Houses of the Oireachtas

Tithe an Oireachtais

Joint Committee on Enterprise and Small Business

An Comhchoiste um Fhiontraíocht agus Mionghnóthaí

First Report

Interim Report on Reforms to the Irish Insurance Market

An Chéad Tuarascáil

Tuarascáil Eatramhach maidir le hAthchóirithe ar Mhargadh Árachais na hÉireann

July 2003

Iúil 2003

Chairman’s Foreword

The Joint Committee on Enterprise and Small Business identified the issue of insurance, particularly as regards motor, public and employer’s liability, as being to the forefront of the issues which it should address. In that context, and with the benefit of work done by its predecessor committee in the previous Dáil and Seanad, the Joint Committee decided, at a very early date, upon an in-depth examination of the issues involved.

The Joint Committee addressed the issue over a broad front and wishes to express its appreciation of the support given by the Tánaiste and Minister for Enterprise, Trade and Employment, Ms Mary Harney T.D., the Minister for Transport, Mr Seamus Brennan T.D. and the Minister for Justice, Equality and Law Reform, Mr Michael McDowell T.D. and their respective departmental officials. The Joint Committee also wishes to express its gratitude to all who made written submissions and to those who made oral presentations. The full list of these individuals and organisations is set out in Appendices A.2 and A.3.

The Joint Committee also wishes to express its appreciation for the dedication and expertise contributed by O’Reilly Consultants, who were appointed to assist the Joint Committee in its evaluation and analysis of the submissions made and evidence given to its Clerk, Mr Richard Manley, and to the committee secretariat for their unstinting support from the commencement of this project.

In adopting this interim report, the Joint Committee wishes to emphasise that it commits itself to return to this topic at an early date and, indeed, to retain it as an on-going item of concern for the duration of the Joint Committee’s existence.

Donie Cassidy T.D. Chairman

31 July 2003

CONTENTS

Chairman’s Foreword

Membership of the Joint Committee on Enterprise and Small Business

Abbreviations

Chapter I

Overview

CHAPTER II

Summary of Recommendations

CHAPTER III

Introduction

Background

CHAPTER IV

Reform Measures in First Seven Months of

CHAPTER V

The MIAB Report

Recommendations Relating to the Department of Transport

Recommendations Relating to the Department of Justice, Equality and Law Reform

Recommendations Relating to the Department of Justice, Equality and Law Reform and the Incorporated Law Society

Recommendations Relating to the Department of Enterprise, Trade and Employment.

Recommendations Relating to the Department of Finance in Relation to the Irish Financial Services Regulatory Authority’s (IFSRA) Legislation

Recommendation Relating to Department of Finance

Recommendations Relating to IFSRA

Recommendations Relating to the Department of Health and Children

Recommendations Relating to the Irish Insurance Federation

Recommendations Relating to the Competition Authority

Conclusion

CHAPTER VI

The Heads of the Personal Injuries Assessment Board (PIAB) Bill, 2003 22

Role of PIAB

Irish Award Levels

Draft Scheme of the Bill

Non-Acceptance of PIAB Awards

Conclusion

CHAPTER VII

The Heads of the Civil Liability and Courts Bill

Limitation Period For Personal Injuries Action

Fraudulent and Exaggerated Claims

Mediator

Court Reform

Record of Claimants

CHAPTER VIII

Road Safety

Provisional Driving Licences

Penalty Points

Speed Cameras

Speed Limits

Traffic Corps

Young Drivers

CHAPTER IX

Insurance Companies

Explanation for Increases

CHAPTER X

Communication Guidelines for Insurers and Policyholders

Calculation of Premiums/Transparency

CHAPTER XI

Competition and New Entrants

CHAPTER XII

LegalCosts

In-House Barristers

Conclusion

CHAPTER XIII

Some Other Issues

Rehabilitation Process

Government Backed Insurance Company

Brokers

Health and Safety Standards in Workplaces

Compulsory Employer’s Liability Insurance

Self-Insurance

Advertising By Solicitors

APPENDIX A.1

Orders of Reference

APPENDIX A. 2

List of Submissions

APPENDIX A. 3

List of Parties Who Attended Meetings

APPENDIX B.1

Summary of Submissions Received

General Insurance Issues

Calculation of Premiums

Renewal Notice

Prices

Fraudulent Claims

Reporting of Accidents and Investigating Claims

Court Procedures

Legal And Medical Costs

Advertising by Solicitors

Prior to Settlement

Rehabilitation Process

Guidelines on Damages/Book of Quantum

Awards

Proof of Loss of Earnings

PIAB

Affidavit

Judiciary

Statute of Limitations

Protection for Policyholders

2% Government Levy

Government Action

Regulatory Changes

Government Backed Insurance Company

Competition and New Entrants

Brokers

Other Employers Liability and Public Liability Insurance Issues

Health and Safety Standards in Workplaces

Compulsory Employers Liability Insurance

Motor Insurance Issues

MIAB Report

Penalty Points System

Road Safety

Beginner Drivers

Uninsured Drivers

Miscellaneous Insurance Issues

Miscellaneous

APPENDIX B.2

Some Additional Issues Raised at the Committee’s Meetings

APPENDIX B.3

The Burden on Business – The Case for Change

APPENDIX C.1

Implementation of Miab Recommendations

Recommendations Relating To Department Of Transport

Recommendations Relating to Department of Transport & Department of Justice, Equality and Law Reform

Recommendations Relating To Department Of Justice, Equality And Law Reform

Recommendations Relating to Department of Justice, Equality and Law Reform & the Incorporated Law Society of Ireland

Recommendations Relating to Department of Enterprise, Trade & Employment

Recommendation Relating to Department of Finance

Recommendations Relating to Department of Finance in Relation to IFSRA Legislation

Recommendations Relating to IFSRA

Recommendation Relating to Department of Health and Children

Recommendations Relating to the Irish Insurance Federation

Recommendation Relating the Irish Insurance Federation & IBEC

Recommendations Relating to the Competition Authority

APPENDIX C. 2

Personal Injuries Assessment Board Bill, 2003

PART 1 : PRELIMINARY AND GENERAL

PART 2 : ESTABLISHMENT OF PERSONAL INJURIES

ASSESSMENT BOARD

APPENDIX C. 3

Civil Liability and Courts Bill

APPENDIX C. 4

IIF & IBEC Communication Guidelines for Insurers and Policyholders

APPENDIX C. 5

IFSRA

Membership of the Joint Committee on Enterprise and Small Business

Deputies

Joe Callanan (Fianna Fáil)

Donie Cassidy (Fianna Fáil) (Chairman)

Tony Dempsey (Fianna Fáil)

Phil Hogan (Fine Gael)

Brendan Howlin (Labour)

Conor Lenihan (Fianna Fáil) (Vice Chairman)

Kathleen Lynch (Labour)

Paddy McHugh (Independent)

Gerard Murphy (Fine Gael)

M.J. Nolan (Fianna Fáil)

Ollie Wilkinson (Fianna Fail)

Senators

Paul Coghlan (Fine Gael)

John Gerard Hanafin (Fianna Fáil)

Terry Leyden (Fianna Fáil)

Shane Ross (Independent)

Abbreviations

AIR – Alliance for Insurance Reform

IBA – Irish Brokers Association

IBEC – Irish Business and Employers Confederation

ICTU – Irish Congress of Trade Unions

IFSRA – Irish Financial Services Regulatory Authority

IHF – Irish Hotels Federation

IIF – Irish Insurance Federation

IRHA – Irish Road Haulage Association

ISME – Irish Small and Medium Enterprises Association

MIAB – Motor Insurance Advisory Board

NTMA – National Treasury Management Agency

PIAB – Personal Injuries Assessment Board

PIBA – Professional Insurance Brokers Association

SFA – Small Firms Association

CHAPTER I

Overview

The publication by Government of the Heads of Bills for the establishment of PIAB and for making new provisions for civil liability and the courts are welcomed by the Joint Committee. These Bills and other measures, such as the IBEC/IIF Communications Guidelines for Insurers and Policyholders, the announcements by the Minister for Transport in relation to penalty points and road safety, the takeover of the regulation of insurance companies by IFSRA and the continued implementation of the MIAB recommendations, represent major reforms of the insurance sector in Ireland.

Further reforms of the sector are recommended by the Joint Committee. All of these reforms are necessary to create market conditions so that the insurance market in Ireland can operate satisfactorily. The Joint Committee recommends, insofar as possible, that all reforms be in force from 1 January 2004.

The Joint Committee was informed of the very substantial increases in insurance costs that have taken place over the past few years. Increases of 300% were reported to the Joint Committee. During the course of its meetings over nine days, the Joint Committee learned of the significant developments that have taken place in the market that gave rise to increased insurance costs and was given explanations for these increases.

It is the opinion of the Joint Committee that none of the explanations justify the level of increases that have taken place. The Joint Committee will continue its work on insurance costs. The Joint Committee invites interested parties to comment prior to the end of September on the recommendations it has made so that the Joint Committee may review this report and consider what further action is required.

The Joint Committee decided to publish this interim report to underline the urgency it attaches to the issue of excessive insurance costs. The Joint Committee is particularly concerned at the loss of jobs in many sectors of the economy and the continuing pressure on many good companies because of the level of insurance costs.

The Joint Committee believes that, when the reforms already announced by Government and the insurance industry and those included in this report are in force, insurance costs should be no greater than those applied in the year 1999, adjusted for inflation.

CHAPTER II

Summary of Recommendations

The Joint Committee recommends that:

HOME Baile COMMITTEE REPORTS Tuasascálacha Coistí

Committee Reports > List of Committees > Joint > 2003 > Committee on Enterprise and Small Business > Report No. 01 - Interim Report on Reforms on the Irish Insurance Market

CHAPTER III

Introduction

Background

In 2000, in response to growing public concern regarding the high cost of motor insurance, particularly for young people in Ireland, the previous Joint Committee on Enterprise and Small Business began taking evidence from a range of interested organisations. This work complemented the inquiry into the cost of insurance being carried out by the Motor Insurance Advisory Board.

The Motor Insurance Advisory Board published its Report on the high cost of motor insurance in April 2002. The Government accepted the Report’s findings and took steps to implement the recommendations. Since then, work to drive forward the Government’s Insurance Market Reform Programme has included the:

• appointment of a cross-departmental / industry Implementation Group and publication of the MIAB Action Plan;
• establishment of a Ministerial Committee (representing the Departments of Enterprise, Trade and Employment, Transport, and Justice, Equality and Law Reform) to oversee implementation of the MIAB recommendations;
• establishment of an Interim Personal Injuries Assessment Board (PIAB), chaired by Ms. Dorothea Dowling (author of the MIAB Report);
• launch of a joint study by the Department of Enterprise, Trade and Employment and the Competition Authority into the insurance sector to identify anti-competitive practices and other constraints on competition; and
• establishment of an Irish Financial Services Regulatory Authority to improve financial regulation and look after the interests of the consumer.

During the period from October 2000 to March 2002, the previous Joint Committee met with 13 organisations to discuss specific issues relating to the Irish motor insurance industry.

The current Joint Committee on Enterprise and Small Business agreed on 29 January 2003 that it would consider the arrangements put in place by the Department of Enterprise, Trade and Employment under the Government’s programme to reform the Irish insurance market, especially with regard to the high cost of insurance to drivers and small businesses.

At its meeting on the 12 February 2003, the current Joint Committee decided to take the following steps:

• That a public announcement should be placed in national newspapers inviting written submissions;
• That key organisations be invited to provide written submissions;
• That a number of organisations be invited to make oral presentations to the Joint Committee;
• That presentations from relevant Government Departments be requested.

The Joint Committee received 47 submissions in response to the advertisement placed in the Sunday newspapers. In addition, the Clerk to the Joint Committee invited a number of organisations to make submissions.

The Joint Committee met with the Chairman of the Competition Authority on 4 March 2003 and with the Tánaiste and Minister of Enterprise, Trade and Employment on 5 March 2003.

Following a tender process, the Joint Committee appointed O’Reilly Consultants (7 Ely Place, Dublin 2) to support the Joint Committee during its series of oral hearings and in the drafting of its final report.

The Joint Committee held a series of oral hearings from invited organisations and individuals commencing on June 19 with the Irish Hotels Federation and the Alliance for Insurance Reform.

A list of the organisations and individuals who made submissions is contained in Appendix A2. A list of witnesses who gave evidence to the Joint Committee at hearings is contained in Appendix A3.

A summary of the submissions is included in Appendix B1. A summary of significant points raised at the hearings is given in Appendix B2. A summary of the effect of the increases in insurance costs on business is given in Appendix B3. All of the submissions and the hearings have been taken into account in devising the interim recommendations.

Following each hearing, a report of the hearing was circulated in the form of a press release. Full transcripts of the hearings will be published by the Editor of Debates. Video and tape recordings of the hearings are also available.

This report is an interim one. The Joint Committee invites comments on the report. The interim report has been prepared immediately following the hearings to underline the urgency of the problems caused by the large increases in insurance costs and the need to find solutions. Further submissions are now invited on the interim recommendations contained in this report.

CHAPTER IV

Reform Measures in First Seven Months of 2003

Since the Joint Committee’s announcement of its intention in February 2003 to consider the Government’s programme of reform of the Irish insurance market, the following developments have taken place:

1. The Tánaiste published the draft scheme of the Personal Injuries Assessment Board Bill 2003 on 28 May 2003. (see Appendix C2)
2. The Minister for Justice, Equality and Law Reform announced on 4 July 2003 that the Government had approved the Heads of Bill to radically reform the law on personal injuries actions. The Government authorised the Minister to publish the Heads, which will now form the basis of a Bill to be drafted. It was stated that the primary purposes of the Bill are to implement commitments in the agreed Programme for Government, including relevant recommendations of the Motor Insurance Advisory Board, and to change the law on personal injury claims in other respects. (see Appendix C3)
3. IBEC and the Insurance Industry Federation published agreed communications guidelines for insurers and policy holders in May 2003 relating to:
   
   1. Safety at work and on the road
   2. Handling of personal injury claims
   3. Liability and motor policy renewals

   (see Appendix C4)

   
   
4. The Minister of Transport, Mr. Seamus Brennan T.D., made a number of announcements in relation to penalty points and road safety with a view to reducing the number of deaths and accidents on Irish roads.
5. IFSRA (The Irish Financial Services Regulatory Authority) took over responsibility for the regulation of insurance companies on 1 May 2003.
6. The Department of Enterprise, Trade and Employment has provided the Joint Committee with an update of progress in relation to the implementation of the MIAB recommendations.

These developments are considered in this report and views are given in relation to them.

CHAPTER V

The MIAB Report

Enclosed in Appendix C1 is the most up-to-date information available to the Joint Committee from the Department of Enterprise, Trade and Employment on the progress in implementing the recommendations of the Motor Insurance Advisory Board.

Recommendations Relating to the Department of Transport

Of the seven recommendations:

• One has been implemented
• Three are “in progress”
• One cannot be further progressed at present, and
• Two are under consideration.

The Joint Committee is particularly concerned with the lack of implementation of part of Recommendation 2 of MIAB – “that the current system of unsupervised driving by provisional licence holders be reviewed”.

The Joint Committee notes that Recommendation 3 addressed jointly to the Department of Transport and the Department of Justice, Equality and Law Reform states “that the sanctions for flagrant breach of compulsory insurance obligations should be fines at a level more consistent with premium charges and should provide for vehicle confiscation, as applies to non-payment of Road Tax, with proceeds being assigned to the Motor Insurers Bureau of Ireland who are responsible for claims from victims of uninsured accidents”.

The Joint Committee notes that this is stated to be partially implemented and being further implemented. The Joint Committee also noted that the Minister for Transport announced that he would make an order for confiscation of the vehicles.

The Joint Committee recommends that:

1. Sanctions for breaches to compulsory motor insurance obligations be introduced as quickly as possible and, in particular, that uninsured vehicles be confiscated.

A witness stated that motor vehicle users should not have to bear the costs of uninsured drivers, as these costs arise from a failure to enforce the law. These costs amount to 10% of the costs of premiums.

The Joint Committee urges the Government to take action to completely eliminate the problem of uninsured drivers.

Recommendations Relating to the Department of Justice, Equality and Law Reform

The Minister for Justice, Equality and Law Reform, Mr. Michael McDowell T.D., launched the general Scheme for the reform of the law on civil liability in a proposed Civil Liability and Courts Bill, which will be published in the Autumn.

The new Bill will deal with many of the MIAB recommendations and also with a number of issues that have been the subject of submissions to the Joint Committee but which were not recommendations emanating from MIAB. A number of the problems in relation to public liability and employer’s liability have not caused difficulties in the motor insurance market.

MIAB addressed fourteen recommendations to the Department of Justice, Equality and Law Reform. Of these, six appear to be addressed by the proposed Civil Liability and Courts Bill and one other recommendation is stated to have already been implemented.

Recommendation 40 states that “The current court based system for assessing legal fees be reviewed as to its cost effectiveness in satisfactorily resolving disputes and litigation costs and that consideration be given to a framework that the public might regard as more independent of the legal establishment from which more transparent information might be available to litigants on the allowable level of fees.”

Part of this Recommendation is being implemented through the establishment of PIAB. However, PIAB will only deal with cases where liability is not an issue and, in addition, all parties have the ability to disregard decisions of PIAB and to go to the courts. This Report addresses legal costs in a later chapter.

Other recommendations that are stated to be in progress or under consideration are Recommendations 49 – 55.

Recommendation 49 of MIAB states that the awards of costs to successful defendants should be made automatic. The Joint Committee, noting the provisions in the proposed Civil Liability and Courts Bill in relation to fraudulent claims, considers that this not be implemented.

In the course of his statement on the proposed Civil Liability and Courts Bill, the Minister stated that he had asked the Committee on Court Practice and Procedure, chaired by Mrs. Justice Susan Denham, to examine all aspects of practice and procedure relating to personal injuries litigation. This review will presumably deal with Recommendations 54 and 55 of MIAB.

The Joint Committee noted that MIAB recommended against a change in the current financial limits of the courts. The Joint Committee believes that a change might bring benefits in so far as more cases would be heard in the lower courts.

The Joint Committee recommends that:

2. The provisions of the Court Bill 2001, in relation to the financial limits of the courts, be brought into force and that the Court Service bring forward proposals to reform the courts as a matter of urgency.

Recommendations Relating to the Department of Justice, Equality and Law Reform and the Incorporated Law Society

Both of these recommendations are stated to have been implemented.

Recommendations Relating to the Department of Enterprise, Trade and Employment.

There were twelve recommendations to the Department. Of these, four are stated to have been implemented and one to be partially implemented. Two are in progress with the remainder “under consideration”. The partially implemented recommendation relates to PIAB, on which the Minister has published a draft scheme of the Bill.

The Joint Committee recommends that:

3. The Government negotiate a common European market protection for insurance policy holders against the insolvency of an insurer.

Recommendation Relating to Department of Finance

MIAB recommended that the stamp duty on motor insurance, if not abolished as recommended by MIAB, should be ring fenced for related matters which include road safety initiatives such as funding of the National Safety Council and the maintenance of a policyholders’ protection fund to safeguard claimants’ interests in the event of the insolvency of an insurer regulated in Ireland (Recommendation 58).

The Joint Committee has been told that the Department of Finance has rejected this recommendation. The Joint Committee had very strong representations on this issue.

The Joint Committee realizes that sources of tax revenue cannot be easily foregone but considers that, in the current business climate, it is inappropriate to tax insurance costs.

The Joint Committee recommends that:

4. The 2% levy, which is now merely a source of tax revenue, should be abolished.

Recommendations Relating to the Department of Finance in Relation to the Irish Financial Services Regulatory Authority’s (IFSRA) Legislation

These two recommendations are stated to be “in progress”. However, the Joint Committee is not aware that IFSRA has been specifically asked to address the issue of the “unique position of compulsory motor insurance”. Similarly, the Joint Committee understands that the appointment of an Insurance Ombudsman will be deferred until the next IFSRA Bill, which is due to be published in the Autumn of 2003.

Witnesses stated that Irish regulations in relation to compulsory motor insurance were inhibiting companies not already established in the Irish market from providing cover in Ireland.

The Joint Committee recommends that:

5. The Irish Financial Services Regulatory Authority facilitate the placement of Irish motor insurance business outside the jurisdiction by amending existing regulations.

Recommendations Relating to IFSRA

IFSRA came into operation on 1 May 2003.

All of the eleven recommendations relating to IFSRA are stated to be either in progress or under consideration.

Recommendation 22 appears to have been partly dealt with by the IIF/IBEC “Communications Guidelines for Insurers and Policyholders” (see Appendix C.4).

Recommendations Relating to the Department of Health and Children

MIAB recommended that the Health (Amendment) Act 1986 be reviewed to the extent that it represents a discriminatory charge levied only on those involved in motor accidents at multiples of the rate charged to health insurers, etc. (Recommendation 45)

This recommendation is stated to be “under consideration” but the Joint Committee understands that this recommendation has been rejected by the Government, presumably because of the cost implications for the health services.

The MIAB considered that the pursuit by hospitals of money by pressuring patients to claim from insurance companies is against the interests of the State.

The Joint Committee understands the wishes of the health authorities to recover the costs of persons being treated as a result of an injury which is claimable from an insurance company.

However, given the costs to the Exchequer and to insurance companies of processing claims in the courts, a better system might be an arrangement between insurance companies and hospitals to refund the hospital on the basis of a form completed by a patient.

The Joint Committee recommends that:

6. An arrangement be entered into between insurance companies and hospitals that would refund hospitals for the costs of treating injured persons at normal health insurance rates but that would avoid the pursuit of individuals to make claims on insurance companies.

Recommendations Relating to the Irish Insurance Federation

Thirteen recommendations relate to the Irish Insurance Federation. Of these, eight were stated by the Department of Enterprise, Trade and Employment to have been implemented; four are stated to be in progress and one is stated to be under consideration.

