Harney makes insurance reform her top priority

The reform of the insurance industry will be the main political priority for the Tánaiste, Ms Harney, over the coming 18 months, she said yesterday. The Minister said high insurance costs were one of the biggest issues facing Irish society with negative effects for households, motorists and business.

High insurance costs were costing jobs, she said.

During a speech delivered to the annual conference of the Insurance Institute of Ireland, Ms Harney announced she would establish a Personal Injuries Assessment Board (PIAB) on an interim basis from next month.

The board will begin establishing a database of court awards in insurance compensation claims and would be ready to "hit the ground running" when it was established on a statutory basis.

The PIAB is a board to which insurance claimants can seek a ruling on the size of the claim to which they are entitled. The issue of liability would then be the only matter to be fought out in the courts. If the board's ruling on the size of the claim to be awarded was unsatisfactory to any party, that party could appeal to the courts.

The objective is to reduce the cost of claims, primarily by cutting legal costs while not reducing the size of claims.

Ms Harney said she was to bring proposals to Government within a matter of weeks outling an action plan for the insurance sector, aimed at reducing the cost of premiums. The elements of the plan would be based on the Motor Insurance Advisory Body report. That report's recommendations, to which the Government has signed up, "also relate to other forms of insurance and to public and employer's liability in particular. The action plan will reflect this".

"The plan will include a focus on improvements to court procedures, the provision of greater information to consumers, and the implementation and enforcement of the Road Traffic Acts."

Ms Harney, speaking on RTÉ Radio 1, said insurance costs were one of the biggest issues facing Irish society, affecting as they did householders, motorists and business. She said she hoped the PIAB would "dramatically reduce the cost of delivering claims".

She said the price of insurance was costing jobs and causing some employers to go without cover. This was an issue she was determined to deal with.

"The national interest has to be put before any vested interests."

She said that up to 60 per cent of claims awarded were currently spent on legal and other costs.

"Some elements of the legal profession" had expressed concerns about the PIAB, she said. The Law Society had met her and made its views plain.

The director general of the Law Society, Mr Ken Murphy, said it had met with the Tánaiste. "We have assured her we want to be positively engaged in this process." He said the society had "no objection in principal to the introduction of a PIAB provided that, in its operation, it was fair and makes sense in economic terms". This was the society's primary concerns.

He said the board should not be established unless there was a guarantee that any benefits that arose would be passed on to the consumer by the insurance industry. He said the society would be concerned if there was any bias against claimants.

The establishment of the board "may or may not" lead to lower legal costs, he said. There was a danger the board could become another layer of cost and delay in the personal claims process.

Ms Harney said the plan she would be bringing to Government would involve a number of ministers.

A "stakeholder" will be identified as responsible for the delivery of each recommendation in the action plan; a timeframe for each measure will be outlined; and a projection of the expected effect on premiums will be made.

In February of this year, the Attorney General, Mr Rory Brady, SC, in an article in The Irish Times, wrote: "The proposal to establish a Personal Injuries Assessment Board will not resolve the problems of personal injury compensation." Mr Brady, who was chairman of the Bar Council at the time, said the establishment of such a board would be "ineffective in reducing costs".