Analysis: The proposals announced do not offer any certainty that premiums will fall by 31 per cent, writes Carol Coulter
At yesterday's press conference in Government Buildings, representatives of the insurance industry were at pains to draw the attention of journalists to one phrase in the documentation. This read: "I should emphasise the tentative nature of the IIF estimate and that cost reductions will be achieved over a number of years in an inter-dependent manner." This came from the chairman of the MIAB Implementation Group, Mr John Corcoran, in the introduction to its Action Plan.
"Tentative" describes much in the proposals, especially in relation to the Personal Injuries Assessment Board, the interim board of which was announced yesterday.
Its first task will be to prepare legislation for the Government which will put the board on a statutory footing. This is expected to be ready by the middle of next year.
The board will also recruit staff for the initial phase and begin work on the compilation of a database for court awards. This will in turn provide the basis for the assessment of the "price" of various injuries, and therefore the awards people can expect when they go to the board following an accidental injury. So the levels of awards will be set, in a general way, by the courts. The board will assess levels of medical injury and make awards only where liability is not an issue.
So far, so good. But there was no information yesterday on how the PIAB will be funded. Instead, the interim board will "revisit" the question of a "funding mechanism for the operation of the PIAB involving the insurance industry". It is clear that, if costs are reduced, the insurance companies will benefit, but it is also clear that there is no agreement with them on how they will respond to this benefit.
There is no agreement either with the insurance companies regarding the provision of their claims data, which would assist the PIAB. The interim board will seek "agreement on procedures" with the industry on this.
The interim board will also set up a "framework" to review the experience gained during the "initial phase" of its work, that is, employers' liability. Presumably the extension of the scheme to motor insurance will depend on what this review reveals.
Another area of continued doubt appears to be on the issue of legal representation. The interim board will work on the "formulation of options and reasoned recommendations" in relation to this, including the payment and recovery of professional fees by claimants. The whole role of lawyers in the PIAB is still unclear.
The Tánaiste, Ms Harney, has also taken note of the widely-diverging estimates of the cost of a PIAB, while not accepting on face value the very high estimates in studies commissioned by the lawyers' lobby groups.
The setting up of the PIAB interim board is only one of a number of proposals, and both Ms Harney and its new chairwoman, Ms Dorothea Dowling, emphasised the inter-dependence of it and other measures, many of them yet to be revealed. These include an accident-prevention programme, on the roads and at work, and a programme of reform of the rules of court. Insurance fraud will be tackled by the use of sworn affidavits; those who make false affidavits will face severe penalties.
Ms Dowling stressed that the problem of insurance costs did not occur overnight and would not be solved overnight. She and Ms Harney also said that most people would prefer a simple and straightforward route to compensation for injury rather than face the ordeal of court proceedings. In this, they are undoubtedly right.
However, they also acknowledged that people will only use the PIAB if they are sure that they will get the same award as they would in court.
If they do not, they will appeal to the courts, and the PIAB will only be another, expensive layer in the process. Indeed, in the report of the Implementation Group on the PIAB, also published yesterday, this possibility is referred to. But Ms Dowling was adamant. If this happened, they would have to "re-examine" what they were doing, she said.