If the Minister thought he was on to a popular price cutting issue, and the general public hoped for prompt action to reduce some major perceived inequities of the insurance market, both will be appointed by the Deloitte & Touche report evaluating insurance costs in this State which was published yesterday. Before the inquiry was set up, there was a considerable amount of concern centring on expensive legal procedures, the cost of motor cover (particularly for young males up to the age of 30) and the belief that awards were grossly out of line with settlements in other countries. The broad sweep of the report effectively undermines all three contentions.
Nevertheless, it does provide a mass of material relevant to reform of some aspects of insurance. Mr Rabbitte is in favour of its most eye catching proposal, the setting up of a Personal Injury Tribunal to deal with minor cases in which there is no dispute about liability and where legal costs will be virtually non existent. He has promised to appoint a working party to see how this can be done, and also to look for other ways of handling personal injury claims. Some complementary recommendations, such as guidelines for general damages awards and a method of deterring frivolous claims encouraged by solicitors, are also likely to have a beneficial effect on the volume of cases and the speed with which they are processed.
Small firms, too, may find that the burden of employer and public liability insurance, which the report shows to be disproportionate in comparison with premiums paid by large firms, is reduced if its recommendations are put into effect. Part of the reason is the lack of awareness and implementation of health and safety regulations by firms employing ten people or less, demanding greater government activity, but a more equitable approach by insurers is also necessary. Small enterprises suffer from not being businesslike in looking for insurance.
Some external factors influence the level of premiums in this State, such as the long and costly delays in taking cases through over worked courts, and the fact that by comparison with many other European countries less social welfare is available to cover injury costs. The courts problem has, to some extent, been tackled and may have an effect on premiums in time; the latter issue, being structural, is not so easily dealt with. One of the undoubted advantages of the report is that it highlights the difficulties of making useful comparisons with other countries and also the lack of statistics on awards to establish trends.
There will be some disappointment at the findings about motor insurance. Premiums here are higher, sometimes very much higher, than elsewhere in western Europe, and claims are on average four times more expensive than in the United Kingdom, reflecting "the level of benefit demanded by the motorist". Taking account of the inflated payments made for some relatively small claims, this is a rather passive comment. But there is sound common sense in demanding a closer alignment of premiums to a driver's record instead of making the safe subsidise the unsafe. How to translate this principle so as to benefit the younger careful driver is a problem for Mr Rabbitte, and the report offers some useful suggestions for solving it.