Charles Flanagan (Laois, Fine Gael) | Oireachtas source

At the same time, the Government has noted that the Bill addresses a specific matter under ongoing consideration by the cost of insurance working group. Also, as has been mentioned by Senators, the Law Reform Commission is now, at the request of the working group, carrying out a detailed analysis of the possibility of developing constitutionally sound legislation to delimit or cap damages in personal injuries awards. We now have an ideal opportunity, therefore, to debate this matter with the benefit of expert analysis of the issues concerned to determine what our optimal legislative and policy responses should be.As reflected in the establishment of the cost of insurance working group, the Government recognises that we have very real challenges with both premium inflation and awards inflation in the insurance sector in this jurisdiction with the ensuing claims inflation coming between them. At the same time we have a highly profitable insurance sector, with the annual profits of our top ten insurance companies running between €6.1 million and €201 million at the end of 2017 and with the total assets of insurance corporations reported by the Central Bank to be €305 billion at the end of last year.

The Personal Injuries Commission has found that soft tissue injury claim costs in this jurisdiction are approximately 4.4 times greater than the comparator costs in the UK, taking account of the relevant capping level that applies. Based on claims paid between 2015 and 2017, the average soft tissue claims cost in Ireland is €17,338 when considered within a €50,000 claim threshold. I assure the House, therefore, that the adverse impact of such prohibitive costs on small business and play centres and on a range of leisure and other activities at local community level is key to the Government's ongoing consideration of reform in this area.

As Members will recognise, this is also an area of the law replete with complex constitutional and legal issues, including the rights of bona fide litigants. Not surprisingly, therefore, the capping-of-damages issue covered by today's Bill is among those being considered by the cost of insurance working group established by the Minister for Finance in July 2016 and chaired by the Minister of State, Deputy D'Arcy. The objective of the working group is to identify and examine the drivers of the cost of insurance and recommend short-term, medium-term and long-term measures to address the issue of increasing insurance costs, taking account of the requirement for the need to ensure a financially stable insurance sector. The group published its Report on the Cost of Motor Insurance in January 2017 and its Report on the Cost of Employer and Public Liability Insurance in January 2018.

Moreover, in response to recommendation 5 of the working group's January 2018 report, the Law Reform Commission is now conducting 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. This now forms part of the commission's fifth programme of law reform, approved by the Government on 20 March 2019. It is my understanding that the Law Reform Commission is giving this project immediate attention with the aim of publishing an issues paper before the end of this year.

It should also be noted that in its final report, of July 2018, the Personal Injuries Commission, chaired by the former President of the High Court, Mr. Nicholas Kearns, noted this development and expressed the belief that the commission is the appropriate body best equipped and resourced to undertake this study. While it is proposed that the commission has a review function under today's Bill, it is important to note that it was not a State body and no longer functions, having completed its work. As such, it would have to be reconstituted and resourced to function effectively as today's Bill would propose.

The decision by the cost of insurance working group to refer the capping-of-awards issue to the Law Reform Commission was not taken lightly. Indeed, as reflected in the group's published reports, this was an issue raised by several stakeholders who contributed to its work, including by reference to the comparative level of awards being considerably higher in this country than in the UK, to which I referred. The working group recognised that a fundamental consideration in any analysis of this issue is whether a legislative cap on damages, or a similar measure, is necessary for the common good. For instance, an argument can be made that broader economic and societal needs may be impacted on by lack of access to insurance as a result of the cost. A further consideration was the danger of incentivising the small minority of people who may choose to take fraudulent advantage of the high level of awards, and to negate the perception that insurance fraud is a victimless crime with no consequences. At the same time, these aspects have to be balanced by the rights of genuine plaintiffs to an appropriate level of compensation. In short, the working group recognised that the State must be cognisant of the constitutional rights of all parties and must balance those rights to ensure any encroachment on them is justified, proportionate and in the common good.

To make progress on this issue, representatives of the Department of Justice and Equality, the Department of Business, Enterprise and Innovation, and the Department of Finance, who were members of the working group's legal sub-group, engaged with the Office of the Attorney General. Arising from this engagement, the three Departments discussed the issue further with the main working group and concluded that introducing such a measure would constitute a significant development in the law, because any legislation that restricts the rights of citizens must be carefully considered and justified to ensure it would withstand constitutional challenge; that the main question for a court, if such a measure were challenged, would be whether an appropriate balance was struck having regard to the exigencies of the common good; and that the appropriate balance can only be struck once all appropriate factors have been taken into account by the Houses of the Oireachtas in considering the legislation.

Therefore, taking account of these matters, the working group concluded it was not in a position to undertake the in-depth analysis required to demonstrate to the satisfaction of a court that the correct balance of constitutional rights and principles could be struck to the common good. Consequently, the working group saw the necessity of further expert research and that the Law Reform Commission might be the appropriate body to carry it out. I confirm that these fundamental legal and constitutional concerns clearly arose in the Government's consideration of today's Bill in conjunction with the Office of the Attorney General. It will also be recalled that, for its part, the Personal Injuries Commission recommended that the future judicial council be assigned the function under its statute of compiling guidelines for appropriate general damages for various types of personal injury and that, pending the introduction of such legislation, the Judiciary participate with representatives of the Personal Injuries Assessment Board and my Department in the formulation of guidelines as to quantum in the case of claims for damages for soft tissue–whiplash injuries.

These are matters on which I am in ongoing consultation with the Chief Justice, while also working in co-operation with the Houses of the Oireachtas with a view to commencing Seanad Committee Stage of the Judicial Council Bill before Easter. I hope the Business Committee might see fit to facilitate such a debate next week.