Recommendations Relating to the Competition Authority

One of the three recommendations is stated to have been implemented and the other two are “in progress”. The Competition Authority at present has studies in progress in relation to the insurance sector and the professions, including the legal professions. However, the Joint Committee notes that the Competition Authority does not appear to have given priority “to the fees that impact on the cost of motor insurance given its compulsory nature and the recent high inflation rate….”.

The issue of competition in the market is dealt with later in this report.

Conclusion

In general, considerable progress is being made in the implementation of the MIAB recommendations. The most important developments will be the speedy enactment of the proposed PIAB Bill and the proposed Civil Liability and Courts Bill.

The Joint Committee has noted its concerns at the non-implementation of some of the recommendations of MIAB.

The Joint Committee has made recommendations in relation to some of the outstanding issues.

CHAPTER VI

The Heads of the Personal Injuries Assessment Board (PIAB) Bill, 2003

The Tánaiste published the draft scheme of the Bill that had been approved by Government for the establishment of a Personal Injuries Assessment Board (PIAB). The Joint Committee was told that it was the intention of the Minister that the Bill would be enacted in the Autumn and that PIAB would be operational from 1 January 2004. The Joint Committee welcomes the publication of the proposals in relation to PIAB.

Many of those who made submissions or gave evidence to the Joint Committee called for the establishment of PIAB at the earliest possible date.

A copy of the draft scheme of the Bill is contained in Appendix C2.

The Joint Committee has noted the report of the implementation group of PIAB, which was published in 2002. The implementation group advised the Government on the setting up of PIAB. The group began its work in April 2001.

The Implementation Group decided that the PIAB model should have the following features:

• Established by Statute;
• The establishing legislation should provide for the appointment of the Board, its officers and servants and the powers, duties and procedures of the Board;
• PIAB’s remit would be to offer assessments of quantum; it would not determine issues of liability;
• Submission of all personal injuries claims, including those against the self insured and the State, would be mandatory, except where these are covered by pre-existing legislative arrangements (for example the Garda Compensation Board and the Criminal Injuries Tribunal);
• If a defendant expresses the intention of pursuing an issue of liability immediately, the claim will be released from PIAB and referred directly to the courts;
• Reference of a claim to PIAB will fulfil the plaintiff’s obligations under the Statute of Limitations;
• Assessments would be based on court precedent;
• Claims would be processed by written procedure;
• If there are disputes about the medical evidence, PIAB will seek independent medical expertise to inform its assessment;
• The assessment will be non-binding; either party will have the right to pursue the case in a Court of first instance once a PIAB assessment has been made;
• Where either party is unwilling to accept the assessment, the case may be taken de novo to a court of first instance.

Role of PIAB

The Implementation Group, in the course of coming to its recommendations, obtained legal advice on the constitutional and legal issues arising because of the establishment of PIAB. The decisions of the Group that PIAB should not determine issues of liability was made partly in response to this advice and because the Group considered that “there was little point in duplicating existing arrangements by setting up a quasi court, which would attract all of the attendant costs”.

The Group also recommended that the PIAB assessment would not be a final determination and, therefore, not binding on the parties. This would mean that PIAB’s function would not amount to an administration of justice.

Irish Award Levels

In the course of evidence, the Joint Committee was told that Irish awards for injuries were, in many cases, greatly in excess of those in the UK or in other jurisdictions. The point has been made that awards in many continental European countries are influenced by the social security systems in place in those countries, which are quite different from those that apply in Ireland or the UK and that the apparently low awards in those countries cannot be compared with the awards in Ireland or the UK. However, in the UK, the insurance and social security systems are broadly similar to those applying in Ireland. Some witnesses argued that some awards in Ireland were up to twelve times the awards in the UK. It is clear that the level of awards has a very significant influence on the costs of insurance. The Joint Committee is very concerned, therefore, at the recommendation of the Implementation Group “that PIAB will make its assessment on the basis of precedents set by the courts”. If the court awards are resulting in excessive costs of insurance for business and consumers, then a continuation of these levels of awards would mean a continuation of the existing levels of costs. The Joint Committee understands that the Book of Quantum is currently being drawn up by the interim PIAB Board on the basis of awards made in Ireland since January 2003. The Joint Committee was informed by the Bar Council that, at present, awards are about 20% below those applying in 2001, prior to the introduction of the Euro.

Nevertheless, the Joint Committee considers that the most important change needed to our system of awards for personal injury claimants would be to reduce those awards to levels applying in other jurisdictions. The Joint Committee was told that Irish awards for serious injuries were similar to those applying in the UK but that awards for less serious injuries were many times greater than UK awards.

The Joint Committee believes that the basis of the awards should be a reasonable compensation to the complainant for the injuries suffered, so as to restore the victim to his/her pre-accident position, taking all circumstances into account. Simply adopting awards presently being given by the courts does not seem appropriate.

The Joint Committee recommends that:

7. The Government establish an expert group who would consider the information now being compiled by PIAB on the levels of awards in the Irish courts, the levels of UK awards and the levels of awards in other jurisdictions. This group would recommend a level of awards that would be appropriate to Ireland. The recommendations of the group should be published in draft form to allow all interested parties, including representatives of victims, to make submissions on the proposals.

Because any person receiving an award by PIAB will have the right to take a case in the courts, it will be essential that the level of awards in the courts should not be higher than those of PIAB.

The Joint Committee recommends that:

8. The proposed Civil Liability and Courts Bill to contain a provision that would require judges, on making decisions in relation to the level of awards, to have regard to the Book of Quantum applied by PIAB.

This provision would not bind a judge but, hopefully, would influence the general level of judicial awards.

Draft Scheme of the Bill

PIAB will initially deal with employer’s liability claims. The Minister, however, may make regulations to extend the scope of legislation to motor accident, public liability and other types of claims.

The Joint Committee considers that:

9. PIAB, as soon as possible and certainly within six months of its establishment, should deal with public liability and motor accident claims, as well as employer’s liability claims.

The Joint Committee welcomes the provision in Head 11 in relation to an independent medical examination where the medical evidence is in dispute.

Non-Acceptance of PIAB Awards

The claimants should have the right to not accept the PIAB award and to take their case to the courts. However, the Joint Committee wishes to encourage claimants to accept PIAB awards.

The Joint Committee recommends that:

10. Where, not having accepted a PIAB award, the court award is equal to or less than a PIAB award, legal costs should not be allowed to the claimant.

Conclusion

The Joint Committee hopes that PIAB will make a significant contribution to a more efficient and non-adversarial method of dealing with personal injury claims.

The Joint Committee notes that PIAB will only deal with claims where liability is not in dispute. One witness to the Joint Committee considered that liability would be an issue in many public liability claims. It may also be an issue in some employer’s liability claims.

The Joint Committee considers that PIAB is likely to be most effective in dealing with motor injury claims and calls for PIAB to be permitted to deal with motor injury claimants within six months of its establishment.

The Joint Committee notes that it is not proposed that any allowance be made by PIAB for legal advice on the preparation of the claim and that PIAB will operate a written procedure only. The Joint Committee believes that it will be essential that PIAB operates in a claimant-friendly way and that those who are poor or disadvantaged in any way will be satisfactorily accommodated in the procedures being introduced.

CHAPTER VII

The Heads of the Civil Liability and Courts Bill

As already stated, the Minister for Justice, Equality and Law Reform, Mr. Michael McDowell, T.D., launched the general scheme of the provisions to reform the law on civil liability on 4 July 2003.

The Joint Committee welcomes these proposals, which will bring about much needed reforms.

The proposed Bill will address many of the recommendations of MIAB. This chapter considers the provisions in the proposed Bill that were not recommended by MIAB.

Limitation Period For Personal Injuries Action

Head 4 of the proposed Bill will reduce the limitation period for personal injuries actions from three years to one, so as to ensure that claims are brought forward without delay. Head 5 requires a complainant to notify the policyholder within two months after an alleged incident or risk being allowed costs that would otherwise be recoverable.

The Joint Committee welcomes these provisions. The Joint Committee heard arguments that, particularly in respect of employer’s liability and public liability claims, the party against whom the claim is to be made should be notified within two weeks of any accident, unless there are special medical reasons that would prevent such a notification being made. The Joint Committee, however, is prepared to accept the Minister’s proposal that the complainant would have two months to notify.

The Joint Committee noted that technical developments in CCTV equipment allow for recorded data to be stored for up to a year so that evidence would be available in the event of a claim.

Fraudulent and Exaggerated Claims

The Joint Committee welcomes the provision of Head 12 that the originating document, defence and other pleadings shall be supported by an affidavit verifying such pleadings. The Joint Committee notes that the intention is that if false material is included in affidavits, the claimant will be guilty of perjury.

The Joint Committee received many submissions about fraudulent and exaggerated claims and the willingness of insurers to pay these claims in spite of the views of the policyholders.

The Joint Committee recommends that:

11. The measures in the proposed Civil Liability and Courts Bill to eliminate fraudulent and exaggerated claims be adopted.

The Joint Committee heard evidence that such claims were much less likely to take place in respect of employer’s liability insurance than in the public liability and motor insurance areas. Many employees are reluctant to take claims against their employers. The level of claims is stated to be significantly less than the level of accidents at work.

Mediator

Heads 14 and 16 provide for mediation. The Joint Committee welcomes this provision.

Court Reform

The Joint Committee notes that the Minister for Justice, Equality and Law Reform has asked Mrs. Justice Susan Denham, Chairperson of the Committee on Court Practice and Procedure, to examine all aspects of practice and procedure relating to personal injuries litigation.

The Law Society states that, of their 50 recommendations for “Real Reform”, 38 are not addressed by the proposed Bill. The Minister for Justice, Equality and Law Reform states that he favoured a “light touch” to reform. Presumably, the Law Society will raise with Mrs. Justice Denham the issues not addressed by the proposed Bill.

The Joint Committee recommends that:

12. Specific judges should be allocated to deal with personal injury cases and they should be required to undertake training in relation to insurance issues.

Record of Claimants

According to the Chairperson of MIAB, there are discussions taking place with the Data Protection Commissioner on the keeping of central records by insurance companies on claimants.

The Joint Committee recommends that:

13. Legislation should be introduced to permit the keeping of central records on claimants by insurance companies, subject to appropriate safeguards.

CHAPTER VIII

Road Safety

The Joint Committee notes that only one of the recommendations of MIAB to the Department of Transport is stated to have been implemented. This recommendation was that “priority be assigned to achieving the objectives set in the Government’s strategy for road safety for a wide range of reasons, which extend far beyond the cost of insurance”.

The principal achievements in relation to road safety are set out in the Minister for Transport’s evidence to the Joint Committee.

Provisional Driving Licences

The Joint Committee is particularly disappointed with the lack of progress in relation to resolving the difficulties with provisional driving licences. The Joint Committee notes that legislation planned for the autumn will introduce regulations for the licensing of driving schools. This, in turn, will permit a requirement that all persons should receive driving instruction from a recognized driving school prior to receiving a provisional licence. The Joint Committee notes that this new legislation will take time to enact and time to bring about a satisfactory recognition of driving schools. The Joint Committee believes that the risk to road safety caused by permitting persons with no driving experience and no instruction to drive on our roads is a contributory factor to the high cost of motor insurance. The Joint Committee notes, in particular, that a large percentage of motor cyclists have no driving licences and have not received as much as a day’s training.

The Joint Committee recommends that:

14. The Government immediately bring in legislation for the regulation of driving schools.

Penalty Points

The Joint Committee notes the success of the penalty points system. It also notes that there are, at present, only two offences subject to penalty points. In particular, the Joint Committee considered that anyone transporting a child in a car without using appropriate restraints (child safety seat, seat belt, etc), is endangering the child.

The Joint Committee recommends that:

15. Penalty points be extended to all motoring offences affecting road safety as quickly as possible and that the necessary infrastructure of IT systems be put in place to achieve this.

Many witnesses called for strict enforcement of the policy in relation to penalty points. The Joint Committee endorses these calls.

Speed Cameras

The Joint Committee notes that speeding is a major cause of road accidents. The Joint Committee is disappointed that there are, at present, only three working stationery cameras in the country. The Joint Committee notes the Minister’s proposal that an additional 50 cameras be brought into operation.

The Joint Committee recommends that:

16. All speed cameras should be operated by An Garda Síochána.

Speed Limits

The Minister informed the Joint Committee that a working group on the conversion of speed limits to kilometres per hour had also considered the rationale behind some existing speed limits. The working group was making recommendations on this issue. The task of converting all speed limit signs to kilometres was unlikely to be completed before the end of 2004. The Joint Committee supports the Minister’s actions in relation to the conversion of speed limits to kilometres and agrees that speed limits need to be generally revised.

Traffic Corps

The Joint Committee notes that the Programme for Government envisaged the establishment of a dedicated traffic corps.

As the enforcement of road traffic regulations is critical to improving road safety, the Joint Committee supports this.

The Joint Committee recommends that:

17. A dedicated traffic corps within An Garda Síochána be established at the earliest opportunity with a view to increasing the enforcement of road traffic regulations and reducing deaths and injuries on the roads.

Young Drivers

The Joint Committee was particularly interested in the AXA cost of insurance for young male drivers at €7,500 per annum. AXA are charging young female drivers €2,000 per annum. According to AXA, young male drivers are the main source of many of the horrendous accidents that lead to huge claims for compensation.

The Joint Committee noted the AXA scheme that monitored by satellite the speed of young drivers who signed up for a reduction of 40% of the premium cost. It was reported that some other insurance companies had arrangements to encourage responsible driving by young drivers.

The Joint Committee expressed its concern about the cost of insurance for young drivers but notes the following:

• At present, it is possible for a young driver to obtain a provisional driving licence and drive a car without having had any training by a qualified instructor.
• There is a very considerable backlog in testing of those applying for driving tests

The Joint Committee believes that the solution to the high premiums for young drivers is to reduce the number of accidents by young drivers. This can be achieved by much stricter rules for the obtaining of a provisional licence and a much higher level of enforcement of the road traffic rules.

Among the issues considered by the Joint Committee were that the CC level should be licensed for motor cycles and should be related to years of driving experience.

The Joint Committee considers the present level of deaths and injuries among young motor and motor cycle drivers to be wholly unacceptable.

The Joint Committee recommends that:

18. The Minister for Transport publish a detailed set of proposals to deal with young driver licensing and training, so as to reduce the wholly unacceptable level of deaths and injuries among young drivers.

CHAPTER IX

Insurance Companies

The Joint Committee heard evidence from the Insurance Industry Federation, Quinn Direct, FBD, Hibernian and AXA.

While the insurance industry representatives accepted that claims had risen substantially, they did not accept that premiums, on average, had risen at the levels reported by those representing policyholders and business.

The insurance companies gave the following reasons for the significant increases in insurance costs.

1. The sudden loss in the value of their investments that occurred with the decline in international stock markets. This meant that it was no longer possible to accept underwriting losses and to have these offset by income on investments and profits on the sale of investments.
2. Following the events of 11 September 2001 and a number of other catastrophes due to flooding, earthquakes, etc., it became increasingly difficult and expensive to offset insurance risks by re-insurance. The cost of re-insurance had risen very substantially and there was a lack of capacity in the market to re-insure.
3. The ever increasing level of awards in the Irish courts meant that provisions that had been made earlier for claims against policyholders were no longer sufficient and had to be increased.
4. General inflation in the Irish market and, in particular, medical, wage and salary inflation, meant that provisions for claims were insufficient and had to be increased, thus resulting in losses in the year in which these additional provisions had to be made.
5. According to witnesses, one of the reasons for the large increases was a reduced level of competition in the Irish market. This reduced level of competition came about primarily because of international mergers which had a significant effect in the Irish market.
6. The decline in interest rates throughout the world meant that investment income from deposits was substantially down. This further reinforced the need to make a profit at the underwriting level.

It might be expected that, if there are too few competitors in the Irish market and that prices are rising substantially, there would be new entrants to the market.

However, this has not occurred. The insurance industry has pointed out that the market within which insurance companies have to operate is not a benign one. Two insurance companies had ceased to provide cover for certain sectors of the market. The insurance industry’s solutions to the difficulties in the Irish market could be summarised as follows:

1. Establish PIAB
2. Deal with fraudulent claims
3. Deal with excessive legal costs
4. Promote safety on the roads and in the workplace
5. Reduce the level of awards

Insurance prices would fall only after completion of a programme of this type.

The Government has responded to the very substantial increase in insurance costs with a major programme of reform. This reform programme includes the introduction of the proposed PIAB Bill, the proposed Civil Liability and Courts Bill and a number of other measures including measures to deal with road safety. Many of these measures will be in force at the beginning of 2004 and others will come into force during the year 2004. There would seem to be no reason why premiums should not fall very substantially from 2004 onwards.

Evidence was given by AXA and FBD that motor insurance premiums had stabilised and fallen in 2003 when adjusted for inflation. However, many witnesses spoke of substantial increases in public liability and employer’s liability insurance in 2003.

Concern was expressed that the Irish solvency regulations, which limited property investments to 15% of their investment resources, may have forced insurance companies to invest in the more volatile equity markets where they suffered substantial losses.

The Joint Committee recommends that:

19. The Irish Financial Services Regulatory Authority review the Irish solvency regulations to ensure that they are in the best interests of policyholders, existing insurance companies operating in Ireland and potential entrants.
20. The Government permit insurance companies, as part of their solvency requirements, to invest in public/private partnerships and infrastructural projects on a basis to be determined annually by the Minister for Finance.

Some witnesses held the insurance industry responsible for the difficulties that had occurred in the Irish insurance market. It was alleged that the insurance industry had been complacent, had not taken action to deal with high legal costs and had not highlighted many of the deficiencies of the market. It was stated that this was because the insurance companies in Ireland were broadly happy with the level of profits they were obtaining. While this allegation may be substantially correct, the Joint Committee accepts that the market is in need of very considerable reform. The Joint Committee believes that the measures being introduced by Government and the recommendations of this report should bring about reductions in insurance costs in the future.

Explanation for Increases

The Joint Committee notes the explanations given by insurance companies for the increases in premiums but is not satisfied that it has received a full explanation.

The Joint Committee is disappointed that Ireland does not appear to have achieved any benefits from the single market in insurance and asks that the reasons why no benefit has been achieved should be satisfactorily explained.

The Joint Committee notes the German case in which two companies trading in the Irish market were found to be fixing prices in Germany. A number of witnesses questioned whether there was a European cartel in operation that had led to the substantial increases. The Joint Committee awaits the Competition Authority report on the insurance sector.

The Joint Committee will not be happy to see prices merely stabilise when the reform programme is substantially completed, but wants significant reductions to at least the levels applying some years ago, adjusted for inflation.

The Joint Committee recommends that:

21. An annual review of the insurance market should be carried out by the Joint Committee to consider whether its expectations of reform are being realised.

The Joint Committee recommends that:

22. The Irish Financial Services Regulatory Authority, in the interests of transparency, should publish the justification given by insurance companies for changes in their premiums.

CHAPTER X

Communication Guidelines for Insurers and Policyholders

The Irish Insurance Federation and IBEC issued joint guidelines in May 2003 for insurers and policyholders. A copy of the guidelines is contained in Appendix C4.

The guidelines contain the following headings:

• General Safety Policy After Any Accident
• Claims Handling Litigation
• Settlements
• Liability and Motor Policy Renewals
• Other Issues
• Rehabilitation
• Compensation for Loss of Earnings

The guidelines agreed between IBEC and the insurance industry address points made in a number of submissions. The Joint Committee generally welcomes these guidelines and looks forward to the immediate implementation of them by the insurance industry.

Where, in the insurer’s view, it would be appropriate to settle the claim prior to a court action, and the policyholder objects, there should be a requirement for an arbitrator to make a binding decision having listened to the views of both the policyholder and the insurer.

The guidelines call for a renewal notice to be issued at least 15 working days in advance of a policy renewal date. The Joint Committee welcomes this provision.

The Joint Committee recommends that:

23. The Irish Financial Services Regulatory Authority give effect to the IBEC/IIF Communications Guidelines by statutory order, so that the guidelines have the power of law.

The Joint Committee considers that:

24. Where a policyholder objects to a settlement of a claim by an insurer, the insurer should not be able to settle the claim unless, having asked for an arbitrator to consider the issue, the arbitrator finds in favour of the insurer. The losing party should pay for the arbitration.

Calculation of Premiums/Transparency

A number of issues in relation to the calculation of insurance premiums were raised in the submissions received. These issues relate mainly to matters of transparency.

Firstly, the IFSRA Order already recommended, should address the lack of transparency in the way that insurance companies calculate insurance premiums. Many of the submissions advocate that a matrix of costs should be available. This would act as a guide for non-insurance experts when seeking a quote.

In relation to employer’s and public liability insurance, it was agreed that a “noclaims bonus” type system, as operates in the motor insurance market, should operate in these markets. In addition, insured parties who partake in risk assessment and risk management programmes should be rewarded with premium discounts for resulting health and safety risk improvements. Likewise, policyholders who accept large excesses should receive related reductions to their premiums.

As regards employer’s liability insurance, it would be appropriate to consider the qualifications of employees before preparing a quote for some industries of perceived high risk.

In relation to motor insurance, insured drivers with clean driving licences should receive premium reductions.

The Joint Committee recommends that:

25. Policyholders should see clear evidence of the benefit of being claim free. Accident-free policyholders or those with low levels of accidents should be seen to be rewarded.

In addition, the Joint Committee recommends that

26. All policyholders should, on renewal, receive information on the basis on which the premium is calculated.

CHAPTER XI

Competition and New Entrants

The Joint Committee notes that the Competition Authority is undertaking a review of the insurance sector and is also, as part of its study of eight professions, examining restrictions on competition in the professions of solicitor and barrister.

The Joint Committee welcomes these studies and asks that they be completed as soon as possible.

As it is hoped that the proposed PIAB and the proposed Civil Liability and Courts Bill will come into force by 1 January 2004 at the very latest, the Joint Committee would like to see the Competition Authority publish an interim report before the end of 2003.

