Ms Dorothea Dowling:

My phone is turned off. The MIAB statutory investigation into the cost of motor insurance started in 1998. We had a very strong board and a particularly strong statistician. We had to threaten to resign en masseas a board because of the non-co-operation of the insurance industry at the time in providing data. Our excellent statistician - I know I am not supposed to name anybody - was able to disprove some of the actuarial data models submitted to us and subsequently gave evidence at the Equality Authority on actuarial data produced to justify age discrimination, which turned out not to be age-related. I give these examples from the point of view of how important it is not just to get data but to interrogate it. At the time, the joint Oireachtas committee had an extremely important role in establishing the Personal Injuries Assessment Board, PIAB. It is important to stress the Long Title of the Act, as its objective is the making of assessments to prohibit in the interests of the common good the bringing of legal proceedings. This is the sole function of the Injuries Board in this context. Representatives from the Injuries Board came before the committee yesterday, and much has been achieved, as was anticipated at the outset. There was never any question of its being a lawyer-free zone. We do not see that anywhere in the legislation and I never said it. The heads of the Bill regarding section 7 made it very clear that nothing would stop people from getting their own advice from any agent or expert, but they would do so at their own expense.

The risk of introducing a streamlined quick personal injuries redress system is what is called the expressway principle - that is, that it would be made too easy. The balancing measure is the Civil Liability and Courts Act, which is the deterrent to what I call exaggerated claims. We need to discuss the word "fraud," because it can be quite misleading. In 2007 the PIAB experienced a situation whereby a small number of high-volume solicitors rejected PIAB awards but took the same money the next day and received litigation costs. Unfortunately, the industry did this. Legislation was introduced in 2007 whereby if someone rejects a PIAB or Injuries Board award the amount stands as a tender or lodgement in the court system, in accordance with existing court rules, and if the court does not award any more than this the party ends up being liable for both sets of costs and will probably receive no compensation.

In 1986 a joint Oireachtas committee examined this issue. At the time, litigation overheads were considered to be a mouth-watering 25% of the cost of insurance. That committee was chaired by Ivan Yates. We now know that by the time of the MIAB report this had risen to 46%. I understand the Injuries Board uses a figure of approximately 60%, based on data from the National Competitiveness Council. In October 2008, I told a joint Oireachtas committee that we had come a long way from the 1996 Deloitte report, when it took five years for people's cases to reach compensation settlement. Perhaps during that time insurers used investment income to delay paying out claims, but it ceased to be a good business model to rely on investment income from the time the PIAB came into operation, when the maximum wait would be nine months and the statute of limitations was adjusted to two years.

In April 2014 I carried out my final function as chair of the PIAB before I retired very early. It gives me no pleasure to say I saw this coming and had seen it coming as far back as 2013, particularly with regard to increasing the compensation limit in the Circuit Court from €38,000 to €60,000. The last time that happened, in 1999, for supposedly the same objectives, it did not work and the Central Statistics Office index increased by 81%, but that was over a decade and not over three years as we see here. When I challenged the Irish Insurance Federation as to why it was not pressing for this not to happen, I was told it wanted to focus its lobbying of Government on the single issue of the introduction of compulsory private pensions.

I have been asking myself what questions would I ask if I were a committee member. One is what success would look like for this project. The first element would be to stop the further increases that apparently have been signalled. I will be cautious about what I say about this, because I understand the Competition and Consumer Protection Commission will investigate it. I note with some irony that some representatives of the insurance industry in this morning's newspapers state that they relish the fact that the Competition and Consumer Protection Commission is to investigate the high level of awards in Ireland. I understand from the press release from the Competition and Consumer Protection Commission that what it will actually investigate is megaphone collusion.

The next question to consider is the real reason we have seen the increases that have taken place. If it is because of unpreparedness for Solvency II, we will not like it, but it is a one-off and we will not have further increases. Let us put a price on Solvency II, as we really need to get to the bottom of this. The data I have point in a different direction. Longer term, because there are urgent actions that need to be taken, we should stop the boom-and-bust economics that seem to operate in the insurance industry. We have seen elsewhere where it can lead.

I am here to assist the committee because I feel I have unique expertise in this area. I have experience of implementing successful reforms. I am here solely in a personal capacity. As I have stated publicly, I am very concerned that insurers are being allowed to dictate the reform agenda without any empirical evidence to support their arguments - in fact, to the contrary. I have provided the committee with some data on this and comparisons with other EU member states on average claims costs and average premiums. If insurers had been allowed to dictate the reform program with regard to the MIAB and establishing the PIAB, we would not have had the 40% reduction in the CSO index in the following decade, which was to the end of 2013. It has all gone pear-shaped since then, which has nothing to do with the fact that I retired at the same time. I have no confidentiality issues because it was before the PIAB was a statutory body. I see indications that the Irish Insurance Federation is making demands for the Injuries Board to do a whole lot of things that would be offensive to the separation of powers and would usurp the position of the courts, and these must be resisted. According to international research I undertook as part of my PhD, this type of thing has happened before. The unsuccessful reforms in the UK have been a disaster, as is the case in some US states. The most seriously injured have been the biggest losers and policyholders have not gained anything.

