled to read that 25% of fatal car accidents in the UK involved people under the influence of illegal drugs. When that figure is added to the number of people, who are unaware of the dramatic side effects, using legal drugs there is a serious problem. We all take drugs from time to time and we must be careful driving or operating machines because they can make one drowsy. Intake of such drugs can result in car accidents. Therefore, we must examine this issue too.
We need to give the Garda more resources to enforce the penalty points system, which will lead to a reduction in claims because all these issues are interconnected. The Tánaiste is not responsible for the Department of Justice, Equality and Law Reform or the Department of Transport but I ask that she urgently revisits the Government's promise for a dedicated traffic corps to enforce penalty points as it seems to have been abandoned. We cannot look at insurance on its own because it is part of an overall package.
The lack of competition in the insurance market is worrying. I heard Eagle Star was considering pulling out of Ireland, which I hope will not happen. The first step we are taking with the Personal Injuries Assessment Board will make Ireland more attractive to other insurance companies to enter the market and introduce more competition. In this case, the consumer will be the winner.
There are many aspects of the report of the MIAB which have not yet been considered. Will the Minister clarify the position in regard to the stamp duty of 2% on insurance premiums, which was supposed to be removed under recommendation 58 of that report? There is a question mark over the funding of the PIAB. The Tánaiste said the initial cost of establishing the PIAB will be borne by the State, but how will it be funded in the future? The Minister refers to it being financially viable and cost effective. However, people are concerned that policy holders will have to subsidise it to some extent.
Does the Tánaiste intend to introduce legislation to tackle fraudulent and exaggerated claims, which was another recommendation of the MIAB report? The board should be set up as quickly as possible to start analysing court and motor insurance cases. We cannot know how effective it will be until it is up and running. The Law Society and the Bar Council look at the matter in a dreary and depressing manner, but hopefully they will be proven wrong. However, we will not know until it is set up.
It is a grave concern that instead of speeding up claims the PIAB could add another layer of bureaucracy because if people are not happy with its findings, they can return to court. Hopefully, that will not be the case. Will the Tánaiste expand on what steps she plans to take to counteract this and ensure it will not happen?
Fine Gael supports this measure and wants it introduced and to see the board up and running as soon as possible. While it may well need fine tuning after its implementation, we will work closely with it. There is a question about how soon the board will become involved in cases. Will the Tánaiste clarify when she envisages the board starting on its first case? Will there be a delay of some months?
Another area that needs to be examined is insurance for young people and males in particular. Most insurance companies do not want to know about males under 30 years of age. We hear about discrimination and sexism and normally associate it with the female gender. It is actually the other way round; the male gender is being discriminated against more than ever.
A Government commissioned Competition Authority report into the lack of competition in the insurance industry is due, but, as far as I know, it has not yet been published. Does the Tánaiste know when it is due to be published? It would be helpful. If insurers refuse to offer cover to people, they should be forced to explain in writing the reason for their refusal. We must keep the pressure on the insurers at all times.
Mr. Scanlon: I welcome the Tánaiste to the House and congratulate her, her colleagues and officials in the Department of Enterprise, Trade and Employment on the excellent work that has gone into producing this Bill.
A great deal of thought and effort has been put into the Bill and I welcome its provisions. As Senator Leyden pointed out, significant benefits will come from this Bill which will have far-reaching implications for everyone. It is, without doubt, one of the most important and significant pieces of legislation to come before the 22nd Seanad so far, despite the many forces working against its implementation.
To say that the issues dealt with in the Bill are complex is an understatement. The Tánaiste and the officials in her Department who were involved in putting this Bill together deserve huge credit for producing such a fine document in a relatively short time. Given the issues and structures involved, it would not have been a surprise if the Bill had taken a great deal longer to finalise. It is yet another example of the effectiveness of the Government and the commitment of the Tánaiste to delivering on their promises. That is exactly what the Bill will do.
Through the establishment of the Personal Injuries Assessment Board, the Government has taken a huge step in dealing with the problem of rising insurance costs which are a problem for businesses all over the country as they strive to keep costs low and maintain their competitiveness. Rising costs are a problem for drivers who face having to pay astronomical premiums to simply get on the road. The problem affects every person in the country and that is why the solution offered by this Bill is so important.
Once the assessment board is in place, we can expect to alter the current situation dramatically. By assessing claims of compensation in an efficient and consistent manner, the board will significantly reduce their cost. Once the price of claims starts to drop, the price of insurance should follow suit. After all, we have been told by the insurance companies for years that it was the cost of litigation that was driving up premiums. It was costing the insurance companies more and more to compensate claimants, due to the legal costs involved. We have now addressed that problem. Legal costs should no longer add on in excess of 40% to the cost of compensation. Through the streamlining of the compensation process contained in the Bill, we should effectively see the insurance companies save most of that 40%. Therefore, it would not be unreasonable to expect premiums to be reduced by the best part of 40% .
The Personal Injuries Assessment Board allows for the shortening of the whole compensation process. It is estimated that it takes six times as long to begin negotiations on claims in this country as it does in Britain. That is a disgraceful statistic but, hopefully, the establishment of the board will end that problem.
The Government is doing its part to reduce the cost of insurance throughout society not only through the introduction of the Bill, but also through the successful implementation of the penalty points scheme and the forthcoming Civil Liability and Courts Bill, which should speed up the litigation process further and help to significantly cut the number of false claims. It is now the turn of the insurance companies to start taking responsibility for lowering prices. They cannot be allowed to just convert these savings into profits. They have a responsibility to this country. Insurance prices, as they currently stand, are not acceptable. They severely affect our competitiveness and put jobs at risk. Commercial liability insurance now costs an estimated €2 billion annually. Insurance is not an option but a necessary requirement and people and companies cannot simply decide that they do not want insurance. The insurance companies have a responsibility to address this issue, but they have yet to accept it. They continue to cream profits to the cost of the citizen and the State. The insurance companies will claim that the cost of insurance has come down by 20% in the past eight or nine months, forgetting that premiums went up by 150% in the previous 18 months.