The Joint Committee recommends that:

27. The Competition Authority publish at least an interim report on the insurance market before the end of 2003.

The Joint Committee heard evidence that there are few if any barriers to entry to the insurance market but that the general conditions under which insurance companies have had to operate in Ireland have not been conducive to the encouragement of new market entrants. However, for motor insurance there appear to be provisions that make it very difficult to obtain cover from companies not currently operating in Ireland.

The Joint Committee was informed that the number of competitors was reduced because of international mergers of insurance companies, which were approved by the European Commission but which had a significant effect on competition in the Irish market. The Joint Committee believes that the Competition Authority will be particularly concerned to ensure that no other international merger of insurance companies has an adverse effect on competition in the Irish market.

Among the conditions stated to be discouraging insurance companies from other countries entering the Irish market are the following:

• The absolute level of the awards;
• The inconsistency of awards by the courts;
• The high legal, medical and other professional costs in defending claims;
• The level of fraudulent claims;
• The delays in the courts which lead to long delays in the finalisation of claims; and
• The absence of a non-court based system for dealing with claims where liability is not an issue.

Many of these issues are now being dealt with through the establishment of the PIAB and the introduction of the proposed Civil Liability and Courts Bill. The Joint Committee hopes that there will be a more benign environment for insurance companies to do business in Ireland in the future and that this will encourage further entrants to the market.

The Joint Committee notes the unhappy experience of the policyholders of the UK based Independent Insurance Company, where they had to pay further premiums to another insurance company. The Independent Insurance Company had ceased to trade. If policyholders are to be encouraged to deal with non-resident companies, they will have to be given an assurance that such a situation will not arise again. The Joint Committee endorses the recommendation of the MIAB that a fund or type of bond be established to safeguard policyholders in the event of the failure of an Irish or EU based company. The Joint Committee considers that the policyholder is entitled to believe that, as insurance companies are subject to regulation in Ireland and throughout the EU, they will not go into liquidation and be unable to meet their obligations to policyholders. The Joint Committee notes that the failure to establish such a fund will discourage Irish policyholders from insuring with non-resident companies.

The Joint Committee received a small number of allegations of anti-competitive actions by insurance companies. The Joint Committee considers that it should pass these allegations to the Competition Authority to assist the Authority in its study.

The Joint Committee was asked to recommend that price controls be introduced and that an independent committee to monitor insurance industry pricing should be established. The Joint Committee understands that EU law does not permit price control to be imposed on insurance companies.

The Joint Committee noted newspaper reports on 22 and 23 July relating to the fines imposed by the German Federal Cartel Office on seven insurers in Germany (two of whom operate in Ireland) for price fixing. The Joint Committee noted also the evidence that there were only two active competitors in the Irish motor insurance sector.

The Joint Committee is not satisfied that the level of price increases suffered by policyholders is entirely due to adverse market factors. The possibility of cartel activity in the Irish and European market was noted by the Joint Committee.

The Joint Committee considers that

28. All regulatory barriers or regulatory impositions on insurance companies that make entry to the Irish market (for Irish or other EU companies) more difficult than to any other EU country should be removed by the Irish Financial Services Regulatory Authority immediately.

The Joint Committee will continue to monitor the level of competitive activity in the market.

CHAPTER XII

Legal Costs

Appendix B.1 sets out the submissions made to the Joint Committee in relation to legal costs. The Joint Committee has considered the submissions made and the arguments made during the hearings.

The Joint Committee notes that if PIAB is successful in dealing with a substantial number of cases, this would significantly reduce the average level of legal costs, although the costs of operating PIAB will have to be borne by the respondents. The Joint Committee notes that these costs were estimated by the Implementation Group to be less than is presently paid to the legal profession.

However, legal costs will still arise where liability is in dispute and where the claimant is unhappy with the PIAB award and takes a case in the courts.

The Joint Committee noted the argument by the Law Society that the costs of litigation in Britain were similar to those in Ireland and that the average cost of legal and other professional fees in relation to a claim in a court in Britain was 107% compared with 42% in Ireland. The Law Society, in response to allegations about the excessive costs of legal fees, stated that all costs imposed by solicitors could be appealed to the Taxing Master. Some of those making submissions argued that the Taxing Master, by custom and practice, had been a legal professional and operated on the basis of precedent. The Taxing Master’s decisions can be appealed to the courts. It was argued that the Taxing Master should be a non-lawyer and be independent of the courts. However, if this official’s awards were capable of appeal to the court, it may be that, in time, no significant difference would be achieved. If the Taxing Master’s decisions could be appealed to a lay appeal body, then this might have merit.

The Joint Committee recommends that:

29. The Government establish an Inquiry, composed mainly of non-lawyers, into the present levels of legal fees in personal injury actions. The Inquiry would undertake a study of the costs and would consider whether the current level of fees being awarded by the Taxing Master are reasonable in relation to the work being undertaken by solicitors in preparing cases for trial. This Inquiry would also consider the necessity for the extensive use of barristers in personal injury actions in the Irish courts.

The Joint Committee recommends that:

30. The Taxing Master should not be, nor have been, a member of the legal profession. The decisions of the Taxing Master should be subject to appeal to a lay appeals body.

In-House Barristers

In response to a question, the Chairman of the Bar Council stated that all solicitors, including those employed by businesses, had a right of audience in any of the courts. However, for practical reasons, solicitors engage barristers to undertake advocacy in the courts on behalf of their clients.

One of those making submissions argued that in-house barristers employed by insurance companies should have a right of audience in the courts to appear on behalf of their employers. At present, court rules do not permit this practice. The Joint Committee agreed that such in-house barristers should have completed their “devilling”.

The Joint Committee considers that

31. In-house barristers should have a right to appear in court in defence of claims against the insurance companies that employ them.

The above recommendation only applies to the defence of insurance claims.

This change, if implemented, is likely to further reduce costs for insurance companies.

Conclusion

The Joint Committee believes that the changes it has recommended would make a significant difference to the levels of legal costs in personal injury claims.

CHAPTER XIII

Some Other Issues

Rehabilitation Process

The IBEC/IIF Code of Practice states that, in the case of a workplace injury to an employee of the policyholder, the insurer will, in accordance with the Workplace Safety Groups Voluntary Code of Practice, support appropriate measures to facilitate the injured employee’s rehabilitation from injury and return to work. The Joint Committee believes that this is an important issue and that every effort should be made immediately to rehabilitate an injured person and have him/her return to work. The Joint Committee hopes that the speedy hearing of cases by PIAB will assist in this regard and that the proposed changes in court procedures will also facilitate the early rehabilitation of persons injured in road accidents, in their employment, or in other places.

Government Backed Insurance Company

The Joint Committee received two submissions asking for the creation of a Government backed insurance company. In general, the establishment of a Government backed insurance company should take place only if the reforms now envisaged do not have the effect of bringing about a significant reduction in insurance premiums. If all of the measures being undertaken by Government fail to bring about a significant reduction, then, as a last resort, the Government could intervene in the market by setting up, for a period of time, its own insurance company. The priority, at present, is to bring about reform to the market and only if this is unsuccessful in bringing down insurance costs should further consideration be given to intervention in the market by Government.

The Joint Committee was told by ISME of a proposal to introduce another foreign insurance company to the Irish market by bringing together 18 representative bodies whose members’ premiums in total would be substantial. However, this had proved to be difficult.

Brokers

Brokers potentially have an important competition role in the insurance industry. They can more readily compare the costs of insuring with a number of companies than can a single company or an individual.

Being independent of insurance companies, brokers should be able to advise businesses on self insurance and organise schemes of insurance that can be underwritten in other countries. Brokers compete with the direct selling of insurance companies and with tied agents or authorised advisors of insurance companies. However, brokers must obtain agencies from insurance companies to enable them to sell the products of the insurance company.

The Joint Committee was concerned that some companies operate production quotas for brokers and that this may encourage brokers to give inappropriate advice in order to retain their agency.

In addition, in order that brokers operate as a competitive force in the market, they need to be independent of insurance companies. All brokers licensed, perhaps on a new licensing basis, by IFSRA should be able to obtain products from any insurance company on behalf of their clients.

Furthermore, any licensed broker should be able to obtain the renewal information given to the broker presently dealing with the client. Competing brokers should not be at a disadvantage.

The Joint Committee recommends that:

32. There should be no production quotas established by any insurance company that might inhibit or prevent brokers from giving independent advice to their clients.
33. A scheme for licensed brokers should be established by the Irish Financial Services Regulatory Authority that would permit any broker to deal, on behalf of clients, with any insurance company.
34. Insurance companies should not discriminate against competing brokers in making available renewal information.

The Joint Committee also heard views expressed that brokers should operate on a fee basis rather than for commission. With commission, brokers apparently have a vested interest in higher premiums.

The Joint Committee recommends that:

35. The Irish Financial Services Regulatory Authority should give consideration to the issue of whether brokers should operate only on a fee basis.

Health and Safety Standards in Workplaces

The Joint Committee heard evidence from IBEC, ISME, CIF and SFA on the work they were undertaking to promote health and safety standards in workplaces. Hibernian Insurance alleged that Ireland was an unsafe place in which to work or drive. This claim was strongly refuted by a number of those who appeared before the Joint Committee. Those who considered that Ireland had a low accident rate by international standards quoted an EU report, HSWI (Jer 2002). The Hibernian allegation was based on a report by their consultants, Tillinghast-Towers Perrin. The assertion by bodies such as IBEC, ISME, CIF and SFA about Ireland’s low accident rate was responded to by Tillinghast at the request of Hibernian. The Irish Congress of Trade Unions considered that Ireland did not have a low accident rate by international standards and that the statistics were misleading.

Some submissions stated that insurance costs were rising irrespective of the safety management procedures in place in the company.

AXA Insurance stated that there needed to be pride in operating in an accident free environment. Only by generating pride in such achievements would the necessary commitment of employers to workplace safety bring about a reduction in accidents and claims.

The Joint Committee recommends that:

36. An annual awards scheme be introduced to recognise the companies that have had no accidents for several years and those that have made a significant effort to improve safety.

Some submissions suggested that, provided certain occupational health and safety standards were applied by a company, this should automatically result in a reduction in premium.

The Joint Committee considers:

37. The Health and Safety Authority and the insurance companies should specify appropriate health and safety standards with a view to offering premium reductions for companies that comply with such standards.

The Joint Committee was told that, whereas there had been a plan to have 8000 inspections per annum by the HSA, this had now been reduced to 4000 due to lack of resources.

The Joint Committee recommends that:

38. The Health and Safety Authority be properly resourced so that Irish safety performance levels become among the best in the EU and that they meet the target of 8,000 inspections per annum.

The Joint Committee recommends that:

39. The Bill to make new provisions for health and safety be introduced immediately.

Compulsory Employer’s Liability Insurance

If a company does not have employer’s liability insurance, it is liable for any awards made against it. Where a company is in a weak financial position, an award against the company may bring about the liquidation of the company.

A number of witnesses argued that employer’s liability insurance should be made compulsory. However, there were other witnesses who argued strongly that it should not be compulsory.

There has been, in response to the very large increase in premiums, an increasing trend for companies either to not take out insurance or to only take out “catastrophe” insurance.

Some companies simply cannot afford insurance and take the risk of a possible claim. The difficulty with this situation is that an employee of one of these companies may find that, even where the company is clearly negligent, it is not possible to recover damages.

Other companies seek a large excess to their policy in order that they, rather than the insurance company, deal with claims and have full control over settlement procedures. For companies with the resources to take this approach, it would seem to have considerable merit and to provide benefits for the company. Claimants can also benefit because claims can be dealt with much more rapidly and satisfactorily in such an environment.

The Joint Committee discussed the possibility of small employers being able to obtain insurance against injury to their employees through a State scheme. The Joint Committee will discuss this issue at a future meeting.

The Joint Committee would like to see employer’s liability insurance become compulsory when the costs become affordable.

Self-Insurance

The Joint Committee was given a list of a significant number of organisations that self-insure. Where this can be done without the risk of a genuine claimant not receiving an award, this trend is to be welcomed as providing competition to insurance companies.

Private insurance schemes can be another form of activity in the market that can provide competition.

The Joint Committee is concerned that, because motor insurance is compulsory, it is not possible to self-insure. Arrangements should be made for such companies to be able to display insurance discs.

The Joint Committee recommends that:

40. Organisations, meeting certain financial criteria, should be able to self-insure for all motor risks.

Advertising By Solicitors

Concern was expressed by witnesses and by members of the Joint Committee about advertising by solicitors in relation to personal injury claims.

The Law Society explained that advertising by solicitors that they were prepared to work on a “no foal, no fee” basis or that they would take a percentage of the client’s award was now illegal as a result of the Solicitor’s (Amendment) Act, 2002. The Law Society stated that it was strictly enforcing the provisions.

Some members expressed concern about general advertising by solicitors on radio and in directories. However, the Joint Committee accepted that, provided the advertising was accurate and in good taste, there was no reason why it should not be permitted. The Joint Committee noted the concern expressed by the Chairperson of MIAB about the regulations that had been introduced by the Law Society.

The Joint Committee also noted the comments by the Minister for Justice, Equality and Law Reform that advertising by legal professionals was not necessarily in the interests of the State.

APPENDIX A.1

Orders of Reference

Dáil Éireann on 16 October 2002 ordered:

1. 1. That a Select Committee, which shall be called the Select Committee on Enterprise and Small Business, consisting of 11 members of Dáil Éireann (of whom 4 shall constitute a quorum), be appointed to consider -
      
      1. such Bills the statute law in respect of which is dealt with by the Department of Enterprise, Trade and Employment;
      2. such Estimates for Public Services within the aegis of the Department of Enterprise, Trade and Employment; and

      (iii) such proposals contained in any motion, including any motion within the meaning of Standing Order 157 concerning the approval by the Dáil of international agreements involving a charge on public funds,

      
      
      

      as shall be referred to it by Dáil Éireann from time to time.

      
      
   2. For the purpose of its consideration of Bills and proposals under paragraphs (1)(a)(i) and (iii), the Select Committee shall have the powers defined in Standing Order 81(1), (2) and (3).
   3. For the avoidance of doubt, by virtue of his or her ex officio membership of the Select Committee in accordance with Standing Order 90(1), the Minister for Enterprise, Trade and Employment (or a Minister or Minister of State nominated in his or her stead) shall be entitled to vote.
2. 1. The Select Committee shall be joined with a Select Committee to be appointed by Seanad Éireann to form the Joint Committee on Enterprise, Trade and Employment to consider -
      
      1. such public affairs administered by the Department of Enterprise, Trade and Employment as it may select, including, in respect of Government policy, bodies under the aegis of that Department;
      2. such matters of policy for which the Minister for Enterprise, Trade and Employment is officially responsible as it may select;
      3. such related policy issues as it may select concerning bodies which are partly or wholly funded by the State or which are established or appointed by Members of the Government or by the Oireachtas;
      4. such Statutory Instruments made by the Minister for Enterprise, Trade and Employment and laid before both Houses of the Oireachtas as it may select;
      5. such proposals for EU legislation and related policy issues as may be referred to it from time to time, in accordance with Standing Order 81(4);
      6. the strategy statement laid before each House of the Oireachtas by the Minister for Enterprise, Trade and Employment pursuant to section 5(2) of the Public Service Management Act, 1997, and the Joint Committee shall be so authorised for the purposes of section 10 of that Act;
      7. such annual reports or annual reports and accounts, required by law and laid before both Houses of the Oireachtas, of bodies specified in paragraphs 2(a)(i) and (iii), and the overall operational results, statements of strategy and corporate plans of these bodies, as it may select;

      Provided that the Joint Committee shall not, at any time, consider any matter relating to such a body which is, which has been, or which is, at that time, proposed to be considered by the Committee of Public Accounts pursuant to the Orders of Reference of that Committee and/or the Comptroller and Auditor General (Amendment) Act, 1993;

      
      

      Provided further that the Joint Committee shall refrain from inquiring into in public session, or publishing confidential information regarding, any such matter if so requested either by the body concerned or by the Minister for Enterprise, Trade and Employment; and

      
      
      8. such other matters as may be jointly referred to it from time to time by both Houses of the Oireachtas,

      and shall report thereon to both Houses of the Oireachtas.

      
      
   2. The quorum of the Joint Committee shall be five, of whom at least one shall be a member of Dáil Éireann and one a member of Seanad Éireann.
   3. The Joint Committee shall have the powers defined in Standing Order 81(1) to (9) inclusive.
3. The Chairman of the Joint Committee, who shall be a member of Dáil Éireann, shall also be Chairman of the Select Committee.”.

Seanad Éireann on 17 October 2002 ordered:

1. 1. That a Select Committee consisting of 4 members of Seanad Éireann shall be appointed to be joined with a Select Committee of Dáil Éireann to form the Joint Committee on Enterprise and Small Business to consider –
      
      1. such public affairs administered by the Department of Enterprise, Trade and Employment as it may select, including, in respect of Government policy, bodies under the aegis of that Department;
      2. such matters of policy for which the Minister for Enterprise, Trade and Employment is officially responsible as it may select;
      3. such related policy issues as it may select concerning bodies which are partly or wholly funded by the State or which are established or appointed by Members of the Government or by the Oireachtas;
      4. such Statutory Instruments made by the Minister for Enterprise, Trade and Employment and laid before both Houses of the Oireachtas as it may select;
      5. such proposals for EU legislation and related policy issues as may be referred to it from time to time, in accordance with Standing Order 65(4);
      6. the strategy statement laid before each House of the Oireachtas by the Minister for Enterprise, Trade and Employment pursuant to section 5(2) of the Public Service Management Act, 1997, and the Joint Committee shall be so authorised for the purposes of section 10 of that Act;
      7. such annual reports or annual reports and accounts, required by law and laid before both Houses of the Oireachtas, of bodies specified in paragraphs 1(a)(i) and (iii), and the overall operational results, statements of strategy and corporate plans of these bodies, as it may select;

      Provided that the Joint Committee shall not, at any time, consider any matter relating to such a body which is, which has been, or which is, at that time, proposed to be considered by the Committee of Public Accounts pursuant to the Orders of Reference of that Committee and/or the Comptroller and Auditor General (Amendment) Act, 1993;

      
      

      Provided further that the Joint Committee shall refrain from inquiring into in public session, or publishing confidential information regarding, any such matter if so requested either by the body concerned or by the Minister for Enterprise, Trade and Employment; and

      
      
      8. such other matters as may be jointly referred to it from time to time by both Houses of the Oireachtas,

      and shall report thereon to both Houses of the Oireachtas.

      
      
   2. The quorum of the Joint Committee shall be five, of whom at least one shall be a member of Dáil Éireann and one a member of Seanad Éireann.
   3. The Joint Committee shall have the powers defined in Standing Order 65(1) to (9) inclusive.
2. The Chairman of the Joint Committee shall be a member of Dáil Éireann.”.

Appendix A. 2

List of Submissions

Alliance for Insurance Reform

Allianz Ireland

AXA Ireland

Consumers Association of Ireland

Crowley Engineering

Custom Crew Construction Ltd.

Enterprise Ireland

Exodos Consultants

Federation of Small Businesses

General Woodworking

Hibernian General Insurance Ltd.

IATA (Irish Amusement Trades Association)

IBEC

Interim PIAB (Personal Injuries Assessment Board)

Irish Brokers Association

Irish Caravan & Camping Council

ICTU (Irish Congress of Trade Unions)

Irish Exporters Association

Irish Hotels Federation

Irish Insurance Federation

Irish Road Haulage Association

ISME (Irish Small and Medium Enterprises Association)

Kieran Madden Insurance Ltd.

Law Society of Ireland

MAG Ireland (Irish Motorcyclists Action Group Ltd)

Motor Insurance Justice Action Group

Mr Adrian Doherty

Mr Danny Doherty

Mr Desmond Guerins

Mr Joe Naughten

Mr Noel Byrne

National Youth Council

Northern Electro Diesel Ltd and Northern Sounds Ltd

Professional Insurance Brokers Association

Quinn Direct

Rainmaster, Aluminium Seamless Gutters

Restaurants Association of Ireland

Small Firms Association

South Dublin Chamber of Commerce

The Association of Irish Showmens’ Guild Ltd.

The Bar Council

The Equality Authority

The Glebe Touring Caravan and Camping Park

Video Vend Services Ltd.

Vintners’ Federation of Ireland

Walsh Waste Ltd.

WG Bradley Solicitors

Appendix A. 3

List of Parties Who Attended Meetings

Thursday 19 June 2003

The Irish Hotels Federation:

-Mr. Jim Murphy, President – Irish Hotels Federation

-Mr. John Power, Chief Executive – Irish Hotels Federation

-Mr. Liam Griffin, Proprietor – The Griffin Hotel Group, Wexford and Kilkenny

-Mr. John Gately, Proprietor – The Vienna Woods Hotel, Cork

Alliance for Insurance Reform (AIR):

-Mr Pat McDonagh – Supermac’s

-Mr Gerry McCaughey – Century Homes

-Mr. Mark Whittaker – Avis Rent-a-Car

Tuesday 1 July 2003

Insurance Industry Federation

-Mr Michael Kemp, Chief Executive

-Mr Martin Long, Public Relations Manager

-Mr. Paul Mac Donnell – Regulation & Planning Manager

Quinn Direct

-Mr Trevor Shaw, Commercial Operations’ Manager

-Mr Ray Foley, Chief Underwriter

-Mr Kevin Lunney, Financial Services’ Director

Hibernian

-Mr Dick O’Driscoll – Managing Director

-Mr Brian Huston – Director

-Mr Laura Booth – Executive Manager

Thursday 3 July 2003

FBD Insurance

-Mr Phillip Fitzsimons, Chief Executive

-Mr Adrian Taheny, Development Manager

-Mr Martin Moran, Underwriting Manager

AXA Insurance

-Mr John O’Neill, Chief Executive

-Mr Pat Healy, Executive Director, Finance and Planning

Tuesday, 8 July 2003

Construction Industry Federation

-Mr. George Hennessy, CIF

-Mr. Kevin Gilna, CIF

-Ms. Patsy Supple, CIF

-Mr. Billy Clancy, CIF

Small Firms Association

-Mr. Kieran Crowley, Chairman SFA

-Mr. Pat Delaney, Director SFA

-Ms. Patricia Callan, Assistant Director SFA

Wednesday 9 July 2003

ISME

-Mr Mark Fielding, Chief Executive

-Mr Jim Curran, Head of Research

IBEC

-Mr Tony Briscoe, Assistant Director of Social Policy

Tuesday 15 July 2003

-Minister for Enterprise, Trade and Employment, Ms Mary Harney, T.D.

