Written answers

Wednesday, 21 November 2012

Department of Public Expenditure and Reform

Insurance Costs

Photo of Bernard DurkanBernard Durkan (Kildare North, Fine Gael)
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To ask the Minister for Public Expenditure and Reform the extent to which his Department has examined the insurance costs, public liability or otherwise affecting the areas of responsibility governed by various Government Departments and their respective subsidiary bodies and agencies, with a view to achieving maximum benefit to the Exchequer; and if he will make a statement on the matter. [51912/12]

Photo of Brendan HowlinBrendan Howlin (Wexford, Labour)
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State indemnity for personal injury and third party property damage is set out in the National Treasury Management Agency (Amendment) Act, 2000 where the management of personal injury and third party property damage claims against certain State authorities, and underlying risks, was delegated to the National Treasury Management Agency (NTMA). When performing these functions, the NTMA is known as the State Claims Agency (SCA).

Under the general rule of State indemnity enacted through statutory provisions above, certain State bodies are indemnified by the Minister for Finance for the following:

- Personal injury to employees of the State;

- Personal injury to third parties (the public) – this includes injury resulting from medical negligence;

- Third party property damage – this includes claims arising from road traffic collisions (RTC’s).

Since 2001 the remit of the SCA has been expanded through various delegation orders based on a value for money analysis. More recently in 2010 the management of Health Service Executive (HSE) personal injury (non-clinical) and third party property damage claims was delegated to the State Claims Agency (SCA) under the National Treasury Management Agency (State Authority) Order 2009. 13 other State authorities were also newly delegated to the SCA in 2011.

Additionally, the following classes of claims were delegated to the State Claims Agency with effect from 7th February 2011:

- Bullying/harassment claims by state employees, which allege personal injury;

- Claims by members of the Defence Forces alleging personal injury whilst serving abroad – includes stand alone PTSD cases; and

- In-cell sanitation claims by current and former prisoners.

The National Treasury Management Agency (Delegation of Claims Management Function) (Amendment) Order 2012 formally delegated management of Thalidomide and nimesulide (Aulin) claims to the State Claims Agency on 3rd April 2012.

In conjunction with the State, the SCA has a strong track record in reducing the cost of managing claims under its remit. For example, during 2011 the SCA achieved significant savings on claims and related legal costs associated with the management of the Clinical Indemnity Scheme (CIS). An independent actuarial assessment projected that €106 million would be required to satisfy CIS claims and related costs in 2011. The outturn for the year was €81 million, representing a saving of €25 million.

Prior to the delegation of the management of Employers Liability / Public Liability/Property Damage claims to the SCA, the HSE and 13 other State Authorities were paying in excess of €21 million in insurance premia per annum. Only approximately €1 million has been expended to date in the management of such claims since 2010, yielding a cash flow saving of €41 million. Based on the current outstanding estimated liability associated with these delegated claims since 1st January 2010, a long term saving of at least €15 million will be achieved for the State by managing these claims on the “pay as you go” basis operated by the SCA.

Currently, the Department of Public Expenditure and Reform is in contact with all Government Departments to identify, on the basis of a cost benefit analysis, what other State agencies should be delegated. It is expected that these agencies will be delegated early next year.

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