Joe O'Toole (Independent)

I wish to declare an interest. As vice chairman of the PIAB, I have taken a deep and abiding interest in this area. There are a number of issues regarding the whole area of brokerage and insurance on which we need further information. One of the recommendations of the report is that the client should be aware of the fees and commissions being paid. This should be made clear from the beginning. Brokers need have no apologies for charging fees. If one visits a dentist or doctor, one will pay a fee for work done. A broker doing his or her job properly is entitled to be well paid for it. I would be the last person to pull back on this point. That it is unclear or in some way clouded does not help matters and leads people to draw the conclusion that everyone is being ripped off. That is not necessarily the case.

I would like to see brokers taking an interest in two areas, one of which they have no involvement whatever in and while they have a tangential involvement in the other, they could do much more. The first issue relates to the subrogation clause in insurance claims. This clause does not allow the client to insist that a claim be fought. This is a huge problem in many areas and Senator Quinn has referred to claims being fought on his behalf. I recently spoke to two business people about this issue. They decided that they wanted a claim fought. To do this, they had to write to the insurance company and accept liability if the case went wrong. They did not want the insurance company to do a deal, even though money would be saved, because of the wrong impression it would give and the attraction it would provide to other people. I am referring to circumstances where insurance companies conclude that it is cheaper to settle a claim rather than going to court for two or three days and winning a case against a person who has no funds. In these circumstances, insurance companies will calculate that three days in court may cost €30,000 while it will only cost €5,000 to settle the claim. This is fine until the person is buying a round of drinks in the pub that evening and tells everybody else about it. This sows the seeds for future claims.

The insurance companies do not pay the cost of this and instead put it down to "claims experience". The claims experience for that person, street or town is then dependent on it. As we well know, insurance companies are not in the risk business; they are in the profit business. We need to focus more on insurance companies than on brokers. The companies will add the claims experience on to the costs and charge premia accordingly. There is no incentive for the companies not to settle and to fight claims. Brokers negotiating with the insurance companies should at least begin a negotiation in allowing the client or broker to have some input to the decision on whether a claim will be fought.

The other issue I wish to raise is probably a little outrageous. However, it is a role in which brokers could have a high profile and insurance companies could almost be taken out of the equation. I am referring to circumstances where people feel they are being overcharged for insurance cover. People could enter a tontine arrangement where those who felt this way could form a mutual group. This group would develop a fund over a number of years to cover itself. Let us say that 20 people invested €5,000 per year. At the end of the first year this group, now with €100,000 in the fund, would simply seek insurance for amounts greater than €100,000. After the second year it would seek insurance for amounts greater than €200,000 and so on. There would eventually come a time when the group would simply deal with re-insurers rather than insurance companies. I feel such an arrangement is legal, attractive and possible. However, such an arrangement could not be administered or developed by someone in another line of business and this is where brokers can bring their expertise to bear. They can do a real job, produce a real product and make a real development in something while ensuring they collect their annual fee in the same way as an accountant.

I would trust brokers to develop products along this line. I would like to see more development in this area. There is no reason that this should not happen. It is not like car insurance — people are not required by law to have certain types of insurance. It only requires someone to take a creative approach. While I understand that this is done in a number of places, it is not widespread.

Under this arrangement, brokers would be able to develop a product and use their expertise to establish a new profile. This profile would have more value than that which currently seems to pertain. I would like to hear the view of the Department on this matter. While I am sure it will find 24 problems arising from it, 24 problems are easily dealt with by 24 solutions and that is the business in which we are engaged. Instead of being critical of the work brokers do, we should look at their role and seek ways of enhancing, progressing and developing it. Brokers are important in this and it is important that someone should bridge the gap between insurance companies and the client. Despite what is in the report, I feel a local person is better protected with a local broker than dealing with a direct insurer.

It is not like buying an airline ticket. These are people to whom one will have to go again if there is ever a claim. These people will know their clients and say they are trustworthy. It gives added value and is preferable to lifting the telephone and speaking to somebody in India to get insurance for a property in Dingle. That arrangement does not suit the Irish psyche and I am not attracted to it.

The brokers themselves should take the lead on some of these issues. The great problem with professional groups in Irish society is that they are always under pressure. For instance, it was interesting to hear Mr. Fingleton from the Competition Authority state this morning that his next target was lawyers. I was so relieved because I have been the target of lawyers since I got involved in the Personal Injuries Assessment Board and I am losing votes by the day. Now that they have Mr. Fingleton to deal with, maybe they will take less of an interest in the Personal Injuries Assessment Board.

We should recognise that brokers are the important local link, that it is worth protecting them and that they themselves should take a stand. Lawyers have a problem because everybody saw the problem developing and did nothing about it. This House is currently looking at reform possibilities because we know that if we do not do something about it, it will be taken out of our hands. The same is the case with every professional group such as legal people and doctors.

Brokers should now say they recognise the position and every time there is a meeting of the brokers of Ireland, half of those at the back of the hall will say that they will fight this and get on to the politicians to ensure nothing happens. That is not the way the world works. Change will happen. It is better for the brokers to ask what will happen if they do nothing and find themselves in deep water shortly. It is better to make a few proposals, do their business which adds value, show that they are important to the people of Ireland and to the industry and show that people can have confidence in them.

I ask that it be put to the brokers that in all cases they simply set out their commission and fees. If clients do not like it, let them go somewhere else. At the end of the day, it is a cleaner way to proceed. They are entitled to their fee and should make no apologies for it. Perhaps the Minister of State could give some indication as to whether my idea of a mutual society — I also called it a tontine society but a mutual society would probably be the best description — could be used by people to develop their business protection.