-Minister for Transport, Mr Seamus Brennan, T.D.

Wednesday 16 July 2003

The Law Society

-Ms Geraldine Clarke, President

-Mr Ken Murphy, Director General

-Mr Ward McEllin, Chairman of the Society’s Task Force on Personal Injuries

Law Reform

The Bar Council

-Mr Conor Maguire, Chairman -Mr Jerry Carroll, Director

-Mr Hugh Mohan, Senior Counsel

Tuesday 22 of July 2003

-Minister for Justice, Equality and Law Reform, Mr Michael McDowell T.D.

-Ms Dorothea Dowling, Chairperson of MIAB and of the Interim PIAB

Wednesday 23 July 2003

The Irish Congress of Trade Unions

-Mr Fergus Whelan

-Mr Eric Fleming

Irish Brokers Association

-Mr Paul Lynch, Chief Executive

-Mr David Cowman, Chairman

-Mr Paul Kavanagh, Past Chairman

-Mr Dermot McSharry, Deputy President

Professional Brokers Association

-Mr Terry Hardiman, Chairman

-Mr Derek Fitzgerald, Committee

-Mr John Hogan, Claims Legislation Committee

-Mr Diarmuid Kelly, Chief Executive

Irish Road Haulage Association

-Mr Eamonn Morrissey, President, Irish Road Haulage Association

-Mr Sean Murtagh, Member of Management Team and Editor of Fleet Magazine.

Appendix B.1

Summary of Submissions Received

The Joint Committee on Enterprise and Small Business received 47 written submissions from interested organisations and individuals. Most of the proposals contained in these submissions are outlined below. As the submissions are confidential to the Committee, the names of the organisations and individuals making the proposals are not included.

General Insurance Issues

Calculation of Premiums

The proposal that premiums should be calculated in a transparent manner and that insurance companies should be obliged to produce a matrix of costs was a strong theme in many submissions.

Two submissions stated that insurance companies apply too rigid criteria when categorising and pricing risks. One submission proposed that there should be a direct correlation between premiums and claims history.

Some submissions suggested reductions in premiums should apply for:

-insured companies who accept large excesses,

-insured companies who partake in risk assessment and risk management programmes,

-insured drivers with clean records/licences, and

-insured drivers who install sophisticated security equipment in their vehicles.

With particular reference to employers liability insurance, one submission suggested that insurance companies should be obliged to consider the qualifications of employees when calculating a quote. Another submission stated that a “no claims bonus” type system should operate in this market.

Renewal Notice

The prevailing theme in the submissions, with regard to renewal notice, was that insurers should be obliged to give their insured clients adequate notice of premium renewal terms and deadlines. Suggested renewal notice time-frames range from two to ten weeks.

Prices

Two submissions suggested that either the Government or an independent body should intervene in the insurance market to control and monitor insurance industry pricing.

Fraudulent Claims

The issue of fraudulent claims also arose in many of the submissions received. On the whole, each called for strong actions to deal with such claims.

The measure most frequently put forward in the submissions is the proposal that, in cases where fraudulent evidence or misrepresentation arises, the claimant’s right to damages should automatically be disallowed, the case should fall and the claimant should face criminal sanctions.

The proposal was also put forward, in many of the submissions, that a Perjury Act be drafted or that the law in relation to perjury be updated.

Other proposals in relation to this issue included the compilation of a central database with details of individuals who make fraudulent claims, which would be made available to insurance companies and the Gardai.

Reporting of Accidents and Investigating Claims

It is suggested, in two of the submissions, that proper procedures for notification of claims should be introduced whereby an incident is reported to the insured party as soon as possible.

One submission suggested that the insurance company should notify suspected fraudulent cases to the insured party.

Court Procedures

Four submissions proposed that civil court procedures be reviewed and streamlined. Two more pressed for new rules in relation to the processing of personal injury claims to be introduced.

It is suggested, in one submission, that new rules of disclosure and transparency need to be introduced at District, Circuit and High Court levels.

Two submissions advocate leaving District and Circuit Court award limits stand at current levels.

One submission argues that the concept of Disclosure/Book of Evidence, as used in the High Court, should be extended to District and Circuit Courts.

Another submission suggests that the recommendations of the Law Society Report, ‘Real Reform’, and the Bar Council commissioned Bacon Report concerning swift resolution of cases, be immediately implemented.

Legal And Medical Costs

A prevalent theme amongst many submissions is that legal and medical fees contribute to the high cost of claims and must be reviewed.

One submission suggests that where a solicitor takes a case on the basis of “no foal, no fee” and is unsuccessful, he/she should be liable for the legal costs. Other submissions put forward proposals that solicitors should be:

-required to lodge security against costs when taking compensation claims;

-required to put in place a bond, so that in successful cases, recovery of costs would be assured to the defendants;

-bonded to cover plaintiffs’ costs.

One submission called for greater transparency as regards the fees charged by solicitors to their clients. It was suggested that solicitors stringently comply with Section 68, Solicitors (Amendment) Act when estimating a schedule of fees for clients, i.e., solicitors be obliged to provide particulars of actual charges or an estimate of these, or to inform the client of the basis on which charges will be made to them.

Also in relation to fees, one submission suggested that the Taxing Master be independent and not a legal professional.

Two submissions suggested that the way in which solicitors charge interest on costs (in particular, 8% interest on legal invoicing from the date of judgement) be examined.

Another suggestion was that costs should automatically be awarded to successful defendants (as currently happens if the plaintiff wins) and should not to be at the judge’s discretion.

One submission proposed that a Medical Code of Practice for doctors assessing personal injury claimants be implemented.

In relation to barristers, a submission suggested that barristers be allowed to work in-house for commercial companies and still practice in court on behalf of their employers.

Advertising by Solicitors

One submission sought to prevent advertising by solicitors for personal injury claims. Another submission urged that there be advertising to communicate clearly to potential clients that solicitors may not take a percentage of a client’s final award (Section 68, Solicitors (Amendment) Act).

Prior to Settlement

Two submissions proposed that insurance companies should not make settlements without recourse to the insured party.

Another suggested that the insurance industry should be less eager to settle claims until all the required investigative work is undertaken.

Rehabilitation Process

In the context of workplace accidents, one submission suggested that the State provide tangible support to the Workplace Safety Group Code of Practice.

One submission proposed early independent medical examination of claimants in a personal injury case. Another suggested allowing insurers to become involved in the rehabilitation process as soon as possible.

One submission suggested compulsory retraining of a driver following a successful claim against him/her.

Guidelines on Damages/Book of Quantum

Eight submissions proposed that guidelines on damages/a Book of Quantum be compiled. One of these submissions stressed the need for the guidelines to be in line with EU levels, applicable in the District and Circuit Courts and in the Personal Injuries Assessment Board.

Awards

One submission suggested that it is the costs, not the awards, associated with personal injury compensation that should be reduced.

Other submissions stated that there should be an element of predictability regarding awards and associated costs. One submission suggested that a record should be kept of awards. Another submission proposed that successful claims be internationally benchmarked. It was also suggested that either side be allowed address the Court on quantum and refer to precedent in other cases.

Another submission proposes that there be an investigation into the tendency of Irish courts to award substantial damages.

Proof of Loss of Earnings

Where a claimant claims loss of income, two submissions suggested that this be calculated only against revenue declared to the Revenue Commissioners for tax purposes.

PIAB

Many submissions expressed a concern to see the immediate introduction of the PIAB. Some suggested that the PIAB does not go far enough and that its remit be extended to include public liability and “all forms of liability insurance” cases.

Some reservations, however, were voiced that the PIAB would constitute a new, costly and unnecessary layer of bureaucracy to the present system and that in its composition and method of operation it would be biased against claimants. It was suggested in these submissions that the existing system be reformed instead.

One submission called for a cost benefit analysis of the PIAB proposals to be undertaken before any further steps are taken to implement it. The same submission stressed that PIAB should not be introduced in the absence of an unambiguous guarantee, in advance, from the insurance industry that a significant reduction in insurance premiums will result.

One submission stated that PIAB should develop a transparent system for insuring that genuine compensation levels are paid and are not eroded by inflation. Another stated that there should be no reduction in the level of compensation paid to the victims of accidents who make an application to PIAB below the level of compensation currently awarded by the courts and that PIAB awards should vary in line with court awards over time.

Another submission suggested that the precise details of how PIAB will deal with the limited role of lawyers and medical professionals needs to be clarified.

An alternative structure to the courts (a Compensation Board) where parties to a claim agree, should be introduced, so as the level of damages can be determined without the need for costly legal, according to one submission. Claimants should then be encouraged, urged this submission, to seek resolution of their claim through this alternative structure to the Courts.

Affidavit

Five submissions suggested that an affidavit claims system be introduced. One of the submissions, in particular, suggested that the affidavit claim system should include a financial bond paid to the courts when registering a claim.

Judiciary

Two submissions suggested there be a specially trained panel of Judges to deal with cases where liability is disputed.

Another submission suggested that the judiciary reviews and redefines the concept of negligence and personal responsibility of claimants.

Statute of Limitations

Four submissions suggested that the Statute of Limitations be reviewed and reduced to a period ranging from six months to a year. It was also suggested by one of these submissions that the period for processing the claim also be tightened.

Protection for Policyholders

Three submissions stated that policyholders should be protected in the event of a collapse of an insurance company.

2% Government Levy

Five submissions suggested that the 2% levy on all insurance premiums be removed.

Three more suggested that the levy should be available to companies experiencing economic difficulties as a result of the collapse of the Independent Insurance Company or in the event of the collapse of another insurance company.

Government Action

One submission recommended the full and early implementation of the government’s reform programme for the insurance industry, as announced by the Tánaiste on 25 October 2002.

One submission suggested the government should facilitate the setting up of an emergency liability insurance fund to cover profitable businesses unable to afford or get cover.

Another submission suggested the removal of discriminatory hospital charges for victims of road traffic accidents currently allowed under the Health (Amendment) Act, 1986.

Another suggested that as public liability and employer’s liability insurance is non-compulsory, the Department should reward businesses that obtain insurance.

Regulatory Changes

Two submissions suggested that an independent insurance regulator be introduced.

One submission recommended the immediate establishment of the Irish Financial Services Regulatory Authority (IFSRA) on a full statutory basis. Another, on a related issue, called for IFSRA to establish a Code of Practice or Conduct for insurance brokers and insurance companies in their dealings with their clients. It was also suggested that IFSRA establish a database of all claims and premiums for all liability insurance.

Government Backed Insurance Company

Two submissions suggested that a Government backed insurance company, similar to the VHI, be created.

Competition and New Entrants

Five submissions urged the creation of an environment in which more insurers would enter the Irish insurance market.

One submission suggested that new insurance companies entering the Irish market be bonded and fully regulated.

One submission called for action to prevent the use of ‘blocking’ tactics by ‘holding’ brokers.

Brokers

One submission suggested that brokers’ commissions should be negotiable. Another suggested that insurance brokers be required to quote all insurance prices net of commission. Another suggested that brokers be remunerated on a fee basis, while another suggested the practice of paying brokers commission is anticonsumer.

One submission suggested that all commercial policyholders be entitled to receive full details of all claims made under their policy during the preceding five years with the information being supplied by the insurance company to the insured party on request, not just the holding broker.

One submission suggested that brokers be able to approach customers through ‘cold calling’. This submission also went on to suggest that brokers should be able to give clients advice on the investments that they already hold.

One submission suggested that insurance companies should not be able to cancel a broker’s agency on the basis of non-production.

Other Employers Liability and Public Liability Insurance Issues

Health and Safety Standards in Workplaces

Many of the submissions urged the development of a stronger workplace safety culture. Some submissions stated that companies with good safety management should be rewarded and those without it should be penalised, through their insurance premiums.

Compulsory Employers Liability Insurance

Two submissions suggested that employers liability insurance be made compulsory, while two others urged that it should not be made compulsory.

Motor Insurance Issues

MIAB Report

Many submissions recommended that the MIAB report recommendations be implemented as soon as possible. One submission also suggested that the Department should prepare a quarterly report on the implementation progress of the MIAB Report recommendations.

Penalty Points System

One submission suggested that insurance companies should be denied access to penalty points information. Another suggested that if the insurance sector is granted access to penalty points information, the Department must ensure that it leads to decreased premiums for drivers without penalty points.

Three submissions suggested that the penalty points system must be adequately enforced. Another submission suggested that the whole penalty points system be implemented as soon as possible. One submission suggested that the penalty points system be financed on the basis of a public private partnership.

Road Safety

Investment in road safety campaigns was cited as a priority in four submissions. One submission urged the government to invest in further road safety improvements.

One submission suggested a training scheme for new drivers be set up which would improve standards of driving, while another suggested that road safety and driving education be taught in secondary schools.

Another submission suggested that a dedicated Traffic Corps be established.

Beginner Drivers

In relation to beginner drivers, one submission suggested that such drivers should be treated as safe drivers until they develop a record as being otherwise. Another submission urged that beginner drivers be charged the average motor insurance premium (approximately €680) and should be loaded on the basis of the penalty points received.

Uninsured Drivers

One submission urged that the law against uninsured drivers be enforced. While two other submissions suggest that sanctions for driving without insurance be increased.

Miscellaneous Insurance Issues

Miscellaneous

One submission suggested that the Australian insurance system be examined.

One submission suggested that insurance company staff should have to acquire a minimum level of qualifications.

One submission suggested that an investigation be conducted into rehabilitation and alternative dispute resolution practices and their implementation in Ireland. This submission also suggested that those who unreasonably refuse to accept rehabilitation should have their awards reduced.

One submission suggested that easy access to relevant information and transparency is required via the Blue Book.

One submission suggested that the Government lobby Eurozone insurers and reinsurers for a fair share of capacity in the market.

Appendix B.2

Some Additional Issues Raised at the Committee’s Meetings

On Thursday 19 June 2003, the Joint Committee heard oral submissions from the Irish Hotels Federation and the Alliance for Insurance Reform (AIR).

The Irish Hotel Federation stated that the average increase in insurance costs suffered by the members who responded to a survey was 351%.

AIR highlighted the trend towards self-insurance and only having catastrophe insurance cover by some companies who cannot afford high insurance costs.

Both groups called for the damages for claimants to be awarded on the basis of equivalent awards in other European countries, rather than the award levels presently applied in the Irish courts.

It was highlighted that the ability of persons without means to take cases on ‘no foal, no fee’ basis meant that defendants could not recover the costs when they successfully defended an action.

There were complaints about the close relationship between the judiciary, the two legal professions and, in addition, the Taxing Master. The Taxing Master, it was argued, should be a non-lawyer and should be independent of the legal system.

It was stated that, in some parts of the country, there were only a limited number of barristers and they could be representing claimants one day and defendants another.

It was claimed that some judges were notoriously plaintiff orientated and that plaintiffs’ legal teams sought to have their cases heard by such judges.

It was also claimed that claimants shopped around for medical opinions until they received one that supported their case.

On Tuesday 1 July 2003, the Joint Committee heard oral presentations from the Insurance Industry Federation, Quinn Direct and Hibernian.

Again, the proposal was put forward that the Book of Quantum be based on the levels of awards elsewhere in Europe.

Quinn Direct stated that the award for a “straightforward arm fracture” in the Republic of Ireland was €15,000, in Northern Ireland €5,000 and in England the judicial Studies Board recommendation was €2,500.

Quinn Direct outlined a number of case examples. In one case example, their insured driver who was a named driver (male, full licence, aged 30, TPF&T), reversed into another vehicle at an estimated speed of 5mph. There was minimal damage to either vehicle. Quinn Direct’s insured driver was carrying three passengers and the other driver had four passengers.

Four whiplash claims were received from the third party car and three from the insured car. Quinn Direct treated the claims with caution from the outset due to the minor damage to the vehicles. The first case was settled in court for €20,500. Quinn Direct has subsequently settled five of the remaining claims out of court for €43,300, with one claim remaining outstanding. All claims came from the same solicitor. The breakdown of the cost to Quinn Direct is as follows:

Litigation, it was claimed, is overused, costly and the process is drawn out.

According to the IIF, the liability and motor insurance sectors have been losing money in recent years. The influences were both global and local. Premium increases are driven by – claims frequency, cost of claims, cost of awards and legal and professional costs.

It was noted that over 50 of the 67 recommendations of the Motor Insurance Advisory Board (MIAB) were addressed to government rather than the insurance industry.

The IIF stated that further improvements in road safety were necessary.

Hibernian Insurance stated that the key messages that they wanted to give to the Committee were:

-Ireland is not a safe place to drive or work

-Reduced costs equal reduced premiums.

Hibernian had undertaken a study of insurance costs in Ireland compared with other countries. The Tillinghast Study showed that:

-Personal injury awards are more than ten times higher than the UK

-Motor offence detection rates are low in Ireland by international standards

-Irish spending on occupational health and safely is approximately half the level of the UK

-Ireland has a poor safety record both on the roads and in the work place compared with Europe

Hibernian Insurance made a trading profit of €54 million before investment losses on a turnover of almost €1 billion in the past financial year.

Hibernian stated that the penalties for not insuring a vehicle were too low relative to the cost of insurance.

On Thursday 3 July 2003, the Joint Committee heard oral submissions from FBD Insurance and AXA Insurance

FBD stated that the underwriting experience of motor insurers had improved recently. This was due in large part to improved road safety practices and a developing improvement in the claims culture.

FBD stated that their premium increases were not of the order reported by the Irish Hotels Federation.

Both AXA and FBD assured the Committee that they had changed their approaches in relation to perceived fraudulent claims. They are now fighting all such claims and bringing them to court more and more. FBD referred to the IBEC Code of Practice in regard to consultation with the insured prior to settlement of claims and stated that they were now committed to such consultation. FBD also stated that there was now a much closer relationship between the insurance industry and the Garda Fraud Squad in relation to fraudulent claims and that they were happy with the pursuit of these by the fraud squad.

When asked why insurance companies had not taken a more aggressive approach on fraudulent claims in the past, FBD stated that the underlying legislation was not conducive to doing so. There had been no crime of insurance fraud; there was no requirement for plaintiffs to sign affidavits for claims and the infrastructure in relation to these issues had to be put in place to bring about real change.

AXA maintained that investment in road safety gave a return to the economy of eight times the cost.

AXA now gives at least 21 days notice of renewals.

AXA stated that the cost of insurance to a young male driver was €7,500, and for a young female driver the cost was €2,000. The average premium is €900.

AXA stated that they have introduced a new technology driven Tracksure. If a young male driver is prepared to accept satellite monitoring of his driving speed, he receives a discount of 40% of the insurance costs. At present, over 1000 young male drivers are on the system.

AXA stated that in 20% of accidents there was a dispute in relation to liability.

On uninsured drivers, AXA stated that it should be possible to remove a vehicle and to destroy it where the driver was uninsured.

FBD stated that by not removing a no claims bonus in the case of an accident, there was a much higher acceptance of liability which speeded up settlement of claims.

FBD agreed that if the fraudulent claims were removed, it may be that the real accident rate in Ireland is not higher than elsewhere.

On Tuesday 8 July 2003, the Joint Committee heard oral submissions from the Construction Industry Federation and the Small Firms Association.

CIF stated that insurance costs are now the second largest cost of running a construction business after labour costs.

CIF urged that PIAB be set up immediately and that its remit be extended to include public liability and motor claims.

CIF stated that insurance companies do not tend to defend ‘small’ claims of between €10,000 – €30,000 and will often settle claims outside the court depending on the judge sitting in the court on the day.

Refuting the claims by Hibernian that Ireland is not a safe place to work, CIF stated that the safety record on Irish construction sites compared favourably with the rest of Europe and that safety on sites is better today than in the past.

CIF called for bonding arrangements for insurance companies, similar to those for travel agents.

SFA stated that, in a survey of members, 21% of respondents ranked insurance costs as their number one problem, with 91% ranking it as a significant business concern.

SFA stated that, in the past year, 83 companies have gone out of business due to insurance costs with the loss of 2,060 jobs.

The survey of SFA members revealed insurance costs in 2002 had increased on average by 52% with:

-76% of respondents saying their claims experience had not changed

-15% of respondents saying their claims experience had improved

-9% of respondents saying they had experienced an increase in their claims

SFA also refuted the claims made by the Hibernian that Ireland is not a safe place to work. SFA cited a recent European Union Survey that placed Ireland as having the second safest workplaces in the Union.

SFA agreed that a special court with specially trained judges would be a welcome development.

SFA called for the scrapping of the 2% Government Levy which was no longer ring-fenced to protect insured parties.

SFA stated that in the Netherlands, where a non-adversarial system and a Book of Quantum exist, underwriters can easily quantify risk which contributes to lower insurance premiums and costs.

On Wednesday 9 July 2003, the Joint Committee heard oral submissions from IBEC and ISME.

IBEC stated that claims costs in Ireland were disproportionate, not because of the level of accidents, but because of Ireland’s compensation culture. IBEC quoted Eurostat statistics that Ireland’s rate of accidents in the workplace is only one third that of the E.U. average.

IBEC stated that the adversarial system helped neither party to the claim and was a barrier to the rehabilitation of the injured party.

ISME stated that over the past two and a half years, their members’ insurance premiums had increased by an average of 290%.

ISME stated that the legal profession was partly to blame for the current insurance market crisis, with most of the blame for the current situation lying with the insurance companies.