How can the insurance companies explain the exorbitant prices that young drivers continue to face? There is no sign of this situation improving. These young people are forced into a corner when it comes to insurance and have no choice but to pay. In many parts of the country they have no option but to travel by car to work, but the insurance companies continue to ignore their legitimate concerns over the cost of insurance. I know young drivers in Sligo have great difficulty meeting the price of their premiums and a huge part of their salaries goes towards the cost of insurance just so they can travel to work.
I compliment Quinn Direct insurance in this regard because three weeks ago it had a full page advertisement in the national press showing the cost of insurance for young people with a one year no claims bonus driving a car valued at €8,000, on a scale from aged 18 to 25 years. This is the first time I can remember any insurance company giving any opportunity to young people who have been treated scandalously by the companies.
I call on insurance companies and the Irish Insurance Federation to address these problems. They need to reduce the price of insurance across all sectors. They must accept their responsibility in tackling the threat to competitiveness this country faces. They need to make premiums cheaper and keep them at that level. There can be no half measures in that regard. Jobs and the economy of the country are at risk. The insurance companies must address this now. They cannot be allowed to dwell and deliberate on the issue and hope they will be let off with some token reduction. Large reductions in premiums should be made immediately. This is the least the public deserves.
I also welcome the provisions for a book of quantum. This should contribute to the standardisation of claims and lead to the streamlining of the claims process. Once there is an agreement that there is a valid claim, all the parties involved will be able to examine the going rate of compensation for the particular injury sustained. In this case, it will not even be necessary to contact the Personal Injuries Assessment Board and should cut down the costs involved even further.
Mr. Scanlon: I welcome the provision for a book of quantum as this should contribute to the standardisation of claims and lead to a further streamlining of the claims process. Once there is agreement that there is a valid claim, all the parties involved will simply be able to examine the going rate of compensation for the particular type of injury sustained. In this case it will not even be necessary to contact the Personal Injuries Assessment Board, which should cut down on the costs involved still further.
There should be some degree of flexibility contained within the book of quantum. Everyone knows that injuries can vary significantly in degree and even similar injuries can result in varying levels of trauma for two different victims. In such circumstances, measures should be built in to ensure that the claimant is given all that they deserve and not just treated in the same manner as someone whose injury, though similar, has not been affected to the same extent. It is merely a matter of getting the balance right and I am sure the board will address these issues when it begins preparing the book of quantum.
The idea of a book of quantum is good and should be introduced into other areas of public life. Perhaps a similar book of insurance prices, which would include the comparative prices in other countries, could be put together. We could then, perhaps, see how much value for money the insurance companies are providing and we might also witness some real competition between those companies.
The Government deserves to be congratulated for taking on the legal profession. We all know how strong a lobby lawyers and their representative bodies present. However, the Government did not allow that to deter it in arriving at a solution which will not be popular among lawyers. I noted with interest the criticism by the director general of the Law Society of Ireland, Mr. Ken Murphy, in The Irish Times yesterday. While I would argue that most of the criticisms contained in his piece were those of promoting the interests of his organisation and its members, I found one point he made worth further examination.
It is true that the vast majority of those claimants who will come before the Personal Injury Assessment Board will be doing so for the first time. In this regard, they will not know how best to present their cases and may find some of the requirements difficult to understand. With this in mind, the board should perhaps consider employing claimant officers who would be available to potential claimants to help walk them through the process. The advice given by such officers would be restricted to the assessment board process and could be paid for by respondents. I hope this suggestion will warrant further examination by the board when it has taken office.
It is equally important that membership of the board is not just made up of representatives from the various interested bodies. There must be people present to protect the rights of claimants. I know the board is still being put together and I ask the Tánaiste to take what I have said into consideration when the make-up of the board is being determined. I congratulate Senator O'Toole, who has had a long public service career, on his appointment to the board. I know he will act in a very fair manner.
One benefit of the Bill which should not be forgotten is that it will greatly reduce the amount central and local government have to pay out in compensation. By cutting the cost of public liability, savings should be made by the various State agencies. This will have an effect on finances nationwide, from every local authority budget right through to the Exchequer purse. Less money should be paid out in compensation which, in turn, will leave more money to be spent on public services. This can only be a positive development. Effectively, citizens of this State should not only enjoy cheaper insurance and lower prices for goods and services but they should also benefit from more money being spent towards the public good.
When the various factors to which I have referred are taken into consideration, it is clear this is remarkable legislation. It is also clear the Government is taking a great step forward with its introduction. The effect it will have cannot be understated. It will make a real difference to people in every walk of life.
By introducing dynamic initiatives such as those contained in the Bill, the Government is again showing that it is doing everything it can to address the real problems in society. We are tackling the problems that people face on a daily basis. It is not always possible to deal with such problems in a straightforward manner. It sometimes takes a great deal of thought and development to piece together a solid and effective solution. That is precisely what this Bill represents; a solid and effective solution to a wide-ranging and awkward problem. With this in mind, I commend the Bill to the House.
