Seanad Éireann - Volume 130 - 20 November, 1991
Motor and Liability Insurance: Motion (Resumed).
Debate resumed on the following motion:
That Seanad Éireann notes with concern the cost of motor and liability insurance and requests the Minister for Industry and Commerce to take urgent steps to remedy the position.
Acting Chairman (Mr. O'Donovan) Acting Chairman (Mr. O'Donovan)
Acting Chairman (Mr. O'Donovan): I would like to welcome the Minister to  the House. Senator Cullen, you have 15 minutes.
Mr. Cullen Mr. Cullen
Mr. Cullen: I would like to welcome the Minister to the House and wish him every success in his office. I have every confidence, as I am sure has everybody in the House, that he will do exceedingly well.
I welcome the opportunity to speak to this motion. The subject of motor insurance is an emotive one and common to every household in the country. Therefore, it is a subject that people understand, or in many cases misunderstand. Everybody seems to have a lot to say on the cost of motor insurance, in many cases rightly so, but the difficulty is in identifying where the solution lies. I believe firmly that it is a combination of many different possibilities and not just one solution, that will bring about the lowering of insurance costs. In the time I am allowed I shall try to deal with some of the issues that are pertinent.
I believe one has to go back and look at how one comes by a driving licence as one of the factors that causes so many accidents, particularly accidents among young people. This is the area of greatest concern to all of us. It is where the highest costs are and where the highest claims are experienced. I have held the view for many years that accessibility to a driving licence in this country by comparison with many of our European partners is far too easy. Because of that the right to take a vehicle — be it a motor cycle, a car, or van or whatever it is — on to the roads is not valued as in European countries. The testing standards one has to go through to acquire a driving licence here are very deficient and I believe there is a contributing factor to the high level of accidents that occur among young people.
For example, in Denmark one cannot just do a series of lessons and on a given day go out and do a test and be granted a driving licence. One must do driving  tests under certain specific conditions. You have to do what I would call the normal driving test we have with regard to being able to park the car, reverse the car, know the general rules of the road. In other countries you have to be able to drive in fine weather and prove that you can do so and, as part of the driving test, you have to do a test in very severe winter conditions. You are tested on your ability to control a car in very difficult conditions. Somebody may say we do not have as much ice and snow as they have in some European countries but we have dangerous enough driving conditions to deal with and people who get a licence at a young age may not be able to cope with such conditions, due to the lack of expertise and experience. That is an important factor. On the Continent a person has to learn to drive in snowy conditions and the ability to drive in wet conditions is regarded as essential. Who can say that in a country like Ireland we do not have a very wet climate? What specific onus is on anybody in this country to take their driving test in very wet conditions? There is none.
The experience one must have to get a driving licence is very limited and it does not cover all of the conditions that people are going to meet in the normal course of driving a vehicle. Because of that young people lack experience of driving in all kinds of weather. In my opinion that, in itself, is one of the contributory factors in the high level of accidents among young people. A person should be tested in a specific place to drive a car at speed, to drive a car in very wet conditions, in windy, icy and even snowy conditions if that is possible. Driving in the different conditions people will meet in the normal course of their driving should be a fundamental and basic part of the driving test. Thus, when people qualify and gain their driving licence it is something far more valuable, something they will treat with far greater care than I believe they  do at present, simply because accessibility to a licence is perhaps a little too easy.
It may be said that could be an expensive process but so be it. One has to remember all those who are killed and maimed because of the action of inexperienced young drivers.
A licence granted to a person on the Continent is granted for life. It costs in the region of £300 or £400 but payment can be phased over a period and it is not beyond the wit of anybody to acquire a licence. The proof of that is there is nobody deprived on the Continent, irrespective of background, socially or otherwise, of access to getting a driving licence and once they get it they are qualified and they are far more responsible. We only have to look at the claims; that in itself is a contributory factor and is something I would like looked at.
Why the Department or bureaucracy needs to be the testing body is beyond me. I do not think that is necessary. It clogs up the system, it becomes heavily bureaucratic and it entails all the difficulties involved in that area. An independent body run on a commercial basis and allowed to function as a commercial operation should be involved in this area. I think it would be far more efficient, less hamstrung, far more focused. The standards I have outlined for qualifying for a licence could be set out in a more organised way and that is another aspect I would like considered.
