Mr. Stuart Gilhooly:

I thank the committee for the invitation to address it. The question on the minds of members and everybody else is simply what has caused this extraordinary, shocking and excruciating increase in motor insurance premiums in Ireland which we believe is over 38% per annum. We say the answer lies within the closely guarded books of the insurance industry which each insurer seems remarkably reluctant to open to anybody outside of their own company. For years all insurers engaged in a price war which saw them quote unsustainably low premiums while insuring bad risks. The inevitable upshot has been an increase in premiums to restore profits and thereby compensate for these poor business decisions. It is also common knowledge, although rarely admitted by the industry, that much of the profits emanate from the investment of the premium income. It is abundantly clear to us that these returns have not been at remotely the same levels that would have been experienced in the past given the recent volatility of global markets.

While studiously ignoring these obviously significant factors in the manner of how it has conducted its business, the industry has conducted a long-running and widespread public relations campaign in which it has sought to blame everybody but itself. Part of this has been a campaign of snide innuendo about the bona fides of personal injuries victims while reserving particular ire for the easy target of the courts and the lawyers who seek to obtain compensation for the innocent victim.

The campaign has included a number of stock phrases and pseudo facts which are either completely untrue or greatly embellished and which appear to have gone largely unchallenged. What we seek to do today is to try to explain some of those pseudo facts that have been put forward and why they are not correct. One thing that is said is that lawyers have found a way of bypassing the Injuries Board. This simply is not true. All cases must go to the Injuries Board. In fact, it is only an insurer who can decide whether a case goes through the courts or not. The vast majority of insurers want the case to go to the board and the acceptance rate has not changed in any way in the 12 years of operation of the Injuries Board.

There is an idea that lawyers have infiltrated the system. Again, this is simply not correct.

Almost since the beginning of the Injuries Board, over 90% of claimants have been represented by a solicitor, at their own cost. They choose to do so at their own cost. This figure has not changed in any way since the operation of the Injuries Board and given the fact that it is the claimant who pays for the involvement of a solicitor, it clearly can have no effect on the level of premiums.

There is a suggestion that claimants wilfully do not show up for medical examinations. Again, there is no evidence of this. There is nothing whatsoever to back this up. The Law Society meets with the Injuries Board twice a year. We discuss matters of mutual interest on these occasions and at no stage has that issue been brought up with us. Over eight years ago, we wrote a practice direction in our industry magazine, The Law Society Gazette, in which we urged all solicitors - lest there be any doubt - to persuade their claimants to go to medical examinations. As we understand it, that is what happens.

There is a suggestion that lawyers are persuading claimants to turn down awards and that there is no penalty if they get less in court. This is absolutely not true. Of course there are occasions on which awards will be turned down, but there is a penalty if one gets less. One simply cannot get costs if one gets less for an award in court and one may have costs awarded against one. There is no incentive to turn down awards unless the person is going to get considerably more.

The suggestion that damages are going up and the judges ignore the book of quantum has been put out there on a regular basis. Damages have not gone up. The only manner in which they have gone up is in respect of what we see as the very large medical negligence awards for tragic birth injuries. These do not relate to motor insurance premiums. In fact, if one takes them out of the equation, one will find the awards have actually gone down marginally. Judges are required to have regard to the book of quantum, under section 22 of the Civil Liability and Court Act 2004 and they do. They are obliged to do so. If they do not, theCourt of Appealis there to deal with any mistake a judge may make. Of course, judges are human and they will occasionally get it wrong, but the Court of Appeal on a regular basis over the last nine months has overturned awards.

The one unheard voice in this debate is the most vulnerable and least represented, that is, the victims of road traffic accidents. They have no representative organisations; there is nobody there to be their voice. That is where the solicitor comes into it. The impression is given that there are a large number of claims that are fraudulent and that whiplash claims are exaggerated. No evidence has been produced to support these assertions and the reality is starkly different. The provisions of the 2004 Act ensure that any exaggerated or fraudulent claims must be dismissed and provide for a mechanism for prosecuting claims by anyone who has exaggerated or fraudulently brought a claim. While the Judiciary has dismissed claims in these circumstances and does so on a relatively frequent basis, there have been practically no prosecutions and we do not know why. Are the insurers not pursuing it? Is the Garda not pursuing it? Whether or not that is the case, we know there are relatively few, if any, prosecutions for fraudulent claims.

The truth is that personal injury claimants suffer genuine and often very debilitating injuries and have only one voice, that is, their own solicitor or barrister. The pejorative term "whiplash" that is used to dismiss the significance of neck and back injuries is very insulting to the many citizens of this country who have had their lives damaged and sometimes ruined by such injuries, caused by the negligence of others. What is to be done? We believe we must uncover the truth. The Law Society calls for a new task force, along the lines of the Motor Insurance Advisory Board, to establish the real reasons premiums are rising at an unsustainable rate and to make recommendations to deal with the problem. Real and accurate data is key. The insurance industry's black box must be prised open in the interests of everyone.