Mr. McDowell: I welcome the opportunity to contribute to the debate. The Labour Party supports the Bill, in principle. Our spokesperson in the Dáil, Deputy Howlin, served on the sub-committee of the Joint Committee on Enterprise and Small Business which dealt with this issue during the summer recess and endorsed, on our behalf, the findings of that sub-committee, which include a recommendation that the establishment of the board be expedited immediately. We support the Bill, in principle, because we believe it is appropriate to introduce a mechanism, it could be called a “clearing house”, whereby cases which are not disputed in terms of liability will be dealt with expeditiously. This offers the possibility that claimants will receive compensation they are due earlier and more efficiently than might otherwise be the case. The Bill will achieve this by putting in place a more streamlined procedure, which will involve fewer lawyers.
The Minister of State is aware that I have a certificate to practice law. However, I have not entered a court for a long period. It is important to state that we are not seeking to create a lawyer-free zone simply for the sake of doing so. Lawyers serve a purpose within the criminal and civil justice systems in that they play an important role in upholding people's rights. Lawyers give people advice, which they are entitled to accept or ignore. It is remarkable that Senator Scanlon referred to appointing claimant officers within the structure of the board. I do not know the origin of that idea, but I imagine we will hear more about it. It is obvious that such officers would be civil servants or whatever within the board who would guide people through the process. Perhaps that has merit but why not provide for independent legal or other advice to be given to individuals? They should be entitled to be advised by people they trust or choose to employ and it is not relevant whether somebody is appointed to the board. By seeking to argue for such advice, Senator Scanlon accepts that people need to be guided through the system.
Everyone who has been involved in processing a claim will be aware the system is convoluted and the requirements of court can be, at times, bewildering but they are intended, and have evolved, to provide a balance between getting the right result at the end of the day and ensuring people's rights are upheld during the process. If an individual believes he or she is required to deal directly with the board and vice versa, mistakes will be made. People will fail to adduce evidence in their own interests and recommendations that are made, which will no doubt be accepted, will be lower than the amount to which the claimants would have been entitled. We must be conscious of this and seek to avoid such a scenario.
Much of the delay in processing claims, which is inexcusable, arises from simple requests. Obtaining a medical report from a doctor or consultant is not easy. When I practised, I took a number of these cases and my secretary and I spent a great deal of time on the telephone to the secretaries of doctors and consultants trying to obtain medical reports. Consultants take the view that their primary job is patient care and the production of reports for lawyers is not top of their list, which is understandable. Something that, on the face it, should be straightforward frequently is not and if ordinary claimants pursue such reports on their own behalf, they will not find it as easy as people think. Something as simple as obtaining a report from a garda confirming that an accident occurred, much less the facts, is not as easy as it sounds. The record taking of gardaí is relied upon but, sometimes, it is not as reliable as it should be. The system is more complicated and messy than it should be and individuals who are entitled to compensation will become lost within it if they are not provided with access to independent assistance or advice and that should be addressed.
However, while the Bill guarantees claimants are entitled to such advice, which was not the case when its heads were published, they are not entitled to compensation for the advice. It is likely the cost of legal advice will be deducted from the award. The Minister may well say that is reasonable but it is a long accepted legal principle that one's medical and other expenses are covered and it is extraordinary that one's legal costs or the costs of the advice one has taken to get to the point where an award to which one is entitled has been made will not be covered. This issue must be re-examined.
I endorse one of the primary motivations behind the legislation, which is to lower legal costs but perspective is needed on this issue. Previous speakers suggested legal costs are the primary problem in terms of the high cost of insurance premia. The MIAB report outlined figures in this regard. I read the evidence it set out to reach that conclusion and it is not persuasive. In addition, the Law Society disputes the figures. Other costs and factors contribute to the high costs of premia and these have been set out in detail by the motor insurers' bureau and the Oireachtas committee that sat during the summer. Between one quarter and one third of drivers hold provisional licences, which would not be understood, much less tolerated, in most other European countries. The Government continues to contribute to the cost of premia by levying an extra 2% on them, which everybody accepts, in principle, should be abolished, but the Government has not got around to doing it. If the Minister of State, Deputy Parlon, manages to persuade the Department of Finance from within to do so, I will be surprised.
In addition, insurance companies derive enormous and, in some cases, unacceptable profits from their businesses in Ireland. Ms Dowling's committee found that British based insurance companies derive a much higher rate of profit from their Irish operations than they do from their domestic operations and that is unacceptable. While the Irish Insurance Federation produces reports, which state companies make losses on parts of their business, it has accepted this year that the profits of its members were almost €200 million, which is not a piddling sum. Insurance is a profitable business and companies are taking significant profits out of a small market. They are, therefore, partly responsible for the level of premia that apply.
I am generally positive towards the legislation. I recall the Stardust club tragedy, which occurred in Artane in my constituency 20 years ago. The tragedy resulted in the first tribunal to settle cases on a no liability, no fault basis and it worked well. People's injuries were assessed on the basis that liability would not be disputed and they were awarded various sums. They were entitled to appeal to the courts but very few did. That system was subsequently replicated in the blood tribunal and so on and it has worked well.
However, there was one essential and important difference in that system. The State ab initio wiped the slate clean and said there would be no dispute on the issue of liability, but that will not be the case in cases processed by the new board. Under the legislation, an insurance company or a defendant can, at the end of the process, say they do not accept the decision and they will return to the beginning to contest liability as well as quantum. That is the major flaw in the legislation because it is likely insurance companies will deliberately flush out the likely cost to them of cases if they were to contest liability and decide on that basis whether they will contest it.
There is a danger if a claimant has been sucked into the process believing liability will not be contested that, by the time it becomes clear that it will be contested, it will be too late for him or her to collate the expert evidence he or she might need to make his or her case. The Minister should include a provision whereby if liability has been accepted by an insurance company at the beginning of the process, it cannot subsequently walk away. If the case ends up in court, it should be dealt with on an assessment only basis.
