Jim Daly (Cork South West, Fine Gael) | Oireachtas source

I welcome the opportunity to address Dáil Éireann on the motion moved by Fianna Fáil on business insurance. The motion sets out many of the issues that have been raised and recognised by the cost of insurance working group, including the lack of availability of affordable business insurance. The Minister for Finance therefore does not disagree with much of what is contained in the motion and would like to set out what the Government is doing to address many of the issues raised.

On the context for the employer and public liability report, the difficulties being faced by many businesses in being able to obtain cover at a reasonable price was the main reason the Government agreed that in the second phase of its work, the cost of insurance working group, chaired by my colleague, the Minister of State, Deputy D'Arcy, would examine the factors contributing to increased costs of insurance to business, in particular employer and public liability insurance. The extensive consultation process that the working group engaged in with the business sector gave greater insight into these difficulties, particularly as to how they are impacting on competitiveness and sustainability. As a result, the working group's report on the cost of employer and public liability insurance makes 15 recommendations with 29 associated actions to be carried out. The recommendations and actions are detailed in an action plan contained in the report with agreed timelines for implementation. The recommendations, covering three main themes, include actions to increase transparency through enhancing levels of transparency and improving data sharing and collection processes, a review of the level of damages in personal injury cases through a Law Reform Commission examination, and improving the personal injuries litigation framework through a number of specified measures.

A key aim overall of both the report on the cost of motor insurance and the report on the cost of employer and public liability insurance is to try to ensure consistency of award levels through the regular use of the book of quantum. In essence, this should mean that no matter what way a claim is settled, whether directly by the insurer, through the Personal Injuries Assessment Board, known as PIAB, or as a result of a court decision, the outcome should be broadly the same. If consistency of awards can be applied in a broad sense, especially for soft tissue injuries, it should have two very significant effects. The first is that there should be less reason for cases to go to litigation as the level of awards granted by the courts will be aligned with those provided by PIAB. This in turn should mean a reduction in legal costs. Secondly, a stable claims and awards environment should mean that the reserves put aside by insurers to meet future claims would not have to be regularly adjusted to reflect new developments such as increases in award levels.

A common criticism received from business stakeholders was that award levels in the book of quantum were too high, particularly in respect of certain soft tissue injuries, compared with those in other jurisdictions and should be cut across the board. However, such a view ignores the fact that the book is a guide which merely reflects the prevailing levels of compensation in Ireland for various types of injury based upon what has actually been paid out in the courts, by the State Claims Agency, in direct settlements by the insurance sector, or awarded by PIAB. Currently, therefore, the only way that the award levels in the book can be lowered is if there is a decrease in the actual level of awards paid out. The report on the cost of employer and public liability insurance recognises the seriousness of this issue through its recommendation that the Law Reform Commission undertake a detailed analysis of the possibility of developing constitutionally sound legislation to delimit or cap the amounts of damages which a court may award in respect of some or all categories of personal injuries. While it is acknowledged that this will take some time, the parallel benchmarking exercise of personal injury awards in Ireland, with awards elsewhere being currently carried out by the Personal Injuries Commission, should add extra impetus to this debate.

There was also a general perception by stakeholders that the book was not being consistently adhered to by the Judiciary, leading to higher payouts. However, a revised version of the book was produced in October 2016 and this has alleviated the key complaint of the Judiciary itself, that the book had become irrelevant having not been updated for 12 years prior to that. The 2016 edition also includes additional injury categories and improved granularity of injuries. Moreover, the passing of legislation, the Personal Injuries Assessment Board (amendment) Bill, another recommendation of the report on the cost of motor insurance, which it is hoped will be later this year, will ensure that the book is reviewed every three years from now on.

There was a major focus in the second phase by business stakeholders on the claims settlement process. It was indicated to the working group that on occasion businesses only became aware at the time of renewal that a claim had been submitted against their policy and sometimes settled. There is a provision in law to ensure a defendant is informed as early as possible about a claim through the receipt of an initial warning letter. The letter is required to be sent under section 8 of the Civil Liability and Courts Act 2004 which provides that where a plaintiff fails to serve a notice on the defendant within two months of the date of an accident, the date of knowledge or as soon as practicable thereafter, he or she may be penalised in costs and, furthermore, the court may draw such inferences from the failure as appear appropriate. However, the working group believes the notification requirements are not being complied with in practice and that no subsequent penalty is being enforced, either in respect of costs or inferences being drawn. There is, therefore, a recommendation to strengthen the wording of section 8 in order to shorten the period of notification and make the penalty provisions more robust.

The relevant law in tackling fraud in a personal injuries context is the Civil Liability and Courts Act 2004. The working group focused on sections 14 and 25, which create criminal offences when false or misleading affidavits and evidence, dealt with in sections 14 and 25, respectively, are knowingly provided in a personal injuries case. It is proposed to amend section 14 such that a court will be permitted to draw inferences if the required verifying affidavit is not lodged within the allowed timeframe.

Attention was also given to section 26, which requires the court to dismiss a personal injuries claim when a plaintiff knowingly provides false or misleading evidence. The working group concluded that section 26 had been invoked on fewer occasions than would have been expected since the Act was commenced in 2004. It believes the provisions of the Act are largely fit for purpose and that the penalties are more than adequate, with fines of up to €100,000 or a term of imprisonment of up to ten years, but are not used to the extent to which they could be. Consequently, the recommendations made in this area relate mainly to encouraging the greater use of the existing provisions.

As regards the reportage, investigation and prosecution of alleged insurance fraud, the major recommendation is that a new set of guidelines be drawn up between Insurance Ireland, An Garda Síochána and the Director of Public Prosecutions. In particular, it should be ensured any case dismissed in court on the grounds of false or misleading evidence, whether under section 26 or otherwise, should at least be automatically considered for investigation by An Garda Síochána under section 25, notwithstanding the different thresholds to be reached in civil and criminal cases. The new set of guidelines will be drawn up in order to standardise and improve the development of cases for submission to An Garda Síochána. A previous protocol agreed to in 2004 between the Insurance Federation of Ireland and the Garda Bureau of Fraud Investigation on the reporting of suspected fraudulent claims represents a good starting point for the formulation of the new set of guidelines.

Overall, the working group strongly believes there is an onus on all insurance providers to become more proactive in tackling fraud, for example, by fighting dubious claims, investing more resources in detection, building up strong evidence bases and following up cases with An Garda Síochána at regular intervals.

The Government understands the motivation behind the motion and agrees with elements of it. We are not, therefore, bringing forward a counter-motion, but I point out that many of the steps called for in the motion are already being implemented pursuant to the reports on the cost of motor and employers' and public liability insurance. However, the Government has concerns about several points in the motion such as those related to the book of quantum and the declined cases mechanism for employers' and public liability insurance. In addition, the Government does not believe it is possible to bring forward the deadlines for the CSO price index or the national claims information database for business insurance. Owing to these concerns, the Government will abstain in the vote on the motion.

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