Mr. Kevin Thompson:

I thank the joint committee for the opportunity to discuss issues relating to the cost of doing business in Ireland. Insurance Ireland has followed the work of the committee over the past six months. It has noted the detailed submissions made by other witnesses before the committee, particularly relating to the cost of insurance. The defining issue in general insurance, including liability insurance, is the cost of insurance claims. Insurance Ireland has been active on the issue of claims volatility in personal injuries since September 2015, when we published a policy reform document, Driving Change, the benefits of which would apply to motor and liability insurance.

The need for reform is clearly established by the trends in the market. According to the 2016 annual report of the Courts Service, the average Circuit Court award increased by 48% between 2013 and 2016, from €11,941 to €17,722. The report of the working group on the cost of insurance, which was published in January 2017, makes it clear that there was an increase in the number of new personal injury cases issued in the courts, including employer, motor, public liability and medical negligence cases, between 2010 and 2015. According to a document published by the National Competitiveness Council, Costs of Doing Business in Ireland 2017, legal service prices were 10.4% higher in the third quarter of 2016 than they had been in the comparable quarter in 2013. It is clear from the annual reports of the Personal Injuries Assessment Board, PIAB, that the average employers liability award made by the board increased by 30% - from €27,102 to €35,159 - between 2011 and 2016 and the average employers liability claim dealt with by the board increased by 35% - from €3,866 to €5,241 - in the same period. According to the same annual reports, the average PIAB personal liability award increased by 17% - from €22,686 to €26,562 - between 2011 and 2016 and the average personal liability claim dealt with by PIAB increased by 23% in the same period. The figures are set out in the documentation I have provided to the committee. On 20 April last, PIAB published figures which show that the number of personal injury claims submitted to it last year represented a decrease of 942 on the previous year. The figure in question decreased from 34,056 to 33,114. There was a reduction in the number of motor claims and public liability claims, but the number of employers liability claims increased.

The Government's working group on the cost of insurance has acknowledged that "there is a significant issue in relation to the cost of personal injury awards in Ireland for some commonly occurring personal injuries, particularly those of a less severe nature". I would like to mention as evidence of this that a minor ankle injury can lead to an award of up to €54,000 in Ireland, which contrasts with a figure of €12,554 in the UK. This situation is made all the more dramatic when the legislative reforms that have been proposed in the UK are factored in. Insurance Ireland has provided data on our claims costs on five occasions over the last two years. We are working in co-operation with the Personal Injuries Commission to facilitate the international benchmarking of our awards data. We have made a number of submissions to the Central Bank and the Department of Finance on how information flow to policy holders can be improved. We have also provided for a methodology to allow returning emigrants to benefit from their foreign driving experiences.

Our well-established commitment to reform is apparent from our actions to date. Insurance Ireland recognises and empathises with the concerns of business owners. We are determined to bring sorely needed reform to Irish claims costs. We believe there is a significant opportunity to bring about structural reform in 2018. All stakeholders should redouble their efforts to ensure this occurs. What needs to happen? We are pleased that the Personal Injuries Commission will publish a report that internationally benchmarks Irish personal injury awards against other jurisdictions. When this has been completed, the Government needs to provide a timetable to address the rise in the cost of claims. The PIAB legislation needs to be passed into law. Four years have passed since the consultation process on this legislation commenced. The design of the book of quantum needs to be addressed. More effective deterrents need to be put in place to combat fraud. If these steps are taken as a matter of urgency, the accelerating cost of claims will be addressed in an effective manner and the insurance costs which are having an impact on businesses and motorists will be managed as a consequence. I thank the committee. We look forward to discussing these issues in more detail with members.