Resourcing is also a serious issue. It is estimated that 12,000 employer liability cases are taken per year and it will be extraordinarily difficult for the board to process that amount. The reason for establishing the board is to ensure cases are processed more quickly and efficiently and, as a consequence, claimants will be compensated quickly. A guarantee to this effect must be provided for in the legislation. Time limits should be set for the board's deliberations. It is not difficult to imagine the board taking years to consider and assess individual cases. For example, when the Offices of the Information Commission and Ombudsman were set up, it was expected cases would be dealt with quickly and efficiently but, subsequently, there was a realisation it would take much longer and it takes years for them to process some cases. I would not wish to see anything of that nature occurring in the PIAB, as could so easily happen. Many thousands of claims could be loaded on to the board haphazardly. In that event, I suspect the board would not be able to deal with the situation.
There is an issue about the membership of the board – I am not sure if it has been addressed yet. As I understand it, the intention is to give representation to the Irish Insurance Federation, the social partners, broadly defined, and the Director of Consumer Affairs. I believe there is a feeling abroad – the representative groups of the legal profession have been mainly to the fore in making this point – that the board is a creature of the insurance industry. That would be unfortunate. If individual claimants dealing with their own cases, including chasing up expert witnesses, are obliged to deal with a system which they do not know and are confronted by defendant insurance companies which are very familiar with the system, having their own experts and legal advice, it is quite obvious there is already an inequality. We should do everything possible to undo that inequality rather than compounding it, as may be the case if the impression is given, through the members of the board or otherwise, that it is in some way a creature of the insurance industry. That should not be allowed to happen.
Senators may be aware of an accident involving a former employee of the Labour Party who cut his hand when a glass door shattered at the entrance to LH 2000 a few years ago. The door was out of action for some time afterwards. The person concerned did not bring a claim against the Office of Public Works, although I believe he would have had a very good case, but he was approached for weeks afterwards by people telling him how foolish he was not to do so. In his view, the question of taking a case for general damages simply did not arise as he was not out of pocket and there was no big deal. Not everybody takes that view – the opposite approach is probably more commonplace. The number who urged my friend to make a claim illustrates just how ingrained in people's minds is the notion of what lawyers refer to as general damages.
Nobody will dispute that a person who is at a loss in terms of wages, medical costs or other out of pocket expense as a result of somebody's negligence, should be compensated. Of course, it is now accepted in law that one is also entitled to general damages, based on a book of quantum or otherwise. In addition to one's out of pocket expenses, one will get €5,000, €10,000 or €20,000 for a broken arm or such injury. As a result of legal precedents established by the courts over time, most lawyers and insurance assessors who deal with these claims on a regular basis would readily put a financial value on the loss of an arm or other injury.
In very general terms, it is my view that our level of general damages is too high. We should move towards a situation where the level of general damages is lower, whether awarded by the courts or otherwise. It is out of line with the rest of Europe. We need to go back to first principles as to the reason we are compensating people – it is basically for the pain and suffering they may endure. We need to look more closely at the value we put on such pain and suffering. If we did so, we might well conclude that the level of general damages being awarded in Ireland is too high. I simply offer that as a general reflection, without suggesting it should influence the board. However, I suggest that practitioners associated with the insurance industry or the courts might give some thought to it.
If I may offer a further reflection, there is a general feeling in this country that if one is injured at work or in a road traffic accident, one should be entitled to compensation. For some time past, efforts have been made by the Irish Insurance Federation to point out that one is only entitled to compensation if somebody else is at fault. That, of course, has been a basic tenet of our law for quite some time. Perhaps there is some merit in moving to a situation of accepting no-fault liability, whether in regard to traffic accidents or particular types of claims. That would be a very meaningful way of cutting costs. It might very well be that the overall cost to the insurance industry might not increase through having to compensate people without a requirement to establish fault. This deserves consideration and debate.
In conclusion, this Bill has merits and the Labour Party supports it in principle. I do not agree that we should get involved in lawyer-bashing, for the sake of it, as Senator O'Toole tended to do this morning, or creating a lawyer-free zone. Most emphatically, one should not try to suggest that dealing with legal costs is some form of panacea which, in itself, will reduce insurance premia – it certainly will not do so. We will put down some amendments on Committee Stage and I look forward to debating them with the Minister and his colleagues.
Dr. M. Hayes: I will not take all of it, a Chathaoirligh. I compliment Senator McDowell on his very thoughtful and erudite contribution, which covered most of what I would wish to say about this Bill. I feel no need to take an entirely derogatory approach towards the legal profession, partly because three of my children are in various branches of that profession, both in this country and in the UK. None of them appears to be a particularly “fat cat” and all of them very readily come home to their mother for a meal when it suits them.
It is a pity we are not discussing this Bill in parallel with the civil liability and courts Bill. It is an interesting social experiment, which I generally support. However, it can be seductively simple and I believe there is a danger of investing it with too much potential and raising hopes which may not materialise. I hope it will be a first duty of the board to consult with the courts system in an attempt to arrive at a modus vivendi. There is a legitimate interest in taking as many cases as possible out of the adversarial system in situations where liabliity is not challenged and a settlement is possible. However, I am not happy with the impression that this will result in a magical reduction in insurance costs and premia. The managing director of an insurance company said at an Oireachtas committee meeting recently that there could be no guarantee that premia would reduce.
