Joe O'Toole (Independent)

I second the motion. I wish to make a formal declaration of interest, since I am member of the Personal Injuries Assessment Board.

I very much share Senator Ross's view that it was entirely unnecessary to table an amendment. I agree that we should make no excuse for the insurance industry. I have seen surveys showing that insurance costs have risen far higher in Europe, including Ireland, than they have in the US since the 11 September 2001 attacks. I see re-insurance companies go out of business, and we all know what Swiss Three went through in the first few months afterwards. However, we also know what they have done for the past 50 years and what they will do for the next 50. They are not in the risk business. One of the reasons we need this kind of debate and these kinds of decisions is that insurance companies, despite the popular view, are not open, liable or exposed to risk. They do not operate by taking chances. They cover others' risks without accepting any themselves. They work out the cost of providing people's insurance, and to those costs are added the administrative costs and the profit. That is how they work out the premium.

That simple list is important because there is no great pressure on insurance companies to reduce costs. It makes no difference to their bottom lines. The higher the premia, the greater their percentage increases will be. If they have a vested interest in any direction, it is in the way things are currently moving. I say that not in any accusatory way, for it is a statement of fact. We must ask ourselves how to approach the issue. If I work backwards taking the points raised in the Government amendment, I find myself in agreement with 99%. The line about the effects of the 11 September 2001 attacks is the only one that could easily be dropped, for I do not see why we need make that excuse for the insurance companies.

The problem stems from the costs: the compensation paid per accident, the cost to whomever when someone has an accident. Every step of that way, a cost control is required to bring Ireland into line with other countries. When I say "cost control", I do not mean "price control", for the largest element of cost in accidents is legal. Any number of surveys have been conducted, and statistics are available from all sorts of viewpoints – from Deloitte & Touche in 1996 up to IBEC in 2001 – showing that legal costs in settling accident claims account for somewhere between 25% and 50% of the total. In many cases, the legal costs are higher than the net award. We cannot live with that reality.