It may be in the public interest for Alan Shatter to listen to vested interests

The court services Bill is ridden with potential for unintended consequences

Minister for Justice Alan Shatter: appears intent on pushing his Bill through, although he has said he will hear any proposed amendments at committee stage this week.  Photograph: Dara Mac Dónaill

Minister for Justice Alan Shatter: appears intent on pushing his Bill through, although he has said he will hear any proposed amendments at committee stage this week. Photograph: Dara Mac Dónaill

Mon, Jul 15, 2013, 01:00

The sight of a Government Minister pushing through important legislation in the face of opposition from vested interests is generally to be welcomed. Particularly when those interests are powerful ones such as the insurance industry and the Law Society. Such is the case with the court services Bill, which has been shuffling its way through the Oireachtas amid the abortion battle and could well be signed into law this week.

The Bill – which will increase the jurisdiction of the Circuit Court to €75,000 (€60,000 for personal injuries) and of the District Court to €15,000 – should in theory increase efficiency and reduce costs. However, if you are looking for a Bill that is ridden with the potential for unintended consequences you do not need to look any further.

It is these unintended consequences that are exercising the minds of the insurance and legal industries. The argument of the insurance industry – in the form of Insurance Ireland and the Irish Brokers Association – is that when you increase the size of awards in the lower courts it results in more insurance disputes going to court.

This means higher costs for insurance companies, which are passed on to policy holders. Figures such as a 30 per cent increase in premiums are being bandied about. The industry claims the argument is supported by what happened the last time awards were increased in 1991. It also argues that the effect will be amplified this time because people will be tempted to opt out of the lowest-cost route – the Injuries Board – and take their chances in court.

The industry is supported in this by Dorothea Dowling, chairwoman of the Injuries Board and best known as the head of the Motor Insurance Advisory Board, which gave birth to the Injuries Board as part of an initiative to cut insurance costs in the 1990s.


Legal profession’s objection
The legal profession – in the form of the Law Society – has a different objection. It supports the higher limits (and presumably the extra work for its members, who were never fans of the Injuries Board) but believes the lower courts cannot cope with the extra workload. The result will be lengthy delays in civil cases that will spill over into the criminal and family courts.

However, as things stand, Minister for Justice Alan Shatter appears intent on pushing his Bill through, although he has said he will hear any proposed amendments at committee stage this week.

It remains to be seen if any are advanced. To date none of the Opposition parties has shown much interest. Maybe they have been distracted by the abortion legislation. Maybe they are uncomfortable with the notion of being advocates of the legal and insurance professions.

It is an interesting dilemma. One of the many reasons advanced for the failure of the Irish economy – and by extension the apparatus of government – is that we did not have enough of this sort of thing. Vested interests – particularly in the areas of finance and property – exercised undue and very damaging influence.

So here we have a tough-minded Minister pushing through important legislation in the face of such opposition. What’s not to like? Particularly when this is not some personal frolic – it is part of the EU-IMF troika-induced effort to cut legal costs. Nor is it the case that the Department of Justice is blind to the potential unintended consequences or has ignored them. Its view is that, on balance, the benefits of higher awards outweigh the potential downside risks.

So what is the argument for a last-minute rethink or delay? If it is anything, it is the number and variety of vested interests and also the credibility of Dowling, who seems to be pulling a lot of strings behind the scenes. Her independence and role with the Motor Insurance Advisory Board gives her great clout.

The opposition of the insurance industry is also significant. The last time awards in the lower courts went up the industry was able to push up margins on the back of higher costs. This time around it is either being deeply cynical or is genuinely concerned that pushing premiums higher will produce diminishing returns.The self-interest behind the Law Society’s objection is far more naked, but it is valid nonetheless.

It is hard to see how anything can be lost – apart from a little face for the Minister – from postponing the introduction of the new awards until these issues have been ironed out.

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