I agree with Senator McDowell that legal costs are an element – but only one element – in this situation. My concern is for genuinely injured parties. In the pursuit of lower costs, those who may suffer are people who were genuinely injured. There are great advantages in having a book of quantum, which could also be introduced in other elements of the courts system. Increasingly, it should be possible to give some guidance and direction in that regard. Above all else, what would bring down the cost of civil liability and insurance would be the elimination of fraudulent claims. The courts are now beginning to look at that.
It is hugely important for public bodies to introduce proper systems of risk management, which could have a transformative effect. There was a famous case in the North where a single flagstone in Ballymurphy gave rise to 132 claims for injuries, 32 of which were from members of the same family and several of the claims were serial ones. However, people started to note the pattern to those reports. It was found that there was also a pattern to claims made in regard to particular hospitals. Claims for bad back pain were fashionable in one hospital but were not fashionable in another. Slippy floors were cited on claims somewhere else. There should be an onus on the public body concerned. Everybody who is managing service should try to do the best he or she can to eliminate fraudulent claims.
Like Senator McDowell, I am concerned about the position of an individual who approaches the board. Such an event is unique for the individual, but for the board, the insurance company concerned and the people on the other side it is an everyday occurrence. They hold all the expertise and there is no sense of a level playing field. There seems to be a throwaway line in the Bill that there is a duty on the board to help the vulnerable complainant, which seems to be to say to the person concerned at a certain point that he or she had better consult a solicitor. However, that involves an expense.
Assistance to a vulnerable complainant may be provided by way of legal aid and the costs involved could be capped and rates set. It would be advisable to examine the support being given to citizen advice bureaus, free legal aid centres and advice centres to ensure that such complainants would be able to approach some organisation. I recall that when I was an ombudsman I felt there was a duty on me to help such people to formulate their claims. That is an important point to remember.
I am sceptical about the question of costs. They may well have been under-estimated, as appears to be the case from the discussion. If there are costs, these will be passed on ultimately to the people who are bearing the liability. It is not possible to deal with everything on paper and there are different degrees of injury. There is a view that there is great unanimity among medical experts. However, my experience of medical experts in the past has been different. They can often draw different conclusions from the same data, even on the basis of having been given the best diagnosis. That element might not be as simple as it appears.
As Senator McDowell said, people should not have it both ways. The Bill does not restrict people's constitutional right to go to the courts. They can go to court, but if they buy into this system that is what they do. It has been agreed that there should be a referee whose decision should be accepted. There is a danger, as Senator McDowell said, of the stronger party, the people who are used to this type of process, suddenly upping the stakes and starting all over again. I look forward to the discussion on Committee Stage.
Dr. Mansergh: I want to make a brief contribution to this debate, mainly for the purpose of putting this matter in context. The Bill and the broader strategy of which it is a part is of huge strategic importance. Insurance costs affect virtually every sector of the economy and I am sure many other Members will know of small firms of various kinds, including builders, hotels etc, who have decided to close in recent years simply because of the escalation of insurance costs.
Unlike some other Senators, I believe it is too simple to blame it all on the legal profession. After the events of 11 September 2001, insurance companies took the opportunity to jack-up insurance bills by enormous amounts. I run a farm with my brother and I remember in the middle of the last general election getting a bill for insuring outbuildings on the farm. I forget the exact premium for the previous year but it was roughly in the order of €800, but the premium for that year had suddenly increased to €6,000. Naturally, one is under pressure during an election campaign and I literally hit the roof. There was no way I was going to pay that amount. We succeeded in negotiating with another firm, by bringing together different types of insurance, a much more reasonable amount, but not everybody has that option. I am not satisfied this issue has been discussed nearly enough.
I received representations from schools recently about the enormous increase in the cost of insuring school buildings in recent years, which puts pressure on their finances. It is clearly not the case that since the events of 11 September 2001, the risks are significantly different. The outbuildings on my farm are not more likely to collapse because it is post 11 September 2001 than they were likely to prior to that time. Similarly, schools are not more likely to go up in flames because of the events of 11 September 2001 than was likely prior to that time. Some explanation is required from the insurance companies as to why insurance premiums were jacked-up in the Irish market to such an extent. One explanation I have been given is that the companies needed to rebuild reserves, but the reserves were not being depleted in Ireland whatever about anywhere else. We require an explanation as to why insurance premiums have remained in most cases way above the level they were prior to 11 September 2001. The objective in this regard brings me back to the Bill. The aim must be to get those costs down at least to the level they were prior to 11 September 2001, but to allow for inflation. This does not ignore the fact that there were some structural problems, particularly in regard to motor insurance, which perhaps has been least affected by the events of 11 September 2001.
The merit of this Bill is that it provides a fast-track process to minimise legal costs. There is no doubt that legal costs are very high and a deterrent. I can cite a similar example to that cited by Senator McDowell. A few years ago, my son was knocked off a bicycle and his arm was in a sling for two or three of the summer months. Lawyer friends were outraged that we did not make a claim. The person who did it was very decent in acknowledging responsibility. Our first instinct when we stub a toe should not be to make an insurance claim. It is a different matter if there is real, substantial and lasting damage. There are a certain amount of knocks in everyday life, which all of us should be capable of taking without running to insurance companies or courts.
A great number of solicitors have lobbied me on this issue. Probably every solicitor in south Tipperary has written to me and no doubt solicitors in other counties and constituencies have written to other Members of this House. I would like a detailed, point by point response to the points they raise. I am not saying the arguments have particular merit because the self-interest motive is obvious. When points are raised ostensibly in the public interest, they deserve a point by point, line by line response. This has not yet happened. These letters are virtually identical and are in wide circulation. A detailed response should be given to each of the points raised.