ISME were highly critical of the insurance companies’ business model, whereby they accepted an underwriting loss and offset it by making a profit on investments.

It was stated that those in the construction and engineering sectors were having the most difficulty in sourcing insurance cover.

On Tuesday 15 July 2003, the Joint Committee heard oral presentations from the Tánaiste and Minister for Enterprise, Trade and Employment, Ms Mary Harney T.D., and the Minister for Transport, Mr Seamus Brennan T.D.

The Tánaiste outlined that, initially, the PIAB will deal with employer liability claims but the Minister announced that she hopes its remit will be extended to include public liability and motor claims as soon as possible.

The Tánaiste detailed that the PIAB eliminates litigation costs (estimated to add in excess of 40% to the cost of compensation) for claims it decides upon, thus reducing the cost of delivering compensation. There will be independent assessors for medical, actuarial and accounting. The system will be paper based. The awards made will be on a par with those in the courts.

Unlike other court services, the Tánaiste envisages that the PIAB will operate six days a week from 8 a.m. until 8 p.m. and shall have a dedicated consumer phone line to address consumers’ queries in relation to the Board.

PIAB will be mandatory for all claimants, which will be the key to its success, according to the Tánaiste. The process will mean claims are handled quickly and easily, which the Tánaiste believes will encourage people not to go to the courts with their claims.

The Heads of Bill establishing the PIAB on a statutory basis have been published and the Tánaiste estimates that the relevant legislation should be passed by the Oireachtas by the end of 2003 and that the Board should be operational by early 2004.

The Tánaiste stated that the interim PIAB and State agencies such as NTMA were involved in preparing the Book of Quantum. The Book of Quantum will provide a guide to compensation for various categories of injury.

In relation to the collapse of the Independent Insurance Company, the Tánaiste stated that she believed it would be possible at the European level to address the concern to protect insurance holders in the event of a collapse of another insurance company. It was not possible for any country to underwrite the claims against insurance companies operating in its jurisdiction. IFSRA are in discussion on this issue at EU level.

The Tánaiste stated that the 2% levy was now a tax.

In relation to the new workplace health and safety legislation, the Tánaiste announced that the proposed new act was in the final stages of legal drafting. The new act will provide for very significant increases in fines and penalties for breaches of legislation.

In response to questions in relation to price control, the Tánaiste stated under EU rules it is was not possible to have insurance price control.

The Tánaiste stated that the issue of awards and whether they should be reduced was an entirely separate issue and not related to the PIAB proposals. The Tánaiste stated that, in her view, the level of awards was not high for genuine cases.

The Minister for Transport, Mr Seamus Brennan T.D., stated that since the introduction of the penalty points system the number of road deaths this year, as against the same period last year, is down by fifty. The numbers of injuries were down by 39% and claims are down by between 25% and 33%. The Minister announced that penalty points for not wearing seat belts would be introduced on 31 July. The complete implementation of the penalty points system will be completed within the next year.

Minister Brennan also announced that 50-60 new speed stationary cameras were being purchased which would be located at key locations. It was stated that these would be operational by Christmas. The Minister also stated that a new Road Safety Strategy is being devised.

As regards access to penalty points, the Minister outlined that information regarding the penalty points history of all drivers would be available immediately to the one insurance company with which agreement had been reached. This company has agreed to offer a 10% discount to all its customers without penalty points.

The Minister disputed the MIAB’s belief that only 13 of the 67 MIAB Report recommendations would lead to reductions in insurance costs. He believes that some of the other recommendations could lead to further reductions in insurance costs.

The Minister spoke of his efforts to address the backlog for driving tests. He told the Committee that he was in discussions with the existing driving instructors to encourage them to work longer hours to get through the waiting list. He has also considered subcontracting the work and bringing driving test instructors from Northern Ireland.

The waiting period for driving tests is now 16 weeks on average. There are 358,000 persons on provisional licences.

The Minister also spoke of the Driving Test Agency Bill, which will come before the Houses in the autumn. This Bill will require those sitting driving tests to show the tester that they have taken a course of driving lessons.

Minister Brennan said that he has had talks with the Minister for Education as regards introducing driving education into the transition year programme.

The Minister spoke of his intention to introduce legislation that would enable Gardai to breathalyse drivers whom they believe to have committed an offence under the Road Traffic Acts. This would eliminate the need for Gardai to form the opinion that a driver has been drinking before conducting a breathalyser test.

On the issue of zero tolerance for driving offences, Minister Brennan stated that he believed that an element of Garda discretion was necessary.

As regards speed limits, the Minister stated that there are plans in train to change speed limit signs from ‘miles per hour’ to ‘kilometres per hour’. The Minister also stated that he expected the complete revision of speed limits to have been given effect by the end of 2004.

Minister Brennan stated that approximately 70% of people driving motorcycles do not have a licence or a day’s training.

Minister Brennan also intends to tackle the issue of uninsured drivers. There are 80,000 uninsured drivers on the roads. He stated that the Motor Insurance Bureau of Ireland pays out €90 million annually to the victims of uninsured drivers, which adds about 10% to the cost of all motor insurance premiums. The Minister announced his intention to impound the cars of uninsured drivers.

The Minister also talked of his plans to experiment with using hard shoulders on some roads outside Dublin as bus lanes.

On Wednesday 16 July 2003, the Joint Committee heard oral submissions from The Law Society of Ireland and The Bar Council.

The Law Society recognised the following factors as contributing to the insurance crisis

-International developments

-The lack of competition in the insurance market

-The profitability of insurance companies operating in Ireland

-The high level of accidents

The Law Society felt that the shortening of the Statute of Limitations to 1 year might lead to injustice, as this period might not be long enough for some claimants to initiate proceedings.

It was stated that from 1 February 2003, the Law Society has operated a ban on personal injury advertising by solicitors.

The Law Society called for a cost benefit analysis of the PIAB and stated that PIAB would add an unnecessary layer of bureaucracy to the system. It was also stated that the fact that legal representation would not be paid for by PIAB would result in poorer people being denied justice.

The Law Society stated that it was not possible to only use a written procedure for evaluating claims.

It was noted by the Law Society that the MIAB report had shown that the profits of Irish insurers over many years were 10 times the profit level in the UK.

The Law Society stated that solicitors should be sent to jail if they knowingly take a fraudulent claim.

The Law Society stated that if reforms were to take place, the insurance companies should have to guarantee that lower premiums would follow.

The Law Society stated that if even a fraction of the money being spent on setting up PIAB was given over to implementing the Law Society’s 50 reform recommendations, great efficiencies could be achieved.

The Law Society stated that percentage charging was illegal. One member had recently been struck off for engaging in the practice.

The Law Society pointed out that the often quoted statistic of legal costs being 40% of claims was incorrect. The correct statistic was that legal costs were 28%. These costs included all professional fees of doctors, solicitors, barristers and engineers. There was VAT on legal fees of 21%.

According to the Law Society, litigation costs in Ireland and Britain were broadly similar. In Britain, legal costs were, on average, 107% of awards.

The Bar Council stated that they were in favour of reform and identified three issues driving insurance costs

-The cost of delivery

-Safety

-The part played by insurance companies

The Bar Council stated that PIAB would be a “new and unnecessary layer of bureaucracy” to the present personal injury litigation system. They called for a cost benefit analysis of PIAB.

The Bar Council refuted the Irish Insurance Federation’s “grossly distorted statistics” on the issue of lawyers fees.

The Bar Council called for implementation of its proposals on reform of the court system. It was stated that the rationale for the introduction of the PIAB was based on the false assumptions that the cause of the problem was the high cost of litigation and that the answer was to “create a lawyer-free zone”. It was stated that PIAB would create competing jurisdictions to the detriment of reform.

The Council proposed the following reforms to the present system.

-Amendment of the Statute of Limitations

-New rules in relation to the processing of personal injury claims

-Permitting each side in an action to address the court on quantum

-The introduction of legislation to deal with fraudulent and/or deliberately exaggerated claims, and updating the law with regard to perjury.

It was stated that fraudulent and exaggerated claims can only be tackled in open court under investigation. PIAB as a paper-based system with no investigative process will not achieve such an outcome.

It was stated that, as the bulk of these reforms were contained in Minister McDowell’s Bill, the need for the PIAB had been eliminated.

It was stated that since the introduction of the Euro, the level of awards had decreased by 27%, possibly because judges had become more conservative. There had been a consistent decline in the number of claims. Courts were taking a more stringent approach to personal injuries cases coming before them.

It was stated that barristers’ fees account for 3.5% on either side in personal injuries cases.

The Bar Council stated that it opposed a Book of Quantum as being too rigid and not taking account of different claimants’ circumstances.

The Bar Council stated that they would have no difficulty in seeing judges undergo training for dealing with insurance cases.

According to the Bar Council, 90% of claims are settled without a court hearing. Many were settled on the day of the court case.

In response to a question about why solicitors did not practice in court in order to save on barristers fees, both professions stated that such an arrangement would be “impractical”.

The propensity of parties to settle on the steps of the court was criticised and an explanation for these late settlements was sought. The Bar Council stated that it was possibly because parties did not want to endure cross-examination. The Bar Council added that lot of people settled on the steps of the court through “terror” and when faced with the reality of doing so, they did not want to go before the court. They stated that there should be a compulsory meeting before court costs were incurred. The mediation idea proposed in the new Bill was a good idea.

The Bar Council stated that barristers took cases on a “no foal, no fee” basis. The Law Society also defended the practice, as there was no provision for Civil Legal Aid.

Both professions stated that it was not possible to “shop around” for “Santa Claus” judges.

On Tuesday 22 July 2003, the Joint Committee heard oral submissions from the Minister for Justice, Equality and Law Reform, Mr Michael McDowell T.D., and Ms Dorothea Dowling, Chairperson of MIAB and of the Interim PIAB

Minister McDowell stated that he believed that reducing the statute of limitations from three years to one left claimants with a “perfectly adequate” length of time to take a claim. The Minister added that this deadline would not apply to children, those too incapacitated to claim earlier and those who could not have been aware of their injury until a later date.

The Minister stated that under Heads 5 to 13, emphasis is placed on early notification of the claim to the defendant, the furnishing of detailed pleadings, provision for strict time limits and the need for an affidavit to verify the contents of the pleadings.

The Minister stated that the purpose of the two-month letter was to notify the other side of the potential claim. If this letter were not issued, then a claimant could be penalised on costs.

The Minister also outlined that, at present, a High Court plenary summons contains minimal information. He proposes that the statement of claim will be outlined to the High Court at this point.

The intention of Head 12 is that a person who includes false material in his/her pleadings will be guilty of perjury. In order to get around the necessity for corroborating evidence to secure a conviction for perjury, the Minister stated that a separate offence of swearing a verifying affidavit falsely will be created with a maximum penalty of a fine and/or ten years imprisonment.

In response to a question as to whether the Minister thinks that people who make fraudulent claims will be sentenced by the judiciary to serve prison sentences of up to ten years, the Minister said that he did see this scenario unfolding in the future.

The Minister stated that some insurance companies are keeping a database of previous claimants.

The Minister stated that he is considering a possible provision to enable the Attorney General to intervene in certain types of litigation to allow him/her to point out the public dimension to a private claim and to look at the public implications of such a claim.

The Minister is also considering restricting liability in certain situations, such as sporting, community and domestic activities, to wilful default or gross negligence. He noted that a higher degree of negligence is required to be proven for such events in Australia.

The Minister stated that he would be prepared to look at court reform regardless of PIAB’s existence.

The Minister stated that he would be willing to consider changes to the Taxing Master system of deciding costs but that it is not something he will have time to consider under present legislation. He stated that he was not wedded to the Taxing Master system.

The Minister stated that PIAB should take on many of the 90% of cases not being presented to court at present.

The Minister stated that he would like to see the judiciary having access to the Book of Quantum. He stated that PIAB award levels must be similar to those available in the court, otherwise PIAB would be bypassed.

In considering award levels for the Book of Quantum, the Minister acknowledged that the focus of attention should not be limited to just Ireland.

Where a claimant does not accept a PIAB award and commences actions in the court, where an award is granted which is equal to or less than the PIAB award, the Minister stated that the claimant would be liable for “the costs of his/her unreasonableness”.

The Minister stated that Ireland has a much higher rate of barrister dependence than in the UK.

The Minister stated that if we were to adopt the UK’s Woolf Reforms, as advocated by the Bar Council, this could result in a more lawyer intensive and court driven system with increases in solicitor and barrister costs, as has been the case in the UK.

The Minister stated that the duty of care standards seem to be higher in Ireland and the UK than in the rest of the EU.

The Minister stated that, in the past, the Irish judiciary seemed insulated from the economic impact of their judgements. The Minister noted that he believes there is a new climate developing in Ireland which is more sceptical of the compensation culture and which must be built upon. Furthermore, he added that he believed that the judiciary are becoming more attuned to economic thinking.

On advertising by solicitors, the Minister stated that he did not believe that the advertising of some legal services was a good thing.

On being pressed to give priority to the proposed Civil Liability and Courts Bill, the Minister said he would ask that both Houses would allow the legislation through before Christmas.

The Minister noted that there are two kinds of approach to awarding damages. The first exists in Ireland at present, where damages are awarded on the basis of what future pain and suffering a claimant might face as a result of their injuries. The second is that the claimant should have a remit to return to the courts to review their reward on the basis of the pain and suffering they face in the future. He was not certain which was the best and most appropriate approach. However, there was merit in closing the files on cases.

Ms Dorothea Dowling, Chairperson of MIAB and of the Interim PIAB, stated that genuine victims are failed miserably by the present personal injuries system.

Ms Dowling stated that 90% of policyholders have not been involved in insurance claims.

Ms Dowling stated that in 1994 there were seventeen competitors in the market, today there are five. The number of cars on the roads has increased by 70%. Two companies account for 50% of the market.

Ms Dowling stated that there is a high volume of low value personal injury claims. There are three times as many injury claims in the Circuit Court than in the High Court.

Ms Dowling stated that insurance was costing twice what it should but there are no quick fixes.

Ms Dowling stated that award levels for serious injury in Ireland are similar to those in the UK, but award levels for minor injuries greatly exceed the equivalent UK levels.

According to the MIAB report, 4% of injury claims in the UK require the use of a lawyer, whereas 70% of injury claims in Ireland require a barrister or a solicitor. Less than 10% of claims end in court. Ms Dowling stated that most litigation costs are, therefore, paid out for claims that, in general, do not end up in court.

Under the Health (Amendment) Act, 1986, people normally entitled to free health care do not get this benefit if they are involved in a road accident. The MIAB report recommended that this be overturned but the Department of Health and Children has rejected this. Ms Dowling claimed that health boards will normally pursue these people for the €600 a night cost of their stay in hospital, which, as a result, fuels the compensation culture in Ireland. The €600 a night was considerably in excess of what would be accepted from the health insurers. In addition, she added that this action also has the effect of driving up premiums, causing job losses and results in lost tax revenues which could be spent on the health service. She stated that there was a need for “joined up thinking” on the matter.

Ms Dowling quoted the Bacon Report commissioned by the Bar Council (page 5) which states that a lower level of accidents are paid for by the State in Ireland than elsewhere.

On being asked whether the inability to invest more than 15% was causing losses to insurance companies Ms Dowling stated that there were similar regulations throughout Europe. We must ensure that our regulations are not keeping out new entrants.

Ms Dowling stated that the highest emphasis placed on fraudulent claims comes from those in the self-insured sector.

Ms Dowling stated that the Data Protection Commissioner is reviewing proposals that would allow access to data regarding repeat claimants.

Ms Dowling stated that there is a complete lack of transparency in the calculating of costs. Ms Dowling stated that MIAB was not confident in the way that the Taxing Master addressed costs.

Ms Dowling stated that the UK Woolf Reforms actually increased insurance costs. There was a growing crisis in the UK.

Insurance companies, she argues, traditionally accepted that underwriting costs will be less than premiums and that the balance will be made up by investment income.

Ms Dowling stated that an EU Directive on the harmonisation of motor insurance proposes “no fault” compensation for cyclists and pedestrians involved in traffic accidents. While this may be acceptable in mainland Europe, Ms Dowling argued that this is not the case in Ireland. Ms Dowling stated that this would impose a further burden on insurance costs, if adopted.

Ms Dowling stated that there are no barriers to companies engaging in self-insurance in Ireland, except regarding compulsory road insurance. Opportunities for self-insurance should be extended to this area.

Ms Dowling noted that although the Law Society introduced a voluntary ban on no foal no fee advertising, little seems to have changed to date. She referred members of the Joint Committee to the Golden Pages for 2004. However, only 2% of solicitors advertised. The Law Society had refused to undertake a specific audit to determine if solicitors were charging a percentage of settlements.

Ms Dowling stated that the Book of Quantum now being draw up relied upon figures for claims dating from January 2003.

In assessing damages, Ms Dowling stated that the PIAB would validate income against Revenue and Social Welfare records.

Ms Dowling stated that a respondent to PIAB will pay a fee (a fraction of the current litigation costs) which will pay for the PIAB.

Ms Dowling stated that some of the MIAB recommendations are not being dealt with by legislation.

Assessments by PIAB will be made by the treating doctor or a panel of independent experts. Medical examiners will be located throughout the country.

Ms Dowling said that PIAB will cost €8 million, will have just over 100 staff and will address 27,000 claims annually. The hope would be that the number of claims would diminish as the Book of Quantum awards are accepted.

Ms Dowling stated that she did not see the PIAB replacing the courts for personal injury claims, stating that the courts will always deal with matters of law.

According to Ms Dowling, it is not possible to do a cost benefit analysis on the PIAB, as it does not exist. The Taxing Master had refused to make cost information available so that PIAB could benchmark its own performance.

On being asked whether persons submitting claims to PIAB should be entitled to the use of a lawyer, she stated that there is no constitutional right to legal costs.

Ms Dowling estimates that the PIAB will be up and running by January 2004.

According to Ms Dowling, given our claims profile, new insurance companies will not be attracted into the Irish insurance market unless insurance companies can make a profit.

Ms Dowling stated that the MIAB did not find evidence of a cartel operating in the insurance market, although they found some aspects of the market that could not be logically explained. Consequently, MIAB recommended that the Competition Authority investigate this behaviour.

Ms Dowling stated that more has been done in the last nine months to reform the insurance market than in the previous nine years.

On Wednesday 23 July 2003, the Joint Committee on Enterprise and Small Business, heard oral submissions from IBA, PIBA, ICTU and IRHA on the matter of insurance reform.

The IBA stated that there were many causes of the current problem, most notably a shortage of capacity in the insurance market. The IBA stated that actions were required regarding:

-Reform of the legal system

-Safety improvements

-Compulsory insurance for SMEs

-Ensuring policyholder protection

-Making the 2% insurance levy available to SMEs that cannot get insurance

-Revival of the declined risks scheme for liability insurance

-Employers practising HSA monitored risk management should get premium reductions and that this scheme should be funded by insurers, the State and the banks (who will benefit from lower numbers of clients going insolvent)

In relation to the issue of new entrants to the market, PIBA made the point that the size of the Irish market is equivalent to that of the Greater Manchester area and that, consequently, there would never be a queue of companies trying to break into the market.

PIBA stated that the market for general insurance is dangerously close to a monopoly situation and that of the 5 main insurers, only Hibernian and AXA were genuinely open to new business. Two others were very selective in the risks they

would underwrite and the other would only engage in renewals. PIBA stated that insurance companies were involved in market segmentation on a wide scale.

PIBA described brokers as “the engine of competition”. PIBA stated that mergers in the insurance sector had thwarted competition. PIBA stated that brokers make it easier for foreign insurers to operate in Ireland, rather than setting up their own costly distribution system.

PIBA was highly critical of production targets set down by insurance companies. If brokers do not bring a certain amount of business to these companies each year, their agencies are cancelled.

PIBA wanted the following legislative changes:

-Legislation to end the practice of cancelling agency agreements for failing to meet production targets

-Legislation to require insurance companies to give agency facilities to all Multi-Agency Intermediaries

-Legislation to require insurance companies to deliver products through different distribution channels at the same wholesale price, thereby creating a level playing pitch

-Legislation to bar insurance companies from discriminating on terms offered to brokers.

PIBA stated that the five main underwriters were Hibernian, AXA, Eagle Star, Royal Sun Alliance, and Allianz.

Both PIBA and IBA assured the Committee that their members were committed to shopping around for the best insurance quotes and further stated that this was a legal obligation imposed on them.

The IBA stated that the cost of uninsured drivers was adding between €100 and €120 per annum to insurance premiums. They cited technology in use in Northern Ireland and the rest of the UK that enabled the insurance details of cars to be recorded remotely by police. Enormous numbers of uninsured vehicles had been impounded as a result.

In response to a question about market segmentation, PIBA stated that insurance companies decided upon the types of risks e.g. young males etc. that they were and were not willing to underwrite.

In response to a question on regulation, the IBA stated that the Central Bank and IFSRA regulations did not reflect best practice in certain cases and that these regulations were putting brokers under pressure.

The IBA stated that Ireland was not a safe country in which to work.

The IBA stated that they favoured self-insurance and saw a role for brokers in this.

In response to a question, PIBA stated that there was, at present, no obligation on brokers to disclose their fees. PIBA stated that they were not aware that brokers had arrangements with insurance companies whereby insurance companies would not quote directly at lower prices than the brokers were offering. It was stated that the opposite was happening i.e. that insurance companies were undercutting brokers.

PIBA were in favour of scrapping the 2% levy. IBA wanted it used as a fund for those experiencing insurance difficulties.

The rising cost of professional indemnity insurance was noted and it was stated that this was not the result of a rise in claims.

In regard to a question on whether brokers tried to place business outside Ireland, it was stated that this was difficult and often just as expensive, as Lloyds syndicates would double the premiums because the business came from Ireland because they knew the insurance could not be sourced in Ireland.

It was stated that the ban on cold calling brought in by the Central Bank harmed brokers, as insurance companies were permitted to sell their products direct through this method.

