Mr. Mark Fielding:

I thank the committee for inviting ISME to address it on this issue, which is, obviously, an important issue for business. I am old enough to remember that this is almost a case of déjà vubecause we were here in 2002 for exactly the reason. There is very little that is new. The crisis in the motor insurance industry is not new nor is the fact that premiums are rising. The fact that insurance companies have lost money on their investments is not new. Insufficient data from insurance companies, defaults from insurance companies and the fact that policyholders have to carry the can for much of this are not new. The lack of competition in the marketplace is not new nor are the arguments between insurance companies and the legal profession with each blaming the other and delays in the system. The fact that insurance companies are settling cases without recourse or referring back to their clients is not new. The fact that we have an Oireachtas committee investigating the horrendous increases we are suffering is not new.

In 2002, there was little or no public information available relating to overall numbers and costs of claims for personal injuries and the only figures that were made public did not contain any information on the costs of directly settled cases. Without access to that information, a full picture of the impact on personal injuries was difficult to establish back then. Nothing has changed. In 2002, some 90% of the 35,000 cases that did not proceed to trial lacked visibility. In 2014 and 2015, of the 31,000 or 32,000 injury claims registered, only 9,000 went to court or were finalised by the Personal Injuries Assessment Board. Again, we are talking about 71% of the cases having no transparency so we are back into exactly the same position. The industry said that it made a loss of €198 million from underwriting insurance and we know that it has been badly hit on its investments. Again, there is nothing new about that but back in 2002, the Motor Insurance Advisory Board, MIAB, discovered that, among other things, the profits relative to premiums for Irish insurers were many multiples of their English counterparts. Again, we know that it is the same. From 1998 to 2002, the same group of insurance companies were found to be less than forthright with their figures to MIAB. The last investigation by MIAB led to significant and dramatic savings over the following 12 or 13 years. CSO figures show that the cost of motor insurance reduced by about 40% over that period but things have changed since 2014 so we are back to the same thing. MIAB reduced the length of time it was taking through the introduction of the Personal Injuries Assessment Board and brought it back down from three years to seven months. MIAB made 67 recommendations, some of which were not followed through. I will return to that point.

Claims numbers have increased only marginally in the past year, more than likely as a result of economic activity. There has been a 6% increase compared to 2015 but, again, we can see that this is slowing this year. The average awards have remained relatively static over the past five to six years. If one looks at the Personal Injuries Assessment Board figures, one can see that in 2009, the average claim was something like €23,000. In 2015, the average claim was €22,800 so, again, there has been very little change. There is very little evidence that the claims are increasing through the Personal Injuries Assessment Board.

We have a continuous line of complaint from our members regarding the handling of what they would regard as questionable claims and the fact that insurance companies continue to settle without the consent or knowledge of the insured businesses. In the opinion of many SME owners, this adds to the fraudulent claims culture that is there.

There has been plenty of talk about the book of quantum. We are still waiting to have the latest version of that. To wait 12 or 13 years for a revision of that is not on and we hope that from now on, there would be a more regular review of the book of quantum.

The poor regulation of the insurance companies that are regulated outside Ireland but which operate in the market also drives up the cost of premiums. We know that the legal position is that many insurers must reserve against the risk of future market failures of other companies. This, obviously, does not help the SME sector. We must take into account the assertions from the legal profession that it is not its fault and the insurance companies' assertions regarding part of the information and part of the reason for increased costs. We know that back in 2002, a large amount of the awards were going to professional fees to the legal profession and others.

ISME thinks that part of the answer to this lies in a reform of the MIAB with a similar task to the previous one. As part of that process, we would need a review of the 67 recommendations and the reasons that some were implemented while others were not.

We would like to see totally aggregated figures made available on the number of claims, the value of claims and the associated legal and professional costs for processing these claims. That information gathering exercise must also include estimates of fraudulent claims and a continuing review of the book of quantum. It would be preferable that the insurance industry itself should develop a common reporting matrix which could and should be aggregated by an external agency because the industry keeps on talking about competitiveness and competitive information. It could work if we could anonymise and pool the information through an external source. In the absence of an agreement from the insurance businesses, I believe the Central Bank must insist and must get involved. The Central Bank must impose stricter reporting obligations. At the moment it seems that the Central Bank's main job is to ensure it looks at the matter from a prudential point of view. Obviously the bank does not want to see insurance companies going to the wall, but the Central Bank would not see the issue of increased premiums as part of its job.

The type of information which the Motor Insurance Advisory Board, MIAB, required for investigation back in 2002 was essential to identify the main contributors to the massive rise in motor insurance premiums. We are back at the same point now, and if we can get that information, it could be weighted accordingly to find out who and what are the actual contributors to the increases in premium. We hope that the new edition of the book of quantum would be reviewed by the Court of Appeal prior to publication and that there would be a certain amount of training. I am loath to mention that the judges need training but they certainly need training in how to use and implement the book of quantum. We hope there would be a consistent application of the book of quantum across all awards in order that the awards would be predictable and certain over a period of time. If the book of quantum is accepted, it would be crucial to reducing the need for taking costly litigation. All awards should be benchmarked internationally in order that we can see what is happening in Ireland and in comparison with our competitor countries.