I agree with the need to take measures and I welcome the plans to provide severe deterrents against fraudulent claims. This is only one part of a much broader strategy. It is being given the highest priority by the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney. There is evidence that our competitive position has slipped. Insurance costs are one of the contributory elements to this slippage.
I am a solicitor and a member of the Law Society, but I have never practised in the area of personal injuries. There is an element in the conclusions drawn from the reports that focuses on legal costs, particularly at the expense of the other costs involved in insurance claims. The right to legal representation for individuals is an important right that must be emphasised. A political correctness now abounds that it is acceptable to knock the legal profession in the same way as politicians. However, solicitors and barristers are only making a living for themselves. They are business people, the same as those involved in other businesses and the insurance industry. It is right they should be monitored and that issues of competition should be dealt with by the Legislature. However, we must recognise that the legal profession provides an important service. It is important that plaintiffs in this process are entitled to legal services to ensure a fair hearing, their cases are put properly and their legal rights are protected. I hope the Government will re-examine providing for the right to legal representation for the plaintiff in the Bill.
The insurance and the business side have much expertise available in-house. All the calculations in terms of costs will also be available. However, the average person does not have such facilities and can be intimidated by the legal system. We do not want this to happen when dealing with this new board. Subsequent to the defendant admitting liability to the board, if a case then proceeds to court, that liability should be accepted. Any further determinations should be on the basis of the assessment of damages that should be provided.
Mr. Ryan: Unlike other Members, with the exception of Senator O'Toole, I have vast numbers of solicitors as law graduates among the electorate for my panel, as do all university Senators. One might think this would temper my language. It will not because they are well used to my utterances. Those in the legal profession who voted for me have come to a reasonable modus vivendi with me after 20 years.
I welcome this Bill, but it is not a solution to all our ills. Our insurance culture is an illness everyone in society must confront. A scandalous compensation culture exists. It has become second nature to people to believe that if an accident happens, one looks for “compo” even if there is no reason for compensation.
Politicians should be slow to claim virtue and I would not do so. However, one of my children, when nine years of age, broke her tooth in the school yard. The tooth was fixed for the princely sum of £25. She was well looked after by the school which did all it could. Some years later, I read in a local newspaper of a case where a child who fell in a school yard, broke a tooth and got three stitches in her knee, was awarded £13,000 in court.
I do want to claim virtue because most of us as we get older realise more how lacking in virtue we are. Parents, who entrust their children to a school for seven hours of the day, get annoyed if they have to take responsibility. If a school closes for a day the telephone lines are hopping to various radio shows. An innocent accident occured, which could happen in the backyard, resulting in a visit to the GP for a tetanus shot and a fee of €30. However, somebody decided that because a child was traumatised to such a degree, £13,000 had to paid out. I am astonished that we have developed a culture where a service as community-focused as a primary school could be regarded in this way. There is a commentary in that story on parents, the insurance system and the courts. I do not have a magic wand to deal with this, but I hope the PIAB will be a tool in tackling it. There is an issue of morality here for society.
In urban areas there are specialists in public liability compensation claims. How can the insurance companies not have noticed the same names coming up time again in claims, particularly against local authorities? How did it take local authorities years to vigorously fight back against some of the compensation specialists? As members of the public were willing to fork out 10% more on premia than they should have paid, this compensation culture emerged. It was not created by lawyers, whatever my other criticisms of them. I am not the greatest enthusiast for a competitive market economy, but those who are seem to want one in which lawyers will not be allowed to advertise because apparently that only gives people notions. How is it possible to have a competitive market economy if one profession, which participates in it, cannot advertise its services? I do not understand that.
I have heard about all sorts of attempts to regulate lawyers. I have always been sceptical about self-regulating professions. I am a member of two professions which claim to be self-regulating. The Houses of the Oireachtas are self-regulated and much thanks we get from the public for it. The engineering profession, of which I am also a member, is self-regulated to a degree. It would like to have more capacity for self-regulation and I know that if it got those powers the first thing it would do would be to attempt to restrict entry, which is the natural instinct of all self-regulating professions.
What would happen if the electricians' trade unions had the right to control electricians' training and education and the hurdles to be overcome to become electricians? The country would explode in outrage. If a foolish Labour Party attempted to do that on behalf of a particular craft union, the country would quite rightly react in anger that trades or professions like that would be able to regulate entry, examination standards, etc. We would all be outraged at such closed shop activity.
I have some sympathy for solicitors who get a bit of a going over. I happen to be married to somebody who works intermittently as a hospital consultant. Not just from outside the ranks of my own party but also from within it that profession is in receipt of a fair bashing as well. If I hand out some bashing to professions occasionally it is from a position of sympathy for the good members of those professions.
There is so much that is arcane about the practice of law. Why do we need the Law Library? Why do barristers in Dublin all have to base themselves in one antiquated building, which is utterly inimical to modern information technology? Why can they not have offices like everybody else? What sort of mystique are they trying to draw around themselves? There are fine barristers who regularly do fantastic work for people. Why is this mystique associated with barristers rather than engineers or dentists? Why is it taken for granted that an acceptable salary for a barrister after a certain number of years training and experience is greater than that of the Taoiseach? Why do we assume that a barrister who is successful – if we define success in income terms – has to be better than the Taoiseach? While I want people in professions to be paid reasonably well, from where did the notion come that this means such a scale of lifestyle? If that is the sort of money that can be made it is a profession that can accommodate vastly greater numbers.