In response to a question about whether insurance companies should be allowed to invest more in property due to the softness of equities, it was stated that solvency requirements forced companies to sell equities at the bottom of the market.

In response to a question about changing the payment of brokers from a commission-based to a fee-based system, PIBA stated that they would have no problem with this.

ICTU stated that while compulsory employers liability insurance should be a long-term goal, in the short-term it would not be desirable, as premiums were too high for many companies to meet.

ICTU stated that in the past, insurance companies were happy not to settle cases, as the longer cases went on the more money the companies made from investment income.

ICTU stated that there was no compensation culture in the workplace and that the compensation culture was limited to the area of public liability claims. As employees have a relationship with their employers, they are always slow to make a claim.

ICTU stated that there were far more accidents at work than claims.

ICTU stated that the present adversarial system, in which the defendant and his insurance company “played hardball”, meant that exaggerating injuries was “part of the game” and should not be treated as criminal fraud.

ICTU stated that if PIAB awards were brought in line with UK award levels, ICTU would have to “re-evaluate” their support for PIAB.

In relation to whether or not Ireland is a safe place to work, ICTU stated that cross-country comparisons were very difficult to undertake accurately. ICTU stated that the data collected by other EU countries was of a far higher standard to that collected in Ireland. ICTU stated that comparisons across sectors were relevant but, as some countries have a great deal of heavy industries e.g. logging, mining etc., comparisons of headline figures could be misleading.

When asked if ICTU were happy with PIAB, they stated that they had three concerns:

-The costs of medical checks should be borne by PIAB

-The cost of any legal input for the claimant should be borne by PIAB

-Awards in the Book of Quantum should be index linked or the whole system would fall into disrepute

ICTU stated that they supported introducing a new crime of corporate manslaughter but felt that there would be little use for it in practice. However, its enactment would send a message to employers. It was stated that our health and safety legislation was second to none but that penalties were weak and enforcement was poor due to the HSA being under resourced.

It was stated that there was significant room for improvement in our accident figures. ICTU stated that safety standards in Scandinavia, UK and Germany were ahead of those in Ireland but that Ireland fared better than Spain, Portugal and others. It was stated that criminal prosecutions took up an inordinate amount of inspectors’ time.

ICTU stated that their experience of self-insured companies was not a poor one.

ICTU stated that a lawyer-free PIAB was not achievable but that ICTU would help their members to fill in forms etc.

The fact that a Health and Safety Bill had been agreed with the HSA two years ago but had not been implemented was said to be disappointing.

It was stated that the power to close sites due to health and safety violations was first used in 1997 and that this had a huge impact. 35 sites were closed last year but this was done on the basis of a private agreement. ICTU felt that this should be done through the courts. The ratio of health inspectors to workers in Ireland was said to be low by European standards.

The Irish Road Haulage Association stated that they had never been contacted by an insurance company to find out if it could improve its product. The IRHA stated that over the years there had been huge productivity gains made by many service providers to the haulage industry but none from insurance companies. The IRHA stated that at least 30 haulage companies had gone out of business in the past 3 years with the loss of 500 jobs.

It was stated that cartel-type behaviour was prevalent in the insurance industry.

It was stated that insurance companies regard brokers as their customers and that often brokers are just another layer of costs in the system.

The IRHA stated that there are two specific areas they would like to see addressed.

-The costs of uninsured drivers should be borne by the State, as the problem stems from poor law enforcement. At present, it is borne by policyholders. He stated that this created an unfair tax on law-abiding companies.

-Insurance companies are acting in a lazy fashion in regard to liability insurance and did not know “how to compete”.

The IRHA stated that it was totally committed to road safety but that it was dangerous to talk about insurance and road safety together. From an insurer’s point of view, road safety is a factor in pushing up the cost of insurance but this is where the crossover ends.

In response to a question on whether the IRHA had evidence of anti-competitive practices for the Competition Authority, it was stated that they had tried to secure this evidence but that what they presented to the Competition Authority was insufficient for action. The IRHA stated that they believed there were up to 100 potential whistleblowers in the industry and expressed the wish that one would come forward.

The IRHA stated that if penalty points improved road safety, they were to be welcomed. However, they were critical of the roll out of the penalty points system. Several non-safety related offences should be removed e.g. cracked mirrors attract a penalty point.

No information was available on the safety record of Irish hauliers compared to hauliers in other EU countries.

The IRHA had sought to arrange a training scheme with FÁS but could not get co-operation from insurance companies.

It was stated that brokers and insurance companies are little help in risk management. It was stated that the hauliers would welcome compulsory employers liability insurance.

It was stated that the 2% levy was a tax.

The IRHA believed that public safety was paramount. The IRHA stated that allowing drivers to use provisional licences was no longer the norm.

In response to a question, it was stated that some hauliers had started to register their companies abroad in order to avail of lower premiums. It was stated that efforts to obtain insurance cover from abroad for Irish registered vehicles had failed due to Irish regulations.

On the issue of preventing truck drivers driving while speaking on mobile phones, the IRHA fully supported the use of hands-free sets. A deal had been struck with O2 to allow a reduction in the cost of these.

Appendix B.3

The Burden on Business – The Case for Change

Businesses have experienced enormous increases in the cost of insurance over the past few years. According to an SFA survey, 92% of businesses regarded insurance costs as a significant business problem. Evidence presented to the Committee in written submissions and during oral hearings has shown the extremely large percentage increases.

The IHF stated that the results of one of its surveys showed that the mean increase in members’ premiums between 2000 and 2003 was 351%.

ISME stated that their members experienced an average increase over the past 2 1/2 years of 290% and that businesses spent an average of 2.5% of their turnover on premiums.

According to the IHF, between 2000 and 2003, excesses on insurance policies have increased by over 2000%.

According to SFA, many businesses have to now borrow to pay their insurance premiums.

Approximately 10%, or 350, ISME members are self-insured and a recent article in The Sunday Times indicated that 10,000 Irish businesses were uninsured. As a result of being uninsured, the directors of these companies are personally liable for accidents that occur on their premises.

ISME stated that high insurance costs were acting as a barrier to start-ups and thus stifling wealth creation.

According to AIR, the dramatic rise in insurance costs and the difficulty experienced by many businesses in finding insurance quotes has already forced the closure of a number of businesses and lead to a loss of employment. In a recent ISME survey of 1000 companies, 400 companies stated that they anticipated job losses.

IBEC stated that high insurance premiums had a significant effect on business because:

• Premiums are a bottom line cost i.e. they come out of profit
• They are a cost that recurs annually
• There is no correlation between business performance and premium costs
• Unlike most other costs, premiums have to be paid in advance
• Insurance increases are not easily passed on to customers

According to the IHF and others, no matter what steps businesses take to manage and reduce risk, there is little or no impact on the premiums charged. This may lead to a situation where businesses no longer see the benefit of striving to eliminate risk.

Appendix C.1

Implementation of MIAB Recommendations

Recommendations Relating To Department Of Transport

Recommendations Relating to Department of Transport & Department of Justice, Equality and Law Reform

Recommendations Relating To Department Of Justice, Equality And Law Reform

Recommendations Relating to Department of Justice, Equality and Law Reform & the Incorporated Law Society of Ireland

Recommendations Relating to Department of Enterprise, Trade & Employment

Recommendation Relating to Department of Finance

Recommendations Relating to Department of Finance in Relation to IFSRA Legislation

Recommendations Relating to IFSRA

Recommendation Relating to Department of Health and Children

Recommendations Relating to the Irish Insurance Federation

Recommendation Relating the Irish Insurance Federation & IBEC

Recommendations Relating to the Competition Authority

Totals

Appendix C.2

Personal Injuries Assessment Board Bill, 2003

DRAFT SCHEME OF A BILL

AN ACT TO PROVIDE FOR THE ESTABLISHMENT OF A PERSONAL INJURIES ASSESSMENT BOARD, TO GIVE POWER TO THAT BOARD TO ASSESS APPROPRIATE COMPENSATION FOR GENERAL DAMAGES AND SPECIAL DAMAGES RESULTING FROM CLAIMANTS’ INVOLVEMENT IN ALLEGEDLY NEGLIGENT ACCIDENTS, AND RELATED MATTERS AND TO AMEND LEGISLATION……

Personal Injuries Assessment Board Bill, 2003

PART 1: PRELIMINARY AND GENERAL

1:Short title, collective citation and construction

2:Commencement

3:Definitions and Interpretation

4:Regulations

PART 2: ESTABLISHMENT OF PERSONAL INJURIES ASSESSMENT BOARD

5:Establishment of the Personal Injuries Assessment Board

6:Functions of the Personal Injuries Assessment Board

7:Procedures of the Personal Injuries Assessment Board

8:Scope of Legislation

9:Mandatory Referral of Claims to the Personal Injuries Assessment Board

10:Respondent intent on pursuing legal issues in the Courts

11:Application for assessment by the Personal Injuries Assessment Board

12:Awards

13:Enforceability of Personal Injuries Assessment Board Assessments

14:Membership of the Board of the Personal Injuries Assessment Board

15:Appointment and duties of Chief Executive Officer

16:Staffing

17:Indemnity for members of the Personal Injuries Assessment Board

18:Funding of the Personal Injuries Assessment Board

19:Strategic Plans and Work Programme of the Personal Injuries Assessment Board

20:Annual Report and Accounts

21:Disclosure of interests by Board Members

22:Disclosure of interests by Staff

23:Superannuation

24:Obtaining information for purposes of making assessments

25:Interface with the Courts

26:Exemption from rules of Law Society and Bar Council

27:Effective service of PIAB documents

28:Membership of the Oireachtas

PART 1: PRELIMINARY AND GENERAL

Head 1

Short title, collective citation and construction

Provide for Short Title of Bill: This Bill may be cited as the Personal Injuries Assessment Board Bill

Explanatory Note

Drafted as the standard citation clause.

Head 2

Commencement

Provide that: This Act shall come into operation on 1 January 2004.

Explanatory Note

Drafted as the standard commencement clause.

Head 3

Definitions and Interpretation

Provide that:

In this Act:

“application form” means any form of application determined by the PIAB;

“award“ means an award of compensation;

“Minister” means the Minister for Enterprise, Trade and Employment

“Claimant” means the person who has been involved in an accident or the lawful dependents of a person fatally injured or a person taking an action on behalf of a minor or vulnerable claimant

“prescribed” means prescribed by regulations made by the Minister;

“Respondent” means the party from whom the claimant seeks compensation

“Release Certificate” means a certificate which must be issued by the PIAB before claimant can commence litigation. …

“General Damages” means compensation for pain and suffering

“Special Damages” means re-imbursement of losses and expenses including property damage.

“Personal Injury” means…….as defined in Civil Liability Act.

Explanatory Note

This Head provides definitions of key words/terms used in the Bill.

Head 4

Regulations

Provide that:

(1) The Minister may, by regulation prescribe any matter or thing which is referred to in this Act as prescribed or to be prescribed.

(2) The Minister may prescribe by regulation any matter specifically referred to as being capable of being done by regulation.

(3) The Minister may by regulation amend or revoke a regulation under this Act.

Explanatory Note

This section gives the Minister power to prescribe by regulation any matter or thing referred to in this Act as prescribed or to be prescribed.

The Minister is also given the power to amend or revoke any regulation under this Act.

PART 2: ESTABLISHMENT OF PERSONAL INJURIES

ASSESSMENT BOARD

Head 5 Establishment of the Personal Injuries Assessment Board

Provide that:

The Personal Injuries Assessment Board shall be designated by the Minister to be the body that shall perform the functions expressed in this Act.

The Personal Injuries Assessment Board shall be a Statutory Body established by legislation.

The Personal Injuries Assessment Board will be independent in the performance of its functions.

Explanatory Note

The purpose of this Head is to provide that the PIAB shall be established by legislation as a Statutory Body with procedures defined by a rules committee.

Head 6

Functions of the Personal Injuries Assessment Board

Provide that:

The PIAB shall have, in addition to the functions assigned to it by any other provision of this Act, the following general functions:

to make assessments of the amount of monetary compensation which the PIAB considers appropriate in cases of personal injuries suffered by claimants in cases referred within the remit of the PIAB

such further functions as shall be approved by the Minister

The PIAB shall have all such powers as are necessary or expedient for the performance of its functions.

When considering an application under this Act the PIAB –

(a) shall not address any issue of fault or negligence arising out of evidence given in an application under this Act, and

(b) shall not make a finding of fact relating to fault or negligence referred to in paragraph (a)

The PIAB may give directions for the purposes of exercising its functions under this Act

The PIAB shall not be applicable to claimants covered by the Garda Síochána Compensation Act, the Criminal Injuries Compensation Tribunal for prison officers, or claimants covered by any other state compensation scheme.

Explanatory Note

This Head sets out the main functions of the PIAB. It also states that the PIAB will not be applicable to claimants covered by any other state compensation scheme.

Head 7

Procedures of the Personal Injuries Assessment Board

Provide that:

Subject to this Act, and in accordance with the principles of natural justice and fair procedures, the PIAB shall have the power to create and amend its own rules and procedures as published by the Rules Committee of the PIAB, which committee shall consist of members of the Board and appropriate external experts.

Explanatory Note

The PIAB will establish a Rules Committee (with expert assistance from the Chartered Institute of Arbitrators) to draw up these details, allowing the flexibility which real time operations require. At the time this legislation goes forward we will have available the first copy of the Rules in question backed up with a layperson’s leaflet such as that used in the Small Claims Court system.

Head 8

Scope of Legislation

Provide that:

At the commencement date of this legislation the scope of the legislation will refer to personal injury claims made by employees against their employers based on allegations of negligence/breach of statutory duty/contract or any or all of these.

The Minister may make regulations to extend the scope of the legislation from just employer liability claims to motor accident, public liability and other types of claims

Explanatory Note

Provision needs to be made for the Minister to make commencement and extension orders starting with Employers Liability then extending to Public Liability and motor (together or separately and not in any prescribed order) leaving the potential for further extension open. It also allows the Minister to extend the scope of the legislation to other types of claims.

Head 9

Mandatory Referral of Claims to the Personal Injuries Assessment Board

Provide that:

All Personal Injury claims (which fall within the remit of the PIAB – as per Head 8), which are not the subject of litigation at the commencement date, shall be referred by the claimant to the Personal Injuries Assessment Board for assessment prior to the commencement of any litigation in the Courts.

The PIAB shall also be empowered to undertake assessments referred on foot of an “ad hoc” agreement between parties to existing litigation but shall not be bound to accept such referrals.

Explanatory Note

This Head is to provide for mandatory PIAB referral to apply to all claims which are not the subject of litigation as at the effective date (different times for EL and PL/Motor) rather than just accidents after a certain date. Such an approach is consistent with the Courts Acts which increase the financial jurisdictions from time to time. Referral to the PIAB only comes into operation after the person has made their claim in the usual way but cannot secure an acceptable settlement from the respondent – this will be enshrined in the Rules of Procedure.

Additionally parties may choose to seek a PIAB assessment on a currently outstanding litigation case.

Head 10

Respondent intent on pursuing legal issues in the Courts

Provide that:

In cases where the respondent intends to pursue issues of legal liability the PIAB will not proceed with an assessment and will issue a Release Certificate.

In cases where the PIAB proceeds to assessments -if either or both parties reject the PIAB assessment a Release Certificate will be issued.

The Release Certificate will require proceedings to be issued within 6 months of the date of the cert. if the claimant decides to pursue litigation.

Nothing in this legislation prevents parties from reaching a mutually acceptable settlement at any stage.

Explanatory Note

The legislation needs to establish a bar on commencing legal proceedings without a Release Certificate from PIAB (either because case is a liability fight or parties have not accepted PIAB assessment) and equally the fact that on notification to PIAB time ceases to run under the Statute of Limitations - both of these aspects of PIAB legislation will require matching amendments under existing Statutes and under the Rules of Court.

Head 11

Applications for assessment by the PIAB

Provide that:

An application for assessment of compensation shall be made in such form and manner as the PIAB may determine and publish

The making of a claim to the PIAB does not involve the waiver of any other separate right of action by the claimant (subject to the provisions of Head 9)

A respondent’s agreement to a claimant’s submission for PIAB assessment is not to be used as a binding admission of liability nor in any other manner to prejudice subsequent Court proceedings.

In considering and assessing a claim before it, the PIAB shall adopt an inquisitorial ethos and shall rely primarily on written medical or other written reports, and shall make such reports available to the parties.

In cases where medical evidence provided by the claimant is disputed by the respondent the PIAB will request that the claimant submit himself/herself to an independent medical examination as provided for by the PIAB. In the event of claimant not co-operating with this the assessment will proceed on the basis of the respondent’s submission.

Explanatory Note

This Head sets out how an application for assessment should be made and how the PIAB will proceed to making an assessment.

Head 12

Awards

Quantification of appropriate compensation shall be undertaken by assessors employed by the PIAB with the assistance of appropriate experts.

An assessment shall be made 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.

Any award for general or special damages shall be made on the basis of a single lump sum.

The Board may allow the claimant such expenses as are directed to be incurred by the PIAB.

Subject to subsection (x on minors etc), where the PIAB issues an assessment, the claimant shall have a period of one month or such greater period as may be prescribed to decide in writing either to accept or reject the award.

If a claimant neither accepts nor rejects an award within the period referred to above, the claimant shall be deemed to have rejected the assessment.

If the respondent fails to respond to the award within this prescribed period then the respondent will be deemed to have accepted the assessment.

Where a claimant accepts an award of the PIAB, the claimant waives any right of action which the claimant may otherwise have had against any party and shall discontinue any other proceedings instituted by the claimant arising out of the circumstances of the claimant’s claim before the PIAB.

Where a claimant accepts an award the PIAB shall issue an Order to Pay.

Where a claimant does not accept an award within the time and in the manner provided in this section, and proceeds with any right of action she or he may have, the respondent will not in such proceedings to which it is a party rely for the purposes of the Statutes of Limitation, 1957 and 1991, upon the period between the date of the claimant’s application to the Board and the date of the Release Certificate

In the case of an award to a claimant who is a minor, a vulnerable claimant, or dependant(s) in the case of a fatality, the acceptance of the award shall be subject to the approval of the High Court or Circuit Court of an application by the PIAB on foot of a special summons.

Explanatory Note

This Head provides for details concerning awards of the PIAB and how they will be dealt with.

Head 13

Enforceability of PIAB assessments

Where a PIAB assessment is accepted by the claimant an Order to Pay will issue. An order to pay issued to respondents shall have the same legal force as Court awards for the purposes of enforcement and for penalties in the event of delayed payment

An Order to Pay will not issue, notwithstanding the claimant’s acceptance of an award, if the respondent rejects it.

Explanatory Note

This Head provides that PIAB Assessments are accorded the same legal status as judgment debts awarded by the Courts with all the delay penalties such as interest etc. imported from the relevant existing legislation.

This will require amendments to other legislation e.g. Debtors (Ireland) Act 1840, Courts Act, 1981

Head 14

Membership of the Board (of PIAB)

Provide that:

The number of members on the Board shall be no more than 11, including the chairperson and Chief Executive.

The non-executive members of the Board shall be appointed by the Minister and shall be eligible for re-appointment and shall include:

1. 2 members on the basis of nominations from the Irish Congress of Trade Unions;
2. 1 member from the Irish Business and Employers Confederation;
3. 1 member from the Irish Insurance Federation;
4. The Director of Consumer Affairs; and
5. The Consumer Director of the Irish Financial Services Regulatory Authority.

In appointing members, the Minister shall have regard to the need for appropriate expertise on the Board.

The term of office of a member of the Board shall be specified by the Minister when appointing such a member

A member of the Board may, by letter addressed to the Minister, resign his membership – the resignation takes effect on the date the Minister receives the letter.

The Minister may at any time, for stated reasons, remove a Member of the Board from office.

Whenever a vacancy occurs in the membership of the Board and is caused by the resignation, removal from office or death of an ordinary member mentioned in any part of subsection 2, the vacancy shall be filled by the Minister by appointment in the manner specified in that subsection.

In the case of a member of the Board filling a vacancy caused by the resignation, removal from office or death of a member before the completion of the term of office of the last-mentioned member, the member filling that vacancy shall hold office for the remainder of the term of office of the person who so resigned, died or was removed from office.

The Board may act notwithstanding any vacancy or vacancies among its members.

A vice-chairperson of the Board shall be appointed by the Board as required and shall act as Chairperson thereof when so required by the Chairperson and when so acting shall have all the powers of the Chairperson.

A member of the Board shall be paid such remuneration (if any) and allowances (if any) as may be determined by the Minister with the consent of the Minister for Finance.

The Board may establish committees to assist and advise it in relation to the performance of any of its functions.

The Board may act without its full membership in attendance.

Explanatory Note

This Head provides for membership of the Board – its numbers, how they are to be appointed, paid, replaced, removed etc.

Head 15

Appointment and duties of the Chief Executive Officer

Subject to the next subsection, the Board shall appoint a person to be the Chief Executive Officer of the PIAB.

The person holding office as Chief Executive Designate immediately before the establishment day shall be the first Chief Executive of the PIAB.

The Chief Executive shall hold office under a written contract of service (which contract may be renewed subject to the satisfaction of the Board) for such period as is specified in the contract, and subject to such terms and conditions (including terms and conditions relating to performance, remuneration, superannuation, and suspension and termination of employment) as may be determined by the Board and approved by the Minister with the consent of the Minister for Finance.

The Civil Service Commissioners Act, 1956, shall not apply to the appointment of a person as the Chief Executive.

The Chief Executive shall be an accountable person in line with the standards demanded by the Committee of Public Accounts (e.g. S14 Human Rights Commission Act 2000; S14(13) Ordnance Survey Ireland Act 2001).

The Chief Executive Officer shall also be answerable to a Committee of one or both Houses of the Oireachtas (e.g. S15 Human Rights Commission Act 2000; S14(15) Ordnance Survey Ireland Act 2001).

Such of the functions of the Chief Executive as may from time to time be specified by him or her may, with the consent of the Board, be performed by such member of the staff of the PIAB as may be authorised by the Chief Executive.

