Timmy Dooley (Clare, Fianna Fail) | Oireachtas source

The pooling of everyday risk at a price that can be afforded by individuals and businesses is a practice that has been going on for over three centuries, and without this system of risk sharing, businesses and, indeed, economies could not function and individuals would not have the capacity to go about their normal everyday lives. Insurance has to be affordable, and for it to be affordable there has to be a relationship between what we are willing to pay in compensation for injuries caused and the cost of underwriting that risk.

Any cursory look at the newspapers demonstrates that this relationship has broken down. Injured parties must be compensated, but some recent awards suggest that in the assessment of damages, the need to have regard to proportionality is not always observed. The issue of proportionality in awards was addressed in the Court of Appeal by Ms Justice Irvine last week. In a judgment she concluded that damages can only be fair and just if they are proportionate, not only to the injury sustained by the plaintiff but also proportionate when assessed against the level of the damages commonly awarded to other plaintiffs who have sustained injuries which are of a significantly greater or lesser magnitude.

6 o’clock

She said it was important that minor injuries attract modest damages, that middling injuries attract moderate damages and that more severe injuries attract damages of a level which are distinguishable in terms of the quantum from those that fall into the other lesser categories. This is a significant judgment in that it restates the principle that should govern the assessment of damages and, in fact, a number of personal injury awards by the High Court have been halved by the Court of Appeal, although not without some considerable cost to the defendants fighting the case.

In a judgment just last week, Mr. Justice Max Barrett referred to the flourishing cost of High Court litigation, which he said highlighted the need for a systemic solution. Clearly, we need lawyers to have access to a legal system but if the fees charged put recourse to justice beyond the reach of all but the very wealthy, which is what the judge has concluded, then surely it is high time we addressed the issue as a matter of urgency.

According to the insurance industry, fewer than 8% of policyholders make claims and, in most cases, those claims are entirely legitimate. We must make sure, through our regulatory system, that all such things are settled speedily and fairly, but it is also clear that, for some, claiming on insurance policies is a way of life. Let us be clear. It is the consumer who pays these costs through increased premiums. It is time we had a compensation system that deals fairly with the claims of the majority of decent, honest policyholders and is paid for out of the reserves that are set aside by the insurance industry. The idea that decent, honest policyholders should be asked to foot the bill for fraudulent claimants is a perversion of the original idea of insurance. It is our job, as legislators, to ensure this state of affairs is ended.

See this speech in context