The real pressing issue for today, in my view, is that reputational damage is being done to Ireland Inc., and I can provide the committee with many examples. This is putting the frighteners on potential entrants. I also suggest that there is a potential constitutional challenge with regard to the quantum as planned, for reasons of principle and pragmatism. I am sorry to say prices are not the only problem with the insurance industry, and I will quite happily discuss this with the committee.

In its 2004 report, the MIAB had to state that matters had got worse regarding victims' rights under EU motor insurance directives. The Motor Insurers' Bureau of Ireland, MIBI, was given special powers which, in the opinion of the MIAB, are contrary to rights under EU law. As the MIBI is an emanation of the State, it has been charged with this responsibility by the State. In 1999, Mr. Justice Brian McMahon found that there was a danger of Francovich damages against Ireland and, if there are, it will go on the bureau and the policyholders. It is another emerging bomb that we need to defuse.

I have thought about measures the Dáil could take next week. I suggest a review of ministerial portfolios. We should reverse the Act that increased compensation in the Circuit Court from €38,000 to €60,000.

If we pass a law and it is not working and if it is not done in the European Union - we have sovereignty here - then I think we should reverse it. We should simply say that we have tried it but it does not work because it has not fulfilled any of the objectives and it is having numerous unintended consequences. We should take it on the chin, reverse it and bring back stability because stability is what we all need. Certainly, it is what insurers need. Moreover, we should not operate the book of quantum as currently set out, and I have explained why.

We really need to beware of rhetoric, anecdotes, hearsay and short-term thinking. Insurance is a long-term business. We should stick to the available data and then chase the missing data. There is plenty of data. I have given the committee much of it. I have stacks more but I did not want to inundate the committee. Having read the transcripts I have been surprised by some of the contributions, especially at the extent to which the existing data has not been referred to by people who would present themselves as professionals in this business. If they are not looking at this data when they are doing their job, then I am sorry but I have to call into question the governance structures within the industry.

My experience on reform is that we need to define the challenge properly before designing the reforms. It is very important to uphold the rule of law. I will set out two examples. One involves an insurance company. The details are in the public domain and the case, involving Aviva, has been mentioned in the committee. The excuses the company gave were extraordinary. There is no fact in any of it except for one point of fact, supposedly, which is the 34% increase in High Court awards in 2014 compared to 2013. Frankly, I consider that to be schoolboy mathematics. It is misleading. Are those responsible speaking out of both sides of their mouths? Are they saying to their staff that they should pay 34% more in High Court cases because the company will not get rid of them otherwise? Are they saying something completely different to our Government and their shareholders? It is not that they do not know because the figures were announced at an actuarial company breakfast briefing which I attended. I stood up and challenged the calculations because I had the raw data. I knew the median, which is the figure we use if there is big range. Let us suppose there are 500 cases and numerous are at the €5 million level as well as some down at the bottom. The median is actually the technical statistical term we use. The median had gone down. I stood up and explained that I was sorry to be awkward but that it was altogether misleading. I actually approached the actuary afterwards and suggested that those responsible should not go with those figures because it was bad for their credibility. I also approached Michael Horan of the Irish Insurance Federation and pointed out that although numerous problems needed to be solved, the approach being taken was not credible and that I intended to keep saying that it was wrong.

There are things the committee members could do in the Dáil to stop this rot. I have tried to show in some of the data I have presented that Irish motor underwriters are making far greater profits than their United Kingdom counterparts. We saw the same in the Motor Insurance Advisory Board back in 2004. I am conscious of the fact the Competition and Consumer Protection Commission is, according to the press release, signalling for next year a further 20% change. That has to stop.

What we really need to focus on - I know this from speaking to people - is making Ireland a benign environment for new entrants. My view is that many of the things being said about many situations, including uninsured driving, amounts to giving out deliberate bad messages about Ireland as a place to do business. It was really embarrassing when Royal Sun Alliance had to put in extra money. I think there were perverse incentives in the bonus structure. That is a personal view - I am not making any accusations. The chief executive got €1 million from the Employment Appeals Tribunal for unfair dismissal, so I do not know anything about the rest of the situation there. People who are in the business read the trade journals. That applies whatever the business. The international trade journals painted the situation as being the Irish problem, again. Actually, it was nothing to do with the Irish market but rather it had to do with lack of governance at board level. Let us suppose a person is sitting in the head office of a European or transnational company in London. If most of the company's profit is coming from little old Ireland, then those on the board need to ask themselves some governance questions. Chopping off the head of the chief executive, in my view, is not a sufficient response.