The functions of the Chief Executive may be performed during his or her absence or when the position of Chief Executive is vacant by such member of the staff of the PIAB as may from time to time be designated for that purpose by the Board.

The CEO will be an executive member of the Board of the PIAB.

Explanatory Note

This Head provides for the appointment of a CEO – it will need to be drafted in a recent standard format e.g. The Human Rights Commission Act 2000 (Section 14 & 15), Ordnance Survey Ireland Act, 2001(Section 14), Section 13 of the Industrial Development (Enterprise Ireland) Act 1998.

Head 16

Staffing

Provide that:

The Board may, from time to time, appoint such and so many persons to be members of the staff of the PIAB with the consent of the Minister and Minister for Finance.

The numbers, grades and terms and conditions of its staff and the appropriate level for each grade shall be determined by the Board with the approval of the Minister given with the consent of the Minister for Finance.

The Board may appoint medical or other experts to advise it.

The Board may devolve any or all of its powers under this Head to the CEO. (Useful reference - Section 4(1)(h) of Public Service Management Act, 1997)

Explanatory Note

This section provides for staff recruitment subject to the numbers, grades and remuneration of each grade being approved by the Minister and the Minister for Finance. It also allows for delegation of authority in this regard to the CEO.

Head 17

Indemnity for members of the PIAB

To guarantee indemnity for the Board of the PIAB, for Members of the Board and for employees of the PIAB – jointly, severally and personally – for any action such as Constitutional challenge, judicial review or allegations of negligence

The Board nor its members or employees of the PIAB shall not be ordered to pay costs in any challenge

Neither the Chairperson nor any Member of the Board nor its employees of the PIAB shall be liable in costs or damages, either their own or any other parties in respect of any thing done or omitted to be done in good faith or negligence by him or her in the performance or purported performance of a function under this Act or any other Act.

Explanatory Note

This Head is required to guarantee indemnity for the Board, for Members and for employees – jointly, severally and personally – for any action such as Constitutional challenge, judicial review, or allegations of negligence.

Head 18

Funding of the Personal Injuries Assessment Board

Funding will primarily be levied by fees on claimants and respondents on a case by case recovery basis. Any shortfall will be provided from Exchequer funds subject to agreement between the Minister and the Minister for Finance.

The level of fees will be as determined by the Board, and approved by the Minister with the consent of the Minister for Finance.

The level of fees will be commensurate with the running costs of the PIAB.

Explanatory Note

This Head provides for the funding of the PIAB. Funding will be primarily on a “case by case fee” payable by the respondent as the most transparent and equitable distribution of costs. Furthermore, most employers now have a high retained liability and we must also cater for the growing self-insurance sector -these issues also apply on motor and public liability. The level of fees will be as determined by the Board, and approved by the Minister with the consent of the Minister for Finance.

Head 19 Strategic Plans and Work Programme of the PIAB

Provide that:

1. As soon as practicable and after the establishment day, and thereafter within 6 months before each fifth anniversary of the establishment day, the Board shall prepare and submit to the Minister a plan (in this section referred to as a “strategic plan”) for the ensuing 5 year period.
2. A strategic plan shall -
1. comprise the key objectives, outputs and related strategies including use of resources, of the Board,
2. be prepared in a form and manner in accordance with any directions issued from time to time by the Minister, and
3. have regard to the need to ensure the most beneficial, effective and efficient use of resources of the Board.
3. The Minister shall, as soon as practicable after a strategic plan has been submitted to him or her under subsection (1), cause a copy of it to be laid before each House of the Oireachtas.
4. The Board shall prepare and submit to the Minister by the end of each year a programme of the activities it proposes to carry out in the following year.

Explanatory Note

The purpose of this section is to require the Board to draw up and submit to the Minister a work programme setting out the Board’s strategies and planned activities for a period of five years. A similar provision is included in other recent legislation e.g. Industrial Development (Science Foundation Ireland) legislation.

Head 20

Annual Reports and Accounts

Provide that:

(1) The Board shall submit, in such form as the Minister may direct, an annual report of its activities after the end of the financial year to which it refers and the Minister shall cause copies of the report to be laid before each House of the Oireachtas not later than six months after the end of that financial year.

(2) The Board shall keep, in such form as may be approved of by the Minister, with the consent of the Minister for Finance, all proper and usual accounts of all moneys received or expended by it and the assets and liabilities of the Board.

(3) The accounts of the Board shall be submitted annually to the Comptroller and Auditor General for audit not later than three months after the accounting period

to which they relate and when so audited, shall, together with the report of the Comptroller and Auditor General thereon, be presented to the Minister, who shall cause copies thereof to be laid before each House of the Oireachtas.

Explanatory Note

An Annual Report on the PIAB’s activities must be prepared and submitted to the Minister at the end of each financial year. The PIAB must also keep account of the money received and expended by it. The accounts must be submitted annually to the Comptroller and Auditor General for audit. Human Rights Commission Act 2000 (S 16) and Ordnance Survey Ireland Act 2001 (S26) are useful references.

Head 21

Disclosure of interests by Board Members

Explanatory Note

This Head provides for disclosure of interests by members of the Board and will be drafted as per the most recent standard format. References to similar legislation: Food Safety Authority of Ireland Act 1998 – S41/S42; Western Development Commission Act 1998 – S16; Transport Railway Infrastructure Act 2001 – S28/S29; Aviation Regulation Act 2001 – S17/S18.

Head 22

Disclosure of interest by Staff

Explanatory Note

This Head provides for disclosure of interests by staff and will be drafted as per the most recent standard format. References to similar legislation: Food Safety Authority of Ireland Act 1998 – S41/S42; Western Development Commission Act 1998 – S17; Transport Railway Infrastructure Act 2001 – S28/S29; Aviation Regulation Act 2001 – S17/S18.

Head 23

Superannuation

(1) The Board shall prepare and submit to the Minister a scheme or schemes for the granting of superannuation benefits to or in respect of such members of the staff of the Board as it may think fit.

(2) Every such scheme shall fix the time and conditions of retirement for all persons to or in respect of whom superannuation benefits are payable under the scheme, and different times and conditions may be fixed in respect of different classes of persons.

(3) Every such scheme may be amended or revoked by a subsequent scheme prepared, submitted and approved under this section.

(4) A scheme submitted by a Board under this section shall, if approved by the Minister with the consent of the Minister for Finance, be carried out by the Board in accordance with its terms.

(5) No superannuation benefit shall be granted by a Board nor shall any other arrangements be entered into by the Board for the provision of such a benefit to or in respect of a member of the staff of the Board otherwise than in accordance with a scheme under this section or with the consent of the Minister and the Minister for Finance.

(6) If any dispute arises as to the claim of any person to, or the amount of, any superannuation benefit payable in pursuance of a scheme or schemes under this section, such dispute shall be submitted to the Minister who shall refer it to the Minister for Finance, whose decision shall be final.

(7) A scheme under this section shall be laid before each House of the Oireachtas as soon as may be after it is made and, if a resolution annulling the scheme is passed by either such House within the next 21 days on which that House has sat after the scheme is laid before it, the scheme shall be annulled accordingly, but without prejudice to the validity of anything previously done thereunder.

Explanatory Note

This Head allows the Board to prepare a superannuation scheme for its staff in line with the most recent standard format.

Head 24

Obtaining information for purposes of making assessments

Provide that:

The PIAB shall be empowered to seek such information and/or documents from the claimant as are necessary to make a fair and adequate assessment of appropriate compensation.

The Board may, for the purposes of its functions under this Act, by notice in writing, or electronically, request a Government Department or such other Bodies as may be specified to furnish it with such information in their possession or control as the Board may reasonably require for the purposes of making an assessment. This is subject to the provisions of Data Protection legislation.

The information sought shall be limited to that which is necessary to validate claims and assess appropriate deductions for collateral benefits in accordance with the Civil Liability (Amendment) Act 1964.

For the purpose of claimant’s direct right of action against motor insurers PIAB shall have access to relevant information from the Vehicle Database.

Explanatory Note

The head allows the PIAB access to information from the claimant or from specified authorities such as Department of Social & Family Affairs, Revenue Commissioners, Companies Registration Office and Department of the Environment’s Vehicle Database.

Head 25

Interface with the Courts

The Rules of Courts Procedures and Practice shall be amended as necessary to facilitate operation of the PIAB’s functions and enforcement of PIAB awards.

Explanatory Note

This Head will allow for interface with the Courts. Examples include those under aged 18 and vulnerable claimants who are not competent to conduct their own legal affairs (either pre or post injury), both of which will require the existing systems within the Courts to manage their funds as there is no point in PIAB duplicating these arrangements.

Head 26

Exemption from the rules of the Law Society and Bar Council

To provide that:

The PIAB and its employees will have Statutory exemption from the rules of the Law Society and Bar Council which might otherwise govern the conduct of solicitors and barristers.

Nothing in this legislation prevents any party from seeking independent legal advice at any stage.

Explanatory Note

The PIAB will communicate directly with claimants and will not be obliged to communicate via legal representatives.

The PIAB may employ Barristers direct for the purpose of necessary court applications for the protection of minors, vulnerable claimants, dependants in fatality cases and in such other instances as may be necessary.

A PIAB award shall be deemed to be a court judgment for the purposes of applications in accordance with Section 63 of the Civil Liability Act and enforcement under Section 76 of the Road Traffic Act.

Head 27

Effective service of PIAB documents

Similar provisions are required as apply to the service of proceedings in civil litigation for personal injuries compensation

Explanatory Note

This Heads provides for effective service of documents on bodies corporate or natural persons.

Head 28

Membership of either House of Oireachtas or European Parliament.

1. Where a member of a Board is—
1. nominated as a member of Seanad Éireann, or
2. elected as a member of either House of the Oireachtas or to the European Parliament, or
3. regarded, pursuant to section 15 (inserted by the European Parliament Elections Act, 1993) of the European Assembly Elections Act, 1977, as having been elected to the European Parliament to fill a vacancy, he or she shall thereupon cease to be a member of the Board.
2. Where a person employed by the Board is—
1. nominated as a member of Seanad Éireann, or
2. elected as a member of either House of the Oireachtas or to the European Parliament, or
3. regarded, pursuant to the said section 15, as having been elected to the European Parliament to fill a vacancy, he or she shall thereupon stand seconded from his or her employment with the Board and shall not be paid by, or be entitled to receive from, the Board any remuneration or allowances in respect of the period commencing on such nomination or election, or when he or she is so regarded as having been elected (as the case may be), and ending when he or she ceases to be a member of either such House or such Parliament.
3. A person who is for the time being entitled under the Standing Orders of either House of the Oireachtas to sit therein or who is a member of the European Parliament shall, while he or she is so entitled or is such a member, be disqualified for becoming a member of a Board or for employment in any capacity by a Board.
4. Without prejudice to the generality of subsection (2), that subsection shall be construed as prohibiting, among other things, the reckoning of a period therein mentioned as service with a Board for the purpose of any pensions, gratuities or other allowances payable on resignation, retirement or death.

Explanatory Note

It is standard practice to include a provision in legislation establishing new public bodies providing that, where a director or senior staff member is nominated or elected to the Dáil, Seanad or EU Parliament, he/she ceases to be a member of the Board or his/her employment terminates as the case may be.

Appendix C.3

Civil Liability and Courts Bill

Arrangement of Heads

Part I - General

Head 1 - Commencement

Head 2 - Application of the Act

Part II - Civil Liability

Head 3 - Personal Injuries Assessment Board Act

Head 4 - Amendment of sections 3, 4 and 5 of the Statute of Limitations

Amendment) Act 1991

Head 5 - Letter of Claim

Head 6 - Originating Document

Head 7 - Other Information

Head 8 - Defence and Counterclaim

Head 9 - Failure to respond to a Statement of Claim

Head 10 - Other pleadings

Head 11 - Pleadings generally

Head 12 - Verifying Affidavit

Head 13 - Time Limits

Head 14 - Mediation Conference

Head 15 - Attendance at Mediation Conference

Head 16 - Outcome of Mediation Conference

Head 17 - Final Offers

Head 18 - Pre-Trial Hearings

Head 19 - Jurisdiction

Head 20 - Evidence

Head 21 - Assessors

Head 22 - False or exaggerated claims

Head 23 - Offences of giving false evidence or instructions

Head 24 - Income undeclared for tax purposes

Head 25 - Collateral Benefits.

Head 26 - Previous awards of damages

Head 27 - Amendment of section 30 of the Courts and Court Officers Act, 2002 - Interest on costs, charges or expenses of certain judgments, orders or decrees

PART I - GENERAL

Head 1 - Commencement

Provide that:

This Act shall come into operation on such day or days as, by order or orders made by the Minister for Justice, Equality and Law Reform under this section, may be fixed therefore, either generally or with reference to any particular purpose or provision, and different days may be so fixed for different purposes and different provisions.

Explanatory Note

This is a standard provision.

Head 2 - Application of the Act

Provide that

1. Subject to subhead (2) and head 12(7), the provisions of this Act shall apply to all proceedings begun after the provision comes into operation.
2. Head 22 and Heads 24 to 27 shall apply to all causes of action whether accruing before or after their coming into operation and to proceedings pending at the date of their coming into operation.

Explanatory Note

This head outlines when the provisions will come into operation. With the exception of heads 22 and 24 to 27, the provisions of the Act will apply to all proceedings begun after the provisions come into operation.

PART II - CIVIL LIABILITY

Head 3 - Personal Injuries Assessment Board (PIAB) Act

Provide that Subject to Head 5, this Act is without prejudice to the provisions of the PIAB Act.

Explanatory Note

The PIAB Bill, when enacted, will require mandatory referral of the personal injury claims within the Board’s remit to the Board before the commencement of any court action. The purpose of this head is to give precedence to this requirement over the procedures provided for in this general scheme. However, the duty imposed by head 5 of this scheme to send a letter of claim to the respondent will apply to PIAB cases as well as to court actions.

Head 4 - Amendment of sections 3, 4 and 5 of the Statute of Limitations (Amendment) Act 1991

Provide that

1. The phrase ‘one year’ shall be substituted for ‘three years’ in sections 3(1), 4(1) and 5(1) (except for the actions referred to at (b) of that subsection) of the Statute of Limitations (Amendment) Act 1991.
2. Notwithstanding subhead (1), where a cause of action has accrued before the commencement of this head, the time limit shall be the lesser of
   
   1. one year, and
   2. the time limit which would have applied in the absence of subhead (1).

Explanatory Note

This provision reduces the limitation period for personal injuries actions from three years to one year. Subhead (2) is a transitional measure. It provides that, where a cause of action arose before the commencement of this head, the limitation period is to be a further year or the expiry of the pre-existing limitation period, whichever is the lesser.

Head 5 - Letter of claim

Provide that:

1. Notwithstanding the terms of the Statutes of Limitation, before commencing an action in respect of a claim for personal injuries, or referring a claim to the PIAB where this is provided for by the PIAB Act, it shall be a duty of a complainant or of any person acting as a lawyer for a complainant, within 2 months after the incident is alleged to have occurred, or the date of knowledge (if later) of the person injured, to notify a respondent in writing of -
   
   1. the nature of the claim,
   2. the complainant’s intention, if not satisfied with the respondent’s response to the claim, to seek redress by starting an action or referring a claim to the PIAB, as the case may be.
2. Where a complainant, or any person acting as a lawyer for a complainant, fails without reasonable cause to comply with the duty outlined in Subhead (1) a court may disallow all or part of the costs of the action, which would otherwise be recoverable by that party.

Explanatory Note

This head provides that it shall be a duty of a complainant, within 2 months after the incident is alleged to have occurred, or the date of knowledge of the person injured, to notify a respondent in writing of the incident and the intention to institute legal proceedings. Where a complainant fails without reasonable cause to give this notification, a court may disallow costs which would otherwise be recoverable by that party.

Head 6 - Originating documents

Provide that:

1. Actions for personal injuries taken in the High Court shall be commenced by way of special summons.
2. Actions for personal injuries taken in the Circuit Court shall be commenced by way of civil bill.
3. Actions for personal injuries taken in the District Court shall be commenced by way of civil summons.
4. Such originating documents must:
   
   1. give the name, address and occupation of the plaintiff(s) and (each) defendant and, in the case of the plaintiff, his or her Personal Public Service Number (within the meaning of section 223 of the Social Welfare (Consolidation) Act, 1993);
   2. specify the injury caused to the plaintiff as a result of the incident and the remedy which the plaintiff seeks;
   3. provide particulars of all items of special damage being claimed and the relief sought;
   4. contain a full and descriptive account to give the defendant a clear understanding of the factual basis of the plaintiff’s claim.
   5. set out clearly in what way it is alleged that the defendant was negligent, in breach of duty or otherwise acted unlawfully.
5. Where the information required under Subhead (4) is not provided by a plaintiff, a court may dismiss an action or take such default into account when determining the costs of any action.

Explanatory Note

This head provides for the originating documents which commence an action. Such documents should contain details of the injury caused, a full narrative of the plaintiff’s claim, the legal basis of the claim and the special damages being sought. Where information is not given, a court may dismiss an action or make allowances for this default when determining costs.

Head 7 - Other information

Provide that:

1. At the request of a defendant to an action for personal injury, a plaintiff must provide:
   
   1. details of any other claims for personal injury which the plaintiff has made previously and details of the damages awarded under each claim or, if the claim was settled prior to the judgment, the amount for which it was settled;
   2. where relevant to the claim, details of his/her medical history and the identity of persons by whom the plaintiff has been treated;
   3. supporting evidence from the Revenue Commissioners or the Department of Social and Family Affairs, as appropriate, where damages for loss of earnings is sought.
2. Where information requested by a defendant is not forthcoming or the request is not complied with fully, a court may dismiss a claim or may take such failure to provide information into account when determining the costs of any action.

Explanatory Note:

This head provides that information may be requested by the defendant in respect of the plaintiff’s previous relevant medical history, including the identity of the persons by whom the plaintiff has been treated, and as to whether the plaintiff has previously made claims for personal injury and, if so, the amount recovered. Head 26 provides that the court is to take account of the amounts recovered by the plaintiff in previous personal injury claims in assessing damages in the current case.

Head 8 - Defence and counterclaim

Provide that:

1. A person to whom an originating document is delivered must indicate whether he/she accepts the claim or will be delivering a defence.
2. Where a defendant delivers a defence, that defence must:
   
   1. specify which of the allegations in the claim, if any, he admits;
   2. specify which of the allegations in the claim he denies and requires to be proved;
   3. state the basis on which liability is denied;
   4. where a defendant’s version of events differs from a plaintiff’s, state the version of events on which the defendant will rely;
   5. contain a full and descriptive account to give the plaintiff a clear understanding of the factual basis of the defence;
3. Where a defendant delivers a counterclaim, it must:
   
   1. specify the injury caused to the defendant as a result of the incident and the remedy which the defendant seeks;
   2. provide particulars of all items of special damage being claimed and the relief sought;
   3. contain a full and descriptive account to give the plaintiff a clear understanding of the factual basis of the defendant’s claim.
   4. set out clearly in what way it is alleged that the plaintiff was negligent, in breach of duty or otherwise acted unlawfully.
4. Where the information required under subheads (2) and (3) is not provided by a defendant, a court may award judgment against him/her or take such default into account when determining the costs of any action.

Explanatory Note

This provision specifies the information which must be included in a defence and counterclaim. As with the originating document, the emphasis is on the furnishing of detailed information.

Head 9 - Failure to respond to an originating document

Provide that:

If a plaintiff delivers an originating document, and the defendant does not deliver a defence within a prescribed time limit, a plaintiff may seek a judgement in default of defence.

Explanatory Note

Failure to respond to an originating document enables the plaintiff to seek judgment.

Head 10 - Other pleadings

Provide that:

Rules of court may provide for such other pleadings as may be conducive to the expeditious progress of cases.

Explanatory Note

This provides that rules of court may provide for other pleadings apart from the originating document, defence and counterclaim e.g. a reply on the plaintiff’s part. Such further pleadings as are provided for must be conducive to the expeditious progress of litigation.

Head 11 - Pleadings generally

Provide that:

All pleadings shall be full and descriptive and shall not be in general terms.

Explanatory Note

The purpose of this head is to ensure that pleadings i.e. the originating document, defence, counterclaims etc. are full and detailed rather than formulaic and in general terms.

Head 12 - Verifying affidavit

Provide that:

1. Subject to subhead (3), all pleadings containing averments of facts, and information provided by a plaintiff pursuant to head 7, must be supported by an affidavit verifying what is contained in such pleadings or information.
2. Where proceedings are brought on behalf of or against or a person under a disability and a next friend, committee or guardian lodges a pleading containing averments of facts, or provides information pursuant to head 7, which are outside their personal knowledge, such pleadings or information must be supported by an affidavit to the effect the information contained therein is true to their honest belief.
3. Subject to subhead (7), the affidavits referred to in subheads (1) and (2) shall be lodged within seven days of the delivery of pleadings but this period may be extended by order of the court or by agreement between the parties.
4. 1. If a person, in the affidavit referred to at subheads (1) and (2), makes a statement which s/he knows to be false or does not believe to be true, s/he shall be guilty of an offence and shall be liable, on conviction on indictment, to a fine or to imprisonment for a term not exceeding 10 years or to both.
   2. The District Court may try summarily a person charged with an indictable offence under subhead if
   1. the Court is of the opinion that the facts proved or alleged constitute a minor offence fit to be tried summarily,
   2. the accused, on being informed by the Court of his or her right to be tried with a jury, does not object to being tried summarily, and
   3. the Director of Public Prosecutions consents to the accused being tried summarily for the offence.
   3. On conviction by the District Court for an indictable offence tried summarily under subhead (4)(b), the accused shall be liable to a fine not exceeding €3,000 or imprisonment for a term not exceeding 12 months or both such fine and imprisonment.
5. Where the same set of facts constitutes the offence of perjury and an offence under subhead (4) and the offender is charged with both offences, the offender shall be liable to be punished for one of the offences only.
6. The affidavit referred to at subheads (1) and (2) shall contain an acknowledgement by the deponent that s/he is aware of the consequences, provided for in head 22, of delivering a pleading on a matter of fact which is, wholly or partly, materially false or exaggerated to a significant extent or in respect of which the deponent has no honest belief in its truth.
7. This head shall apply to proceedings which are pending at the date it comes into operation and the time limit for lodgement of affidavits shall be agreed between the parties or, in the absence of agreement, be fixed by order of the court.