I say this with scepticism. Of course I believe in people's right to legal representation. However, we need to be careful when talking about such rights. There is an old cliché that everybody has the right to have dinner in the best restaurant in the Shelbourne Hotel. Even though everyone has the right, 95% of the population will never be there because they cannot afford to exercise that right. The distance between saying people have a right to legal representation and the numbers of people who would be excluded entirely from legal representation if it were not for free legal aid services provided either voluntarily or by the State is a comment on the gap between the aspiration to the right and the experience of ordinary people. Legal representation costs a vast amount of money.
Parts of the Bar Council's submission were interesting, parts were profoundly provocative and, based on the experience of some of us in public life, parts show a late conversion to concepts of justice and equity in society. I welcome the belated conversion. The day I hear the Bar Council publicly say they approve of price competition between barristers, in which a citizen can see in public what they charge, is when I will believe they have accepted the idea that market competition – in which I am quite certain they believe in their property dealings – also applies to their own profession, as it should to any other profession. I look forward to the Competition Authority's investigations and I hope there will be Government follow-up in that area.
I fully share Senator O'Toole's view that either this body will work or it will wither. If it withers it will achieve no purpose. I encourage the Government to move on other areas also. While this is one area, the lack of competition in the insurance business and the extraordinary inflation in their profits are others. The remarkable fact that the inflation in insurance charges coincided with the period when the stock markets collapsed merits further investigation.
It would be extraordinarily wrong if because of a lack of competition between insurance companies ordinary customers were to be forced into having to pay through insurance premiums, the cost of the unwise rush by fund managers connected with the insurance companies into the dotcom boom or whatever boom was current at the time, and which suddenly left a hole in their reserves when the whole thing collapsed. People are now paying huge premiums not because of huge claims but because of poor management of assets by the insurance companies.
This area deserves further study. There is widely published material in such left-wing journals as The Economist about the way in which banking in the past ten years has offloaded the risk of bad debts on to the insurance business. When Enron and others in America went belly up, no US bank suffered significantly because they had insured themselves against it. Some insurance company paid for that and this was ultimately paid by the customers of the insurance company. Could it be that this huge worldwide phenomenon of increased insurance charges, some of which is locally generated but most of which is not, is a consequence of the fact that the banking system offloaded its risk on to the insurance system? The insurance system got bitten and it is now charging its customers to re-establish its own financial equilibrium. It would be wrong if that happened. That is not the way a market should function and it is worthy of further investigation.
Having said that, I welcome the Bill and I look forward to the board's activities. I do not believe I will meet many of my friends from the legal profession on their uppers or visiting me in the Simon Community hostel in Cork because of the consequences of this. Nor do I believe their passion for social justice, shown so eloquently in their recently published document, will not have many other outlets if they want to pursue that also.
Dr. Henry: I welcome the Minister to the House and I welcome the Bill. I sometimes wonder whether people make personal injury claims as the only way to get a public authority to take any notice of what has happened to them. I speak from personal experience. I try to walk as much as possible around the city rather than bringing my car or even taking public transport. It is extremely difficult to keep one's balance on the footpaths and roads of this city.
I regret that Alderman Joe Doyle is no longer in the Seanad. I used to be able to give him a list of complaints and to give him his due he certainly dealt with matters such as getting the problem on Baggot Street fixed. There is frequently a serious difficulty in getting public authorities to fulfil their duties. I have great sympathy in this regard because the utility companies dig up the roads with monotonous regularity. It is the responsibility of such companies or of the local authority to put them back in place. For example, I fell in Nassau Street in February. The hole in the road, which is almost opposite the Setanta car park exit, is still there although I informed Dublin City Council of its presence. The Minister of State can see it for himself. When one crosses the road at the lights at the bottom of Kildare Street, one can see that the concrete at the crossing was unevenly laid. That happened about three or four years ago and several people have fallen there since. I, along with others, informed the council, but nothing has been done about it. Sometimes I think people seek recourse to the courts, not out of avarice, but in an attempt to get the public authorities to deal with a problem of this kind. I have sympathy with that.
I address this issue as someone who has not made a personal injuries claim but who has been frequently called as an expert witness for people who have. There is much merit in the assessment board that is being set up. Going to court is stressful for many people. It is not stressful at all for my legal friends because it is a home from home. For those of us who do not spend much time in the courts, a court appearance can be a stressful occasion. I have frequently thought when obliged to act as a witness that even if I were to get £200 to attend, I would pay £400 to stay away. It is quite a different matter undergoing cross-examination to submitting a written report to a tribunal, even if one believes everything one is saying is right. The courts employ an adversarial system which will not come into play with the PIAB.
Many doctors would concur that frequently they are called to give evidence where personal injuries cases are settled on the steps of the court. People travel from as far away as Cork and Galway and have to come straight home on the next train. This a terrible waste of doctors' time and money. I understand 10% of cases come to court, but I do not think we have the figures as to how many are settled on the day or the day before they are due to come to court. It must be remembered one has to cancel clinics or lectures in advance and then the case might not go ahead on the appointed day. There is a huge waste of money involved as regards medical practitioners acting as expert witnesses. It is not just a matter of paying them to go to the courts or for their reports, but the waste of time involved in cancelling clinics that could have taken place. The proposed legislation should be useful from that point of view.
