Anthony Lawlor (Fine Gael) | Oireachtas source

I move: "That the Bill be now read a Second Time."

I welcome the Minister to the debate on this Bill. I thank my colleagues in Fine Gael for allowing me bring it forward. I also thank the Minister for being present and for his advice in my discussions with him. I thank my work colleagues in the office, Fintan and Adam; the various groups with which I consulted such as the Irish SME Association, ISME, the Irish Farmers' Association, IFA, and the Vintners' Federation of Ireland, VFI; and the legal personnel to whom I spoke about this legislation. I must also acknowledge the work the Government has been doing on this. The former Minister of State at the Department of Finance, Deputy Eoghan Murphy, set up the cost of insurance working group and, following this, the Personal Injuries Commission, PIC, under Mr. Justice Nicholas Kearns, was established, which brought forward a telling report. The cost of insurance working group made a number of recommendations as well.

I will relate a couple of stories. James is a young driver. He is 22 years of age. He has his own car valued at €1,800. He goes to look for insurance on it. He cannot get fully comprehensive insurance. All he is offered is third-party fire and theft insurance. The first insurance payment he was supposed to make was €4,000. He eventually got this down to €2,000. A small publican living in the locality saw his insurance rise from €5,000 to €7,000 over four years. Lately I have met people who own play centres. Rachael is a woman who has a business in which she ensures that everything is done properly. She has had a couple of claims against her, which she contested. On one occasion the judge mentioned the fact that she was not negligent in the business she had run and that what happened was purely accidental. The claimant, a young child, received €26,000. Her insurance has risen to in excess of €15,000. There must be some cases in which personal responsibility is carried. Some play centres have experienced insurance increases of 300% in recent years. A number of them have had to close because of this insurance increase.

When I started doing research on this, I inquired as to why premiums are so high and there are a number of reasons. I refer to insurance companies' profits, which in recent years have been excessive. The Minister of State at the Department of Finance, Deputy D'Arcy, said insurance companies must pass on some of the profits they are making back to premium holders and reduce premiums. Levies are another reason premiums are so high. Government levies on motor policies are currently 7%. This is associated with failed insurance companies in the past, such as Quinn Insurance. We will all be paying 2% ad infinitumto recoup the money the State paid into that. Fraud is another reason. Insurance fraud is probably at an all-time high. The Judiciary, in fairness to it, is starting to recognise this and is working with insurance companies to reduce the volume of fraud. Claims, future claims and awards happen to constitute the most costly part of an insurance premium. Up to 70% of one's insurance premium, whether it is for one's car, one's home or one's business, is associated with awards. The awards that have been made can be broken down as follows: of the awards paid out through the courts or the Personal Injuries Assessment Board, PIAB, 90% to 95% are for under €50,000. This has increased by 42% since 2011. Most of these awards come through the courts and they are mostly small claim awards. Regarding PIAB, a body that was set up in 2003 to try to reduce insurance costs, the average payout for a whiplash claim in 2018 was €18,581. According to PIAB, 70% of all claims concern whiplash.

I then looked at comparisons with other countries. The PIC under Mr. Justice Nicholas Kearns found that insurance awards here are 4.4 times higher than in the UK. I refer in particular to whiplash claims. In the UK, a green book is used, whereas here we use a book of quantum. The green book pays out between £500 and £3,000 for small injuries. In the book of quantum, this can rise to up to €15,700 for similar claims. The cost of insurance across Europe for small, minor injuries, general damages ranges from zero in France and Finland up to €6,000 in Germany, so our awards are way out of line. As a result of this, the cost of insurance here is higher. The average car insurance premium in the UK is £477 for all motor vehicles, in comparison with the average premium for car insurance here, which, according to AA Ireland, across all age sectors, was €998 in 2018.

PIAB was established to remove as many cases as possible from the courts. As a result, the cost of insurance dropped for the next ten years. However, PIAB is currently basing its awards on the book of quantum. The book of quantum is based on historical awards made through the courts. Sixty per cent of all cases with which PIAB deals are motor-related. Of these, 80% of the cases dealt with relate to whiplash. The PIC report makes ten recommendations, key among which is the Judicial Council Bill 2017, which will come before the Seanad next week. The PIC recommends that guidelines be instrumental. However, are guidelines strong enough, and do the courts have to take the guidelines on board? The key is consistency of awards. When a case is taken before a court, it depends on the judge as to how much is given out as an award. Judge A could award €20,000 while Judge B could award €10,000. There seems to be no consistency in awards. The Law Reform Commission, LRC, has been tasked with looking into legislation which may be robust so as to be able to reduce these awards.

I have considered whether or not this legislation is constitutional. The Supreme Court, in Sinnott v. Quinnsworth, put a cap on awards that can be made under general damages. This was done in 1984 to the tune of £150,000. Section 49 of Civil Liability Act 1961 provided for a cap of IR£1,000 on certain types of damages. Since then, various Ministers have increased this to €35,000.

The Bill itself is straightforward and simple. The first section deals with the definitions and interpretations of the various terms used throughout the legislation. The key definition relates to "general damages". This means "compensation for non-monetary damages for pain and suffering incurred by a claimant and which is sought to be recovered as part of a claim for personal injury".

Section 2 deals with the maximum level of damages for personal injury. This requires the Minister to make regulations.

Section 3 concerns considerations to apply to the making of the regulations, that is, what the Minister must take on board. He or she must take on board what is fair and proper and right for each claimant.

Section 4 states that the regulations laid down by the Minister must come before both Houses of the Oireachtas and be passed. The purpose of this is to ensure we scrutinise the regulations.

Section 5 deals with a review of the regulations. Section 6 deals with the fact that the book of quantum must be brought into line with the regulations the Minister makes.

Section 7 deals with the operation of the Bill, allows for a review when it is eancted and takes into consideration those people who should be considered with regard to the review.

Section 8 sets out the Short Title.

I have outlined some of the many factors that must be taken into consideration as we seek to deal with high insurance premiums. This legislation seeks to deal with the amounts of the awards that are being paid out at the moment, which is a key factor. On the basis that it is trying to address this issue, I commend the Bill to the House.