I remember speaking two or three years ago in the Dáil about the high cost claims. It is clear to me, as I think it is to everybody in this House and elsewhere, that we desperately need a specific quantum book of damages. We all know that the amount of law being practised in the High Court in this area today is practically nil. Something approaching 80 per cent of cases are agreed on the steps of the High Court, less than 20 per cent actually go to court.
Who are the beneficiaries of all of this? It is the legal system. Who are the people  who should draft a quantum book of damages? The legal people. They have a vested interest in not going down the road of putting in a very specific quantum book of damages which limits substantially the type of claims and the value put on injuries. I believe in the UK a whiplash claim is £1,500. That is it, that is specific. People know what they are getting. We know it can run to £40,000, £60,000, £70,000. You can put any figure you like on it. There is an incentive for people to pursue claims in a legal sense with all that entails. It suits the legal profession. They are not necessarily working on a percentage basis but in many cases it is a case of “no foal, no fee”. There is an incentive to go for the highest possible claim in terms of their reward. That is a fact of life and there is no point in pretending it does not happen. You will not begin to seriously tackle the high levels of claims until a specific quantum book of damages is introduced to deal with the many types of insurance claims. It is my view and it is something that has been said to the legal profession on many occasions. If they have not responded it is the duty of the Government to force them to do so. Enough signals have been sent to them to get their act together to do this. If they do not do it, whether it comes under the Department of Justice or any other area, they should bring in their own people to draft the quantum book of damages and say: “That is it; that is what is going to happen from here on.” Look at the impact that could have on the level of insurance claims and the attitude people have to going after insurance companies. The perception is that insurance companies have tons of money; it is only the insurance company and there is no problem. People tend to forget that the high premiums they are paying specifically on car insurance are the result of that practice. It is time something was done about this.
The legal profession have been aware of this for some time and in my view  they have not responded sufficiently. The Department of Justice should look at it and get their own people to draft a quantum book of damages. I do not think there should be any major difference between it and what exists in the UK. This would be a basis to work from. The legal practices that have grown up around those opportunities are also questionable, to put it in its mildest form. I have made the point and I do not need to say any more about it.
A question was raised about impounding non-insured cars. This too could be looked at. I understand there might be an infringement of individual rights and constitutional problems in that area but nevertheless the number of people who drive uninsured cars is nothing short of a disgrace. Some forceful way has to be found to deal with this problem and with the problem of impounding cars.
One point I want to make which may sound contradictory to the point I have just made is that I do not understand why, if a person is insured he cannot drive any car. I believe it is the person who is insured. Why can it not be as it is on the Continent? There if you are an insured person you may drive any car. It is a nonsensical situation here. Either I am an insured person paying hefty insurance to drive or I am not. I think the business of attaching it to the vehicle is wrong. The onus should be on the person to be insured and should be recognised as such. We should cut out all the codology.
The question of public liability is causing great difficulty in terms of costs. I come from a rural constituency in Waterford and I know many farmers cannot allow people to cross their land because they are afraid people will get injured and that they, the farmers will be faced with a major claim. The days of holding the old barn dance and all the fun that that entailed are disappearing and the only people benefiting are the insurance companies. All these attendant costs make it prohibitive for anybody to get  any kind of function going in rural Ireland today. This is grossly unfair; it is wrong. This high public liability insurance premium is not doing anything for the social infrastructure. There should be reasonable guidelines on the definition of public liability, where it is required, and what the cost should be.
There is a fundamental question to be asked in terms of the social consequences of the level of public liability insurance. There are restrictions on people in terms of the activities that can now be carried out by young people and by families together. We are all saying young people stand on street corners and they cannot do this, that or the other thing but maybe we are part of the reason for that, maybe we are killing the opportunities for the social intercourse that should occur in this country. I wish I had more time but I wanted to make those specific points and hope they contribute to the debate here this evening.
