Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Question 1: To ask the Tánaiste and Minister for Enterprise, Trade and Employment her views on whether the establishment of the Personal Injuries Assessment Board will reduce insurance premium costs; her estimate of the amount by which they will be reduced; and if she will make a statement on the matter. [18153/04]

Mary Harney (Dublin Mid West, Progressive Democrats)
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The establishment of the Personal Injuries Assessment Board is a significant milestone in the Government's insurance reform programme, which I am confident will lead to reduced insurance premia to the benefit of both consumers and business alike. By eliminating the need for litigation costs where legal issues are not in dispute, the PIAB will significantly reduce the cost of delivering compensation. The PIAB will also offer speedier assessments to the benefit of claimants.

It is generally recognised that litigation costs add between 40% and 50% to the cost of a personal injury claim. It is intended that the PIAB will make significant inroads into this figure. The PIAB will, however, carry out a cost benefit analysis of the new system as against the system prior to the introduction of the board and this will indicate the reduction in the level of litigation.

The pricing and underwriting of insurance is a matter for individual insurance companies and EU law prevents governments from intervening directly in regard to premia levels. However, it is expected that reductions in litigation costs will lead to corresponding reductions in premium levels.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Members on all sides of the House welcome the introduction of the Personal Injuries Assessment Board and are prepared to give it a fair chance to achieve the objective, as set out by the Tánaiste, of reducing insurance premia. There was an unexpected delay of six months in it commencing operation. We had expected that it would be in operation by 1 January.

There is considerable concern among those operating small businesses about the increasing level of premia being charged by insurance companies for employer's liability and public liability insurance. There is a levelling out of costs, but arising from the serious increase in insurance premia over the past four or five years, to the tune of 200% or 300% in many cases in many categories of business, will the Minister estimate the amount by which insurance premia are likely to reduce following the successful implementation of the Personal Injuries Assessment Board?

Mary Harney (Dublin Mid West, Progressive Democrats)
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As the Deputy is aware, the Bill establishing the board was passed towards the end of last year. It was signed into law on 28 December by the President. I signed the ministerial order on 13 April, which was just under four months from the start of the year. We wish we could have done that sooner, but the board had to have the necessary expertise and personnel in place before it could open for business to deal with personal injury claims arising in the workplace, which began on 1 June.

According to the CSO, motor insurance premia are down 14% year on year and it is estimated that level could be reduced by that percentage again or perhaps more. I have anecdotal evidence from people I know of insurance premia having decreased by 30% or 40% but the average is 14%.

On the employer's liability side, the reduction in premia is moving towards 15% to 20%, with some companies experiencing higher reductions. A number of companies have applied for licences to do business here, and I understand there will be some significant announcement in that regard during July. If we can attract one new company to enter each market, that will have a dramatic effect on reducing the cost of insurance.

I acknowledge the support of Members on all sides of the House, including Deputies Hogan, Howlin and others, for the Government's reform programme, a key part of which is the courts and civil liability Bill which the Minister for Justice, Equality and Law Reform has promised me he will have ready before the summer recess.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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Is the Minister prepared to indicate her estimate, which she would have gleaned from personnel she had appointed to the Personal Injuries Assessment Board, Ms Dowling or others, of what small businesses are likely to expect in a reduction in their insurance costs during the year? They have to proceed with financial planning.

I welcome more competition in the market. I also welcome what the Minister said regarding potential new licence holders who will trade in the market. That is an important step.

Given all the planning that has taken place to establish this board, it was indicated that there would be a 31% reduction in the event of the insurance reform agenda being fully complied with and fully completed. I am disappointed the Minister is not prepared to give an estimate of the likely reduction in insurance costs, particularly in terms of employer's liability and public liability insurance for small businesses arising from the establishment of the PIAB. That is what matters, namely, what the establishment of the PIAB will mean in terms of the reduction of insurance costs for the consumer. The Minister might be more forthright in indicating what she expects from the establishment of PIAB in terms of a reduction in insurance costs.

Mary Harney (Dublin Mid West, Progressive Democrats)
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It is the market and competition that will drive down the costs. Given my recent estimate on figures in advance of the local elections, the Deputy will understand that I am hesitant to give any more estimates.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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I am not surprised. The Minister got the multiplier wrong.

Mary Harney (Dublin Mid West, Progressive Democrats)
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Yes. We could see the same levels of reductions again. That is what most experts in the field believe is likely when the courts and civil liability Bill takes effect to deal with exaggerated and false claims. I am meeting lawyers throughout the country who have informed me that their salaries will fall by 40% or 50%, if we can factor that into the costs of insurance.

Phil Hogan (Carlow-Kilkenny, Fine Gael)
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I do not know if that would help.

Mary Harney (Dublin Mid West, Progressive Democrats)
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I think the Deputy can take it that we will see further substantial reductions. Employer's liability and public liability insurance premia are only beginning to reduce. I understand it is expected that by the autumn the reduction will be fairly significant.