Mr. Jackie McMahon:

FBD Insurance is the only indigenous insurer. We are part of and embedded in the community, with 34 branches in cities and towns throughout the country. Insuring farms and small businesses is our business. They are critically important to us and represent 85% of our premium. It is our job to be there when things go wrong. We have a proud and long tradition, spanning more than 50 years, of paying claims and of being there when things go wrong.

From 2014 to 2016, FBD Insurance was making a loss. It is in our customers' interest that we have stabilised and returned to making profit. In order to stand by our customers and pay our claims, we must be stable and profitable. We stabilised matters by taking a raft of measures, including charging our customers more. The cost of insurance is too high. It is affecting our customers' ability to do business and that affects us. A great deal has happened in the attempt to address the cost of insurance, but not enough has changed. With the permission of the committee, I will share FBD Insurance's insights into why this is the case and what must be done.

First, I will summarise what is causing the high cost of insurance. In essence, Ireland has too many claims and those claims are costing too much. People are too willing to make a claim and advisers are too willing to encourage them. Compensation payouts are simply too generous and the cost of getting to a payout decision is too high. To address the root cost of the high cost of insurance, all roads lead to our legal system. The legal system dictates the level of award. It sets the market price that determines the level of our awards, both in and out of court, and the system creates a vicious cycle. High payouts with no downside encourage claimants and high legal fees encourage certain solicitors and barristers to take and make the case. The legal system is difficult to reform and resistant to change and practitioners have little to gain and, perhaps, much to lose.

I would go further. FBD Insurance does not recognise our legal system as the root cause of the problem. We do not have the capability, or at least we have not demonstrated the capability, to fundamentally reform the system. Litigation is always expensive. I will share how costs spiral as a consequence of this system. Take the example of a soft tissue injury from a low impact collision, meaning there was little or no damage to the car. The occupant has a sore neck. Bear in mind that soft tissue injuries comprise approximately 80% of our motor claims. It is the type of injury that some jurisdictions do not recognise or for which they do not pay or pay very little. Normally, it will take three years and up to five years from the date of the accident until the case is heard. The Injuries Board will assess the injury 12 to 18 months after the accident based on a medical report that gives a six month forward prognosis but the majority of claimants will continue to report pain right up their day in court, three to five years after the accident. The judge will make an award for the same injury based on three to five years of reported pain. Court awards, determined later than the Injuries Board, are higher and costs are significantly higher. The key insight is that the level of award is based on the length of time the complainant is complaining of the pain as opposed to the amount of pain the complainant feels. Compensation is more a function of time than of suffering. There is a major incentive, therefore, to bring a claim to litigation.

FBD Insurance has previously stated what it believes must be prioritised. Our key recommendations remain outstanding or are work in progress. We should lower the level of awards. Why do we pay four to five times more than what the UK is already trying to reduce? We must recalibrate claimants' expectations. The proposed judicial council and its proposed redrafting of the book of quantum can be the vehicle, but awards and soft tissue awards in particular must be significantly and consistently lower.

FBD Insurance also believes that we must cap awards, implement what one might call a front stop on the legal system's generosity. We need a standardised objective approach to assessing whiplash, a measure of pain that is not linked to the time it takes to settle the claim. There must be a more efficient process up to and in litigation. The vast majority of soft tissue injuries should be finalised in the Injuries Board.

Insurance companies must be more transparent and publish premium levels. They must work harder on fraud. We need help to be allowed to share data. Finally, we must establish a dedicated insurance fraud investigation unit with An Garda Síochána. In a nutshell, we must build momentum and drive home meaningful reform of the legal system.

The chief executive officer of FBD Insurance, Ms Fiona Muldoon, has said that Irish society can have either high injury awards or cheap insurance, but not both. As legislators, the members of the committee have the sole ability to help deliver what is to the greater benefit for most in our society.