The cost of insurance has doubled for Irish companies in two years and it is now ranked as the greatest threat to their survival. Because of that, publication of legislation to formally establish a Personal Injuries Assessment Board (PIAB) will come as a considerable relief to many firms now under pressure.
It is, however, just one of the measures promised by the Coalition Government to reduce insurance premiums. Action to encourage competition within the industry and to tackle bogus claims is still awaited.
The Tánaiste and Minister for Enterprise and Employment, Ms Harney, reassured members of the public yesterday that the new board was not being established to reduce the value of insurance awards. Litigation, she said, added in excess of 40 per cent to the cost of legal settlements. And the elimination of those overheads would significantly reduce the cost to insurance companies. She expected much of that benefit to be passed on by way of reduced insurance premiums. Initially, the PIAB will deal with personal injury claims. But its work will gradually be extended to injuries arising from motor accidents and public liability.
The reforms proposed by the Tánaiste are being resisted by the legal profession because of the negative impact they will have on the earnings of its members. The profession questioned its constitutionality and argued the new system would disadvantage an injured person in pursuing a claim while favouring insurance companies. The Bill will also be subjected to intense scrutiny when it comes before the Dáil. Fine Gael has insisted such fundamental change must be carefully considered. And there may be some delay in the PIAB's planned, mid-January start-up date. But the high - and growing - cost of insurance is likely to guarantee passage of the Bill.
Ms Harney quoted independent research which showed that claimants in Ireland can wait up to six times longer than their UK counterparts before negotiations open on a personal injuries claim. That situation reflects the stranglehold of the legal profession. The Tánaiste said she was responding to public demand for an alternative to the existing litigation system. New arrangements will involve publication by the board of a document giving the "going rate" for particular injuries. Settlements may, as a result, be reached without reference to either the PIAB or the courts. Where legal issues are not in dispute, PIAB assessors will adopt the continental, inquisitorial approach, in establishing the facts of the case. The costs involved will be levied on the insurance companies.
This Bill is a key element of the Government's insurance reform programme. An equally important piece of legislation is, however, still awaited. A Civil Liability and Court Bill will attempt to streamline court procedures in personal injury cases and outlaw spurious and exaggerated claims. Given the financial pressures being exerted on Irish industry by rising insurance costs, the Government cannot delay. Too many jobs are at risk.