Explanatory Note

This provision is designed to ensure that pleadings which contain averments of fact by any party in relation to a claim for personal injury are supported by a sworn affidavit. It will not be possible to allege particular facts in support of a personal injury claim without swearing to the truth of those allegations. Information provided by a plaintiff at the defendant’s request under head 7 must be supported by an affidavit also. These requirements extend to a next friend, committee or guardian on behalf of a person under a disability (which, for this purpose, can include a child).

The intention is that anyone who makes a claim falsely will be guilty of the common law crime of perjury. However, a separate offence is also created i.e. making a statement in the verifying affidavit which the party knows to be false or does not believe to be true. On conviction on indictment, the maximum penalty (in addition to a possible fine) would be ten years imprisonment. There is also provision for summary trial on certain conditions.

The verifying affidavit must contain an acknowledgement that the person swearing it is aware of the consequences (provided for in head 22) of making a false or exaggerated claim.

The requirement for a verifying affidavit applies not just to proceedings brought after the commencement of this provision but also to proceedings which are pending at commencement.

Head 13 - Time limits

Provide that:

1. Time limits for the delivery of pleadings shall be established under rules of court.
2. In fixing time limits, rules committees shall have regard to the level of detail required in any pleading and set a reasonable time limit for its delivery.
3. Such time limits shall be strictly adhered to except where an extension has been agreed by all parties or where a court extends the time limit, on application by any party, where it is satisfied that an extension is genuinely necessary to deliver the pleading and that the application does not result from any neglect on the part of the applicant.

Explanatory Note

This provides for the setting of time limits for the delivery of pleadings. Such time limits shall be strictly adhered to except where an extension has been agreed by all parties or where a court extends the time limit where it is satisfied that an extension is genuinely necessary and that the application does not result from any neglect on the part of the applicant.

Head 14 - Mediation conference

Provide that:

1. Prior to the trial of an action, any party to a personal injury action may, with a view to reaching agreement, request that a mediation conference of all parties be held.
2. A court may order that a mediation conference be held between the parties if it considers that it would assist in the proper disposal of the proceedings.
3. The mediation conference shall take place:
   
   1. at a time and place agreed between the parties; or
   2. where parties cannot agree on a time or place, at a time and place fixed by the court.
4. The mediation conference must be chaired by a person agreed by the parties but, in the absence of agreement, the court shall appoint the chairperson.
5. Without prejudice to subhead (6), a chairperson of a mediation conference must be a practising solicitor or barrister of at least 5 years standing.
6. In actions taken in the District Court, a district court clerk may act as the chairperson.
7. All parties shall, at the beginning of a mediation conference, agree a definitive time period for the conduct of the conference.
8. The costs of the mediation conference shall be part of the costs of the action.

Explanatory Note

This head provides that a conference of all parties to a claim may be held prior to the trial or at any stage during the conduct of a trial. The head further provides that a chairperson be appointed to the conference by agreement of the parties or, failing that, by nomination of the court. The chairperson must be a practising solicitor or barrister of at least five years standing. It is proposed that, in personal injury actions appropriate to District Court jurisdiction, a court clerk may act as chair of a conference.

Head 15 - Attendance at mediation conference

Provide that:

1. Each party must attend or be represented at the mediation conference and the representatives must have authority to settle a claim.
2. Each party must actively participate in attempts to settle the claim.
3. Subject to head 16, all communications and the chairperson’s notes and records shall be confidential and cannot be used in any subsequent trial.

Explanatory Note

All parties to a claim are required under this head to attend and/or be represented at a mediation conference and representatives must be authorised to settle the claim. Parties must actively participate in efforts to settle. Communications at the conference and the chairperson’s notes and records are confidential.

Head 16 - Outcome of mediation conference

Provide that:

1. At the conclusion of the mediation conference, a report from the chairperson shall be lodged with the court indicating whether:
   
   1. full agreement has been reached on the claim, in which case the report must incorporate a settlement agreement signed by all parties;
   2. a partial agreement has been reached on the action, in which case the report must incorporate a partial settlement agreement signed by all parties, together with a statement of the outstanding points at issue;
   3. agreement has not been reached on the action, in which case the report must outline the process undertaken to try to achieve settlement;
   4. all parties have actively participated in trying to reach agreement on the claim.
2. Where a party refuses the request of another party to participate in a mediation conference or, if a mediation conference is held and s/he fails to actively participate in attempts to settle the claim at the conference, a court may award in the other party’s favour costs incurred because of the refusal or failure and it may deduct from costs awarded to the first party such amount as represents costs incurred because of the refusal or failure.
3. Before exercising its power under subhead (2), the court shall hear the parties.

Explanatory Note

The outcomes of a mediation conference must be fully disclosed to the court. A report from the chair of the conference must be lodged with the court which will indicate whether all parties have actively participated in efforts to resolve the case. A court may consider the chairperson’s report on the participation of all parties in efforts to achieve resolution at the conference when determining the costs of the action. The court may also deduct from costs awarded to a party any costs incurred because of that party’s failure or refusal to participate in a mediation conference.

Head 17 - Final offers

Provide that:

1. The plaintiff and defendant must, before the commencement of a trial, exchange written final offers of settlement.
2. Time limits for the lodgement of final offers and the period for which they must remain open are to be established by rules of court.
3. Following the expiration of a time limit for a final offer of settlement to remain open, the written offers of settlement must be lodged in court.
4. The content of the final offers shall not be communicated to the judge until judgment has been given.
5. The court shall, however, have regard to final offers of settlement in making orders about costs.

Explanatory Note

Under this head, where agreement is not reached at the conference, the parties must exchange written offers of settlement before the case proceeds to trial.

Head 18 - Pre-trial hearings

Provide that:

Where considered appropriate, a court may convene a pre-trial hearing of all parties for the purpose of identifying which evidence is agreed and can be dispensed with at trial and the matters still at issue which are to be decided by the court.

Explanatory Notes

This head provides that a pre-trial hearing involving all parties to a personal injury claim may be convened by a court. The purpose of the pre-trial hearing will be to identify those areas of agreement regarding evidence which may then be dispensed with at trial and to identify those matters which are to be determined by the court.

Head 19 - Jurisdiction

Provide that:

In the High or Circuit Court, the jurisdiction provided for under subheads 12(3) and (7), subhead 13(3), subhead 14(2) and head 18 may be exercised by the Master of the High Court or the county registrar, as the case may be.

Explanatory Note

This head provides that the Master of the High Court or a county registrar, as the case may be, may deal with the extension or fixing of time limits for the delivery of verifying affidavits, the extension of time limits for the delivery of pleadings, and the ordering of a mediation conference. The Master or a county registrar can also convene pre-trial hearings.

Head 20 - Evidence

Provide that:

Where it considers it appropriate for the proper, expeditious and economic disposal of the proceedings, a court may order witnesses in a personal injury action to provide their evidence by way of affidavit and may order that the parties exchange affidavits.

Explanatory Note

This head provides that, where a court considers it appropriate, witnesses may provide evidence by way of affidavit.

Head 21 - Assessors

Provide that:

1. The court may appoint suitably qualified assessors to assist it, in a manner specified by the court, on any matter relating to expert evidence or reports in a personal injury action.
2. All parties to a personal injury action shall co-operate fully with the assessor and shall provide, on request, any expert’s reports available to them and the assessor may interview the authors of such reports.
3. Costs associated with the appointment of an assessor shall be part of the costs of the action.

Explanatory Note

This head provides that a court may appoint an assessor to assist it in relation to expert evidence. All parties are required to assist the assessor.

Head 22 - False or exaggerated claims

Provide that

1. Where, in any proceedings for personal injuries, the court is satisfied that a party has knowingly tendered evidence or delivered a pleading on a matter of fact which is, in whole or in part, materially false or exaggerated to a significant extent or in which the said party has no honest belief as to its truth, the court shall award judgment to the other side unless it, for special and substantial reasons stated by the court in the exceptional circumstances of the case, is satisfied that such award would result in serious injustice.
2. If the court decides, pursuant to subhead (1), not to award judgment to the other party, it shall instead order payment to the other party of a sum which reflects the seriousness of the conduct referred to in subhead (1), the harm it has caused to the other party and the need to deter such conduct.
3. Before making the finding referred to at subhead (1) and exercising its powers under subheads (1) or (2), the court shall hear any submissions made and consider any evidence adduced by or on behalf of the parties.

Explanatory Note

This head provides that, where the court is satisfied that a party has knowingly tendered evidence or delivered a pleading, which is materially false or exaggerated to a significant extent, the court shall award judgment to the other side unless, for special and substantial reasons stated by the court in the exceptional circumstances of the case, it is satisfied that such award would result in serious injustice. In the latter case, the court shall instead order payment to the other party of a sum which reflects the seriousness of the falsity or exaggeration, the harm it has caused to the other party and the need to deter such conduct.

Head 23 - Offences of giving false evidence or instructions

Provide that

1. It shall be an offence for a person, in the course of or for the purposes of a personal injury claim, to
   
   1. tender or adduce evidence which is to his/her knowledge false or which s/he
      does not believe to be true, or
   2. give instructions or information to any solicitor or person acting on behalf of a solicitor which s/he knows to be false or does not believe to be true in circumstances giving rise to a reasonable inference that this was done with a view to deceiving another party to the claim either on the issue of liability or quantum.
2. 1. A person guilty of an offence under subhead (1) shall be liable, on conviction on indictment, to a fine or to imprisonment for a term not exceeding 10 years or to both.
   2. The District Court may try summarily a person charged with an indictable offence under subhead (1) if
   1. the Court is of the opinion that the facts proved or alleged constitute a minor offence fit to be tried summarily,
   2. the accused, on being informed by the Court of his or her right to be tried with a jury, does not object to being tried summarily, and
   3. the Director of Public Prosecutions consents to the accused being tried summarily for the offence.
   3. On conviction by the District Court for an indictable offence tried summarily under subhead 2(b) the accused shall be liable to a fine not exceeding €3,000 or imprisonment for a term not exceeding 12 months or both such fine and imprisonment.
3. Where the same set of facts constitutes the offence of perjury or subornation of perjury, on the one hand, and an offence under subhead (1)(a), on the other, and the offender is charged with both offences, the offender shall be liable to be punished for one of the offences only.

Explanatory Note

This head creates new offences of tendering or adducing false evidence and falsely instructing a solicitor. As with the offence of falsely swearing a verifying affidavit, the maximum penalty is a fine and/or 10 years’ imprisonment.

Head 24 - Income undeclared for tax purposes

Provide that

1. Any income, profits or gains in respect of which returns have not been made as required by the provisions of the Taxes Consolidation Act 1997 shall, in determining the damages to be awarded in any action in respect of liability for personal injuries not causing death, be disregarded.
2. 1. For the purposes of the Social Welfare Acts, the Minister may, with the consent of the Minister for Social and Family Affairs, make regulations providing for the transfer by the court to the latter Minister of information relating to the damages awarded in actions in respect of liability for personal injuries and the evidence given in such actions.
   2. For the purposes of the Taxes Consolidation Act 1997, the Minister may, with the consent of the Minister for Finance, make regulations providing for the transfer by the court to the Revenue Commissioners of information of the kind referred to in paragraph (a).

Explanatory Note

Income, which has not been declared to the Revenue Commissioners in breach of taxation law, shall be disregarded in determining the damages to be awarded in any action in respect of liability for personal injuries (not including fatal injuries actions).

The Minister may make regulations providing for the transfer by the court to the Minister for Social and Family Affairs and the Revenue Commissioners of information relating to the damages awarded in personal injuries actions

(including actions in respect of fatal injuries and actions for the benefit of the estate of a deceased) and the evidence given in such actions.

Head 25 - Collateral benefits

Provide that

1. Paragraph (a) of section 50 of the Civil Liability Act 1961 and paragraph (a) of section 2 of the Civil Liability (Amendment) Act 1964 shall be deleted.
2. In assessing damages in an action to recover damages in respect of a wrongful act (including a crime) resulting in personal injury, account shall be taken of any sum payable in respect of the injury under any contract of insurance.
3. The phrase “Subject to subsection (2)” shall be inserted at the start of paragraph (b) section 50 of the Civil Liability Act 1961 and at the start of paragraph (b) of section 2 of the Civil Liability Act 1964.
4. The following subsection shall be inserted in section 50 of the Civil Liability Act 1961:
   
   2. Where a charitable gift (whether in the form of money or in kind) has been given to the plaintiff in response to the incident that also gave rise to the cause of action, the gift or its value shall not be taken into account in assessing damages subject to the following:

   where the charitable benefit was paid by the defendant, it shall be taken into account only if the donor-defendant stipulated in writing at the time of the donation that s/he intended the donation to be deducted from any subsequent award of damages.

   
   
5. The following subsection shall be inserted in section 2 of the Civil Liability (Amendment) Act 1964:
   
   2. Where a charitable gift (whether in the form of money or in kind) has been given to the plaintiff in response to the incident that also gave rise to the cause of action, the gift or its value shall not be taken account in assessing damages subject to the following:
   1. where the charitable benefit was paid by the defendant, it shall be taken into account only if the donor-defendant stipulated in writing at the time of the donation that s/he intended the donation to be deducted from any subsequent award of damages; and
   2. where the donation takes the form of sick pay, it shall be taken into account (sick pay being interpreted to include any series of payments made by an employer to an injured employee that resemble the employee’s regular remuneration in frequency or amount of payment).
6. In assessing damages in an action to recover damages in respect of a wrongful act (including a crime) resulting in personal injury not causing death, account shall be taken of any sick pay paid in consequence of the injury (sick pay being interpreted as in subhead (5)), save that no account shall be taken where the sick pay gives rise to a legally enforceable debt.

Explanatory Note

In December 2002, the Law Reform Commission published a Report on The Deductibility of Collateral Benefits from Awards of Damages. This recommended a general principle of deductibility subject to exceptions. This head provides for the implementation of the Commission’s recommendations, subject to one exception, in relation to insurance payments, charitable gifts and sick pay.

This exception referred to above relates to the proceeds of insurance policies where the premiums were paid entirely by the plaintiff. The Commission recommended that account should not be taken of the proceeds of such a policy. This head provides that all insurance benefits, whether the premiums were paid by the plaintiff, his/her employer or somebody else, should be taken into account in assessing damages.

Head 26 - Previous awards of damages

Provide that:

In determining the damages to be awarded in any action in respect of liability for personal injuries, the court shall have regard to any damages previously awarded to the plaintiff for personal injury and to the amounts for which personal injury actions were settled.

Explanatory Note

This head provides that a court must have regard to any previous compensation recovered by the plaintiff in personal injury actions. Head 7 provides that a plaintiff must provide, at the request of a defendant or the court, information in relation to previous personal injury claims made and the outcome of these claims.

Head 27 - Amendment of section 30 of the Courts and Court Officers Act, 2002 - Interest on costs, charges or expenses of certain judgments, orders or decrees.

Provide that Section 30 of the Courts and Court Officers Act 2002 is amended by

1. the insertion of “no” before “interest” in subsection (1),
2. the deletion of “subject to subsection (3), at the rate of 2 per cent per annum” from subsection (1), paragraph (a). and
3. the deletion of subsections (3) and (4).

Explanatory Note

This head provides that interest should not apply to judgment costs (e.g. solicitors’ fees) etc. until such time as those costs are agreed or taxed. At present, an interest rate of 2% per annum applies from the date of judgment, even if the bill has yet to be submitted, until the costs are agreed or taxed.

Appendix C.4

IIF & IBEC Communication Guidelines for Insurers and Policyholders

INTRODUCTION

These guidelines have been prepared jointly by the Irish Insurance Federation (IIF) and the Irish Business and Employers’ Confederation (IBEC) to help business and commercial insurance policyholders and their insurers to improve communication and understanding as to how arrangements in respect of insurances, especially the handling of personal injury claims, will be dealt with.

Premiums are principally driven by claims costs. Claims costs are determined by the frequency and average cost of claims (including both compensation paid and legal and other delivery costs). Policyholders have statutory and contractual obligations to take reasonable steps to minimize the risk of accidents, and it is in all parties’ interest to reduce claims frequency by improving risk management and the effectiveness of safety policy.

Claims costs can be moderated by prompt and professional investigation of claims, a shared determination to defend suspected fraudulent and exaggerated claims - while at all times ensuring fair treatment of all claimants -and mutually agreed procedures for handling and settling claims.

GENERAL SAFETY POLICY

The Policyholder undertakes to comply with all relevant legislation, and in particular to adopt and abide by a safety statement. Adoption of the Workplace Safety Group’s Voluntary Code of Practice is recommended and encouraged.

The Insurer will support Policyholders’ safety efforts with appropriate risk improvement and loss control advice.

AFTER ANY ACCIDENT

The Policyholder undertakes to:

• notify the accident to the insurer immediately and submit to the insurer a completed accident report form as soon as possible, where required;
• record the accident as soon as practicable, incorporating all relevant details, and notify the Gardaí in the case of road accidents where required by law to do so;
• preserve the locus of the accident for inspection wherever possible, or photograph the locus if it is not possible to preserve it for inspection by the insurer;
• where applicable, preserve any relevant CCTV or video recording for inspection by the insurer;
• identify witnesses to the accident and take witness statements if possible and appropriate;
• pass on unanswered to the insurer any correspondence or other communication from the injured employee or his/her legal or medical advisers as soon as it is received.

The Insurer undertakes to:

• where investigation of the circumstances of the accident is deemed necessary, carry out the investigation as soon as possible; when carrying out investigations, consideration will be given to any action which might prevent future accidents and any recommendations will be communicated to the policyholder;
• avoid undue disruption to the workplace or work processes of the policyholder during the investigation;
• advise the policyholder on receipt of notification of the accident as to the claims reference and the identity of the person handling the claim in the insurer’s claims department;
• make available for verification by the policyholder as necessary, any witness statements obtained by the insurer’s investigators or any other material documentation relating to the circumstances of the accident.

CLAIMS HANDLING LITIGATION

The Policyholder undertakes to:

• notify the insurer of any claim made or of any potential claim. If the claim arises from a gradually operating cause (e.g. illness which arises from exposure to a particular hazard over a period of time) all insurers who may have had an exposure at any material time should be notified;
• provide all relevant information in relation to the plaintiff ’s employment and accident history, the circumstances of the accident, witness details etc. as soon as possible.

Appendix C . 5

IFSRA

The Irish Financial Services Regulatory Authority (IFSRA) came into being on 1 May 2003. IFSRA is the new regulator of all financial services firms in Ireland. It also has an important role in the protection of the consumers of those firms. Its main tasks are:

• Helping consumers to make informed and responsible decisions on their financial affairs in a safe and fair market; and
• Fostering sound and solvent financial institutions which gives depositors and other consumers of financial products confidence that their deposits and investments are safe.

The Financial Services Regulator is a distinct component of the Central Bank and Financial Services Authority of Ireland, with clearly defined regulatory responsibilities. These cover all Irish financial institutions including those previously regulated by the Central Bank, Department of Enterprise, Trade and Employment (DETE), Office of the Director of Consumer Affairs (ODCA) and Registrar of Friendly Societies.

It has taken over the role of regulating insurance companies from the Department of Enterprise, Trade and Employment.

The Consumer Director, Mary O’Dea, who is a full member of the Authority, will have considerable powers and direct statutory responsibility. It is envisaged that the Consumer Director will have responsibility for the way insurance companies treat their customers.

In providing consumer protection, the Financial Services Regulator will focus on problem prevention and will:

• Provide consumer information and education through various channels in relation to the costs, risks and benefits of financial products.
• Monitor competition in the market for insurance services by working with the Competition Authority; and
• Promote and be a strong advocate for the interests of consumers of insurance products.

The regulator will seek to provide protection to consumers in a number of integrated ways:

Codes of Conduct and their Enforcement

• The introduction of sound conduct of business rules, which oblige insurance institutions to act in a fair and transparent manner.
• The policing and enforcement of those codes by on-site inspections, backed-up by enforcement powers.

Consumer Information and Education

• The introduction of consumer awareness programmes that enhance the understanding of the consumer’s rights and the public’s level of financial knowledge. A focus on life-long learning will form part of our approach.

Industry Education and Competence

• A focus on a well-trained industry with professional training courses and the promotion of continuous professional development.
• The promotion within industry of an understanding of codes of conduct and the importance of consumer protection.

Monitoring Competition

• The regulator will work with the Competition Authority on the development of close monitoring systems for market development and competition.

Motor Insurance Advisory Board

• The implementation of relevant MIAB recommendations, which seek to increase consumer protection in the area of motor insurance.

Complaints Handling

• The regulator will foster a consumer friendly complaints-handling mechanism by working with the Financial Services Ombudsman.

Financial Exclusion

• The regulator will seek to open appropriate gateways into the insurance market for those who are currently excluded and we will work with various government departments and agencies in this regard.

The Central Bank and Financial Services Authority of Ireland Act, 2003, has led to the establishment of the new Financial Services Regulator. There is, however, further legislation planned for enactment this autumn, which is expected to include the setting up of a statutory financial services ombudsman for consumers.

Financial Services Ombudsman

It is envisaged that the Financial Services Ombudsman will deal with specific insurance disputes between policyholders and insurance companies. The Ombudsman will be independent of the Consumer Director but will work with the Director.

There are also plans for a streamlined appeals system for the industry. There will also be consultative consumer and industry panels where matters of policy and practice can be discussed. In addition, it is proposed that the further legislation will include new enforcement powers for the Financial Services Regulator such as fining and public censure powers.