Michael Kennedy (Dublin North, Fianna Fail)

Ba mhaith liom mo chomhghairdeas a ghabháil leis an tAire, Deputy Martin, and the Minister of State, Deputy Michael Ahern. I support this legislation. Some of the Members who have spoken have legal backgrounds. I have practised as a professional insurance broker for more than 30 years, working on behalf of insurance consumers. It is my experience that insurance premia have increased consistently in that period due to insurance companies incurring major losses. Companies frequently imposed across the board increases, for both private and business customers. People may choose to ignore the statistics but they undoubtedly show that motor, public liability and employers' liability claims were consistent loss makes for insurance companies. Those clients who had the misfortune to have claims paid out of their policies suffered a further penalty when their insurance company imposed a claims loading.

Before the advent of the PIAB system, most claimants brought their claims to court. It is my experience that it generally took three to five years for claims to be settled. These delays caused great annoyance to genuine claimants. Furthermore, those policyholders against whose policies the claim was made suffered an increased premium for the duration of the three to five years in which the claim was awaiting a court hearing. The insurance companies made sure no-claims bonuses and so on were not paid to such persons. There is no doubt that insurance brokers had great difficulty in trying to negotiate the loading imposed by insurers on these policyholders.

One of the consistent problems for insurers in the pre-PIAB era was that the courts were inconsistent in granting awards for seemingly similar claims. There was a general view that particular judges were more or less likely to award substantial amounts. This was a factor in the apparently relentless annual increases in insurance premia. Since the introduction of the PIAB system, there has been a major reduction in the number of claims and the amounts of payments. There has also been great consistency in the amounts awarded for similar injuries. In 2005, for example, the number of claims in the court system reduced from some 40,000 to fewer than 5,000. This has allowed the courts to deal with genuine cases in a more expeditious manner. Under the previous system claimants had to wait three to five years to have their cases settled and receive their money. Notwithstanding these developments, I have not seen any poor solicitors or barristers. On the contrary, they seem to be flourishing. One can only wish them good luck as they play an important role.

Before the advent of the PIAB, legal costs at 40% were payable on the settlement achieved by the claimant. A person who received a settlement of €10,000, for instance, had to pay €4,000 to his or her legal representative. The difficulty in this regard is that it was insurance consumers who paid these costs via increasing premia. Insurance companies are not the Society of St. Vincent de Paul but in business to make profits. When they lose money, the losses are passed on to all customers through increased premia, not just those unfortunate persons who have a claim against their policy.

It is my experience that in the last three years insurance premia across the board have reduced by 50%. This is a direct result of the PIAB system by which claims have been substantially reduced in numbers and costs. There is now greater competition within the insurance industry which was open in the past to charges that a cartel was in operation. Both private and commercial business clients have benefited from reduced premia. I suggest to Deputies D'Arcy and Penrose that if their premia have not come down by 50%, they should consult a good insurance broker.

Reverting to a situation where claimants were encouraged to go to court would undoubtedly lead to higher settlements and drive premia up. This would not be in the best interests of insurance consumers, whether private citizens or businesses. While insurers are currently making large profits, it would be a sad day if we reverted to the problems we faced in the 1970s, 1980s and 1990s when insurance premia were considerably higher due to a lack of competition. This Bill will continue the policy of streamlining the settlement of personal injury claims in a non-adversarial manner and replacing the old system with a speedy, low cost and user friendly one. I do not wish to suggest that claimants have no rights to go to solicitors because if their claims are genuine they should be able to take that course. However, the provisions in this Bill are in the best interest of insurance customers. I strongly urge Deputies to support this Bill.

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