There is a perception that 1992 and competition will suddenly reduce claims. I do not believe that will be the case. The claims experience will dictate what the outcome will be. If we get those issues that I have referred to in order, we will have greater competition on the marketplace and lower insurance costs because of the competition in a given area and the different types of insurances. If one person has spoken on the record on this issue over the last number of years it is the Minister for Industry and Commerce. I welcome his discussions with the Minister for Justice and the Minister for the Environment. I hope their deliberations will result in fundamental, radical but workable, changes that can make the difference. We all know what the problems are and the simple solutions are there. The three Ministers have the capacity to ensure that young people have the right to insurance but, because of what we and others have allowed to happen, they do not have access to the market.
 I thank the House for the opportunity to speak on this debate.
Mr. O'Toole Mr. O'Toole
Mr. O'Toole: It gives me great pleasure to welcome the new Minister to this House. As a fully paid up and active member of my own union, the INTO, I welcome him. I can also say that if he brings as much to his new job as generations of the Kitt family have brought to teaching and to the development of the INTO, then the country will benefit from it. I have great pleasure in welcoming him to his new office and wishing him well.
I would like to start by referring to the position of schools and insurance. All professions are now beginning to suffer from this litigation conscious community which, as Senator Cullen said, has led to a new spin-off industry which keeps many of those in the legal profession well looked after. It has become almost a national pastime taking professionals to court for claims of negligence arising from accidents. Senator Cullen referred to the position in farms but the most hazardous occupation in this country at the moment is running a school. There is no such thing as an accident anymore. If a child falls and hurts himself more often than not that is the basis of a claim and so begins the long process of going from one lawyer to another until somebody is found who is prepared to take the case. A schoolyard accident was brought to my attention. It was an accident, there was nobody to blame but the parents, having discussed it with others in the area and being told they had a good case, went to the local solicitor who told them there was no case as it was just an accident. Not happy with that the parents went to another solicitor locally and got precisely the same advice. Still not happy, they went to a third solicitor who was trying to make a name for himself. That solicitor thought here was a great opportunity, schoolyard accidents always make good newspaper headlines and he would take it on the basis of “no foal no fee”; in other  words, if they did not win there would be no fee. I believe that the legal profession should look at this area.
The vast majority of lawyers are thoroughly competent and responsible in the way they approach things but there is always the temptation to move into this area to make a quick buck and to gain a profile and a bit of publicity. I went to the court to listen and after three days of massive newspaper headlines the case was, of course, thrown out. The judge really castigated the lawyer who had invited the parents to take the case to court and said there should be more of that. This should be brought to people's attention. I want to stress that this is only one aspect.
The real difficulty very often lies with the insurers or underwriters. At the moment if there is a schoolyard accident there is claim of negligence put in against everybody in sight — the school, the board of management, the chairperson of the school management board, the principal teacher, the class teacher, the teacher who was on yard supervision — everybody in sight is sprayed with litigation, everybody is involved. Then a claim is entered. This goes back to what Senator Cullen said about settling on the steps of the courts.
Nothing pains me as much as that because many of these cases would be better off fought. The reason they are not fought in the court is precisely because the actuarial study done by the insurance company does not make it worth their while. This creates a long term problem. Say there is an accident, a claim is entered for maybe £6,000 or £7,000, not a huge claim. It then goes to the underwriters. They look at it and decide they might win in court. It then goes to the cost accountant in the insurance company. The cost accountant works out that it may be a three day case and will cost about £7,000 but they will probably win it. Next they look at the person taking the case. They may decide he is a man of straw, unemployed, in  rented accommodation with no visible means. They might win this case but at a cost of £7,000 whereas if they settle it will only cost £5,500 or £6,000. Ergo settle. That goes down in the insurer's books as a saving of £1,000.
What really happens is that the parents go home with the £5,000 in their pocket. They have a party. They explain to everybody how easy it was and half the neighbourhood says: I can do that. Then we are into another case the following week, and it becomes almost a national pastime. It is so bad that my organisation on many occasions have asked the underwriters if we could take responsibility for the costs so that we could fight the case and win it. They have never allowed us to do that because the underwriters have always written into the clause that once a claim is lodged they take responsibility for it and it is they who decide whether it should be fought or conceded.