I am somewhat worried about the report that is to be prepared by a medical practitioner who has treated the claimant in respect of personal injuries. Thanks to Senator O'Toole, I had the good fortune to talk to Ms Dorothea Dowling yesterday. She explained that this was likely to be the patient's general practitioner. Many people will have treated that patient, from the doctor who first attended him or her in the accident and emergency unit to an orthopaedic surgeon if the injuries were serious, or perhaps a neurologist, vascular surgeon and so on. If the general practitioner is to give the report, it is most important to remember that the family doctor is really a friend. It is quite a different relationship to that one has with a consultant in a hospital, whom one hopes to see only once or if the situation is really bad, two or three times. A general practitioner, however, is the person one asks about the children's illnesses, one's mother's health and so on. The relationship is totally different to that one might have with other members of the medical profession. I have not yet had a chance to ask members of the Irish College of General Practitioners how they feel about this legislation although I will do so. General practitioners will naturally want to give the most honourable of reports regarding the patient's condition, but at the same time they will have to bear in mind the relationship between family doctor and patient, which is one of the greatest possible trust. This is an area that could present problems.
Otherwise, I wish the board well. I would encourage people to go to the board because of the stress involved in going to court. When the compensation tribunals were set up for those women who had been given infected anti-D and the haemophiliacs whose blood products had been infected, I encouraged patients to go because I thought it would be much less stressful. However, as the Minister of State will have seen, some wanted their day in court, even though the tribunals were there. We will have to see how this works and what percentage of patients come before the board. Then we will see how many decide to refer cases to the courts.
My one reservation is my concern about the general practitioner as the plaintiff's agent in court. I know there will be a board and a medical panel to which people who feel they have lost out as regards medical indemnity can be referred. This has been modestly successful in the social welfare area where people felt the disability they had incurred was not fully understood. This could also happen with the proposed board and it may be just another stage before people decide to go to court. I wish the board well.
Minister of State at the Department of Enterprise, Trade and Employment (Mr. M. Ahern): I would like to sum up on behalf of my colleague, the Tánaiste and Minister for Enterprise, Trade and Employment, Deputy Harney. This pioneering legislation provides for the establishment on a statutory basis of the Personal Injuries Assessment Board whose objective is to tackle the delivery cost of speedier compensation to genuine claimants while reducing the cost of insurance for consumers and businesses alike. The PIAB will offer a lower cost and speedier means of finalising genuine personal injury claims than the current litigation system. The establishment of the PIAB is in the public interest.
The PIAB is not being set up to cut the level of awards to genuine claimants. Awards will be at current levels. The role of the PIAB will be confined to claims where legal issues are not disputed by the respondent and there are no reservations about their genuine nature. Exaggerated claims should be defended in the courts and new provisions are being introduced under the Civil Liability and Courts Bill 2003 by the Minister for Justice, Equality and Law Reform, Deputy McDowell.
The PIAB is not designed to deny people's access to the courts nor their entitlement to seek independent legal advice. The priority for the PIAB will be to implement fair procedures in accordance with the principles of natural justice as they apply in this “documents only” procedure. While parties are entitled to seek independent legal advice at any stage, the PIAB will not award litigation costs for or against any party. The PIAB will not conduct oral hearings. There are very limited opportunities for respondents, or their insurers, to attack the claimant's claim once the case has been accepted as one appropriate for assessment of quantum only.
The PIAB will avail of its own expertise, either on staff or from appointed independent consultants, to assess the validity of a claim and will not indulge in an adversarial process between competing parties' experts. The PIAB will always communicate directly with claimants in order that they know exactly how their case is progressing through each stage of the assessment process.
The inquisitorial approach adopted by the PIAB will ensure the claimant gets what he or she is entitled to – no more and no less. This approach will be of assistance to claimants on many issues where they might currently seek legal advice, even in assessment only cases which do not involve legal disputes. At the end of the Personal Injuries Assessment Board process, the parties are entitled to reject the award if they consider they would secure a more favourable outcome through the courts system. The Personal Injuries Assessment Board will issue an authorisation for the claimant to proceed to litigation within a specified timeframe if he or she wishes to pursue the matter further.
From the planned effective date, all relevant non-litigation cases which would currently require the issuing of legal proceedings, will be subject to mandatory referral to the Personal Injuries Assessment Board before they can proceed to adversarial litigation. If the respondent wishes to dispute legal issues or has reservations about the genuineness of the claim, the Personal Injuries Assessment Board will immediately issue an authorisation for the claimant to proceed to litigation if he or she wishes to pursue the matter further.
The Personal Injuries Assessment Board will endeavour to deal with assessments within specific time limits, unlike the current litigation system where no such target dates are set for completion of cases. This will give genuine claimants a speedier settlement. A respondent's agreement to a claimant's submission for assessment by the Personal Injuries Assessment Board will not constitute an admission of liability, nor can it be used in any other manner to prejudice legal arguments in subsequent court proceedings.
The Personal Injuries Assessment Board will have the power to levy charges and will be a break-even operation without being a draw on the Exchequer or the taxpayer. Funding of the Personal Injuries Assessment Board will primarily be on a case-by-case fee payable by the respondent as the most transparent and equitable distribution of costs.
The Personal Injuries Assessment Board will make special provision for vulnerable parties and will take steps to ensure the application process is straightforward. Personal Injuries Assessment Board staff will provide assistance to either party where required and explain the consequences of a party either taking or not taking a step during the process. Cases involving claimants who lack full legal capacity will be subject to a ruling by the court, for example, persons under 18, persons of unsound mind or dependants after a fatal accident.
In addition to the chief executive, the board will consist of members representing the interests of employees, employers, consumers and insurers. It will also include members with relevant expertise in areas such the legal and medical fields.
The establishment of the Personal Injuries Assessment Board is a key element of the Government's insurance reform programme. Other elements include road safety initiatives and measures to deal with fraudulent and exaggerated claims. Taken as a package, the reform initiatives being undertaken will lead to a properly functioning market that will attract new entrants into the market and provide the much needed competition to drive premia down further. I commend the Bill to the House.
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