On numerous occasions we have demanded that the insurance company fight the case and we will cover the cost just so that people can learn that these cases can be lost. The reality is that the case is presented in court, the plaintiff puts the case first, there are three days of publicity telling one side of the story, and even if the case is finally lost at that stage, it is worn out as a story and nobody ever gets to hear the other side.
There is a hardship side as well. Teachers feel that being charged publicly with negligence is almost a professional assassination. It does not matter whether the case is won or lost, the fact is that a teacher against whom a claim for negligence has been lodged will live for 18 months, two years, four years, and in one case up to ten years, waiting for the case to come to court.
I can tell of one horrific case I dealt with. A claim was lodged against a teacher in a large suburban school where a child in a class of 40 fell in the schoolyard and injured a knee. The accident was noted — they always are in schools  nowadays — in the accident book. Almost ten years later, a claim was lodged against the teacher for negligence saying that the fall resulted in knee damage. The teacher could not even remember the accident. They checked it in the accident book and found it had happened. She could barely remember the child. That teacher was found to be negligent on the basis that she omitted to take the proper action when this schoolyard accident took place. It was a cut knee which the teacher looked after in the best way possible, treated the knee as she would with her own child and that was the end of the matter. Nothing further arose until almost ten years later. That case was settled for £8,000 or £9,000.
We are being caught every way. I am not saying that every professional person should be above a claim of negligence, I am just saying that the way in which these claims are processed is causing great concern, unnecessary hardship and is leading to concessions of claims on the steps of the court resulting in higher premiums the following year and beyond.
How does one deal with that? The common law says that in such cases a teacher dealing with schoolchildren should act like a wise and prudent parent. The difficulty is that wise and prudent parents tend not to have 40 children. It is very difficult to deal with this and to know what is demanded. While it is quite acceptable for a parent to let a child play on the street or in the back garden, where they are not under the constant supervision of the parent, a lot more is demanded of any professional person dealing with children. They are supposed to have full visual supervision at all times. Even at that level we need to have a good look at what is demanded of a professional, what is meant by “the wise and prudent parent” and what is expected of them.
The question of insurance in schools is the single greatest bugbear in teachers' lives. They never know when a claim is  going to be lodged. I can fully appreciate the points Senator Cullen made about farmers having events on their land or allowing people on their land. It is precisely the same in schools. When an accident occurs the first thing people think of is whether this is going to lead to a claim. Very often there is a sense of panic created. People wonder how many years of hassle will result from this. Inevitably the claims come flying in and inevitably it creates more and more problems at school level. It is an issue which is among the most serious.
The cost of public liability and specific insurance to cover for negligence claims is huge. It is grossly unfair that where somebody who is looking after many pupils in the school yard, if one of the 100 falls in a corner of the yard and cuts himself or herself, that teacher, doing his duty to the best of his ability given all the problems that exist in any educational structure, can have a charge of negligence sustained against him that attaches to him professionally for the rest of his career. That is an aspect we perhaps do not think about a lot but it is there. We are all very sensitive to criticism about how we do our job.
I want to look briefly at car insurance. A recent OECD study noted that the accident risk presented by young drivers is almost four times the average. The risk of fatal accident is two or three times greater for young men than for young women. This is a fact and there is no way around it. There is no gainsaying it. What is important to note is that this affects car sales and increases the number of uninsured drivers.
I would like to put on record that the cost of claims taken against or because of drivers in the 26 to 30 age group is just about average. There are two ways of looking at that. It is important to note that the 25-30 year old driver is very often given a penal rating on his or her premium but the figures show the average cost of claims arising from drivers in that age group is £4,500 and the average cost  of claims for all ages is £4,400 — almost the same, higher for drivers in the 17-20 and 21-25 age groups. I believe these people should be encouraged to drive and I agree fully with what Senator Cullen said. The problem begins with the application for a driving licence. There is a written test in Denmark and the Scandanavian countries. There, drivers learn how to deal with all road hazards.
I want to add to what Senator Cullen said. It is not just the driver who is insured. In some Scandinavian countries, Sweden for instance, they do the opposite; they insure the car for any driver. You either insure a driver to drive any car or insure a car no matter who drives it. Either way is cleaner than the mess we have. I read my insurance policy every year to see how it has changed from the previous year. Some years you are insured to drive any car, others your own car has open driving and it goes on and on.
On the question of uninsured driving — I do not like the idea of mandatory sentences — until we grasp the nettle and insist that uninsured driving will lead to a prison term, people will not take it seriously. We are paying the costs of uninsured driving. There is no escape from that. We are all paying for it and we should put the boot in hard. This practice is negligent and irresponsible and cannot be sustained. In that area there is a lot of work to be done.
We need to look at the inter-ministerial group chaired by the Minister for Industry and Commerce which dealt with enforcement, driving laws, tuition and the operation of the courts. The proposals brought forward by that group should be given serious consideration and, in the main, should be implemented. It could lead to cheaper car insurance for all but especially for the younger driver. That together with action against uninsured driving would vastly improve the situation.
Mr. Foley Mr. Foley
Mr. Foley: I wish to be associated with the words of welcome to the Minister of State, Deputy Kitt, on his first visit to this House. His appointment is most popular  and well deserved. Having shared an office with him for many years. I am very conscious of his capacity for work. Hence I am satisfied that he will make a tremendous success of his new portfolio. I will share my time with my colleague, Senator Hugh Byrne.
I welcome the opportunity to make a brief contribution to this very important motion that Seanad Éireann notes with concern the cost of motor and liability insurance and requests the Minister for Industry and Commerce to take urgent steps to remedy the position.
The situation with regard to young drivers seems to be deteriorating day by day mainly due to the very high level of insurance premiums they are quoted. The position has now been reached where, in many cases, they cannot even get a quotation. I was present at a youth forum some months ago where the high cost of motor insurance for young people was discussed at length. It is now accepted that insurance premiums for motor insurance, employers' liability and public liability are very high in this country. We are told it is due to the high level of claims. The level of accidents on our roads and in the workplace has increased out of all proportion over the past number of years and, as a result, the cost of settling these claims has also increased.
I understand from many insurance brokers that one of the main causes of high premiums is due to the many uninsured vehicles on our roads. It has been brought to my notice over the past number of months that many young people, especially if they are under 30 years of age or if they have no previous insurance, now find it impossible to get cover especially if they are provisional licence holders. No company seems interested in their case. In the few cases where they have been quoted, the figures are beyond their means.
I had the situation recently checked through one insurance broker with regard to one of Lloyds syndicates. I  found that the premiums for similar type risk in the UK would be only one-third the premium quoted here. It is now an accepted fact that motor insurance premiums are much higher in this country than in most European countries, and not merely for young drivers. I understand that young drivers constitute a very high risk group for the purposes of motor insurance. Where they are quoted, their premiums tend to be well above the average. I believe also that male drivers constitute a higher risk than female drivers. For this reason young male drivers pay the highest premium of all.
As I already stated, Ireland has a very high accident rate which results in a large number of claims in proportion to the number of insured vehicles on the road. We also have a very high level of compensation for personal injury. This also applies to damage or repair costs. We have very high legal fees. This combination of factors results in a very high average cost of claims compared to other countries. As a result of our very high premiums another situation arises where young people have accidents and convictions. They do not disclose the fact that they had an accident and it is only when a further accident occurs that it comes to light. The Motor Insurance Bureau are then asked to deal with the claim because their policy will be null and void. It would help if insurance companies' claims bonuses would reveal accidents or convictions as it would deter people from making a false declaration. At present they do not show any claims history, etc., or convictions.
Over the past number of years, insurance companies have made substantial losses. As a result they have had to apply for a number of increases in motor insurance premiums. I understanding that as a result of the serious situation in which they find themselves, they will be seeking further increases in the year ahead.
If we were to make comparisons between insurance costs in this country  and in other European countries one thing stands out: we have more accidents than any other European country; we pay accident victims substantially more compensation than most European countries. I know of a case where a victim who lost sight in one eye was compensated by a sum in the region of £85,000 whereas in the United Kingdom a corresponding injury victim would receive approximately £30,000; in other countries, like Portugal and Greece, this figure would be well below the region of £5,000.
It was mentioned in this House last week that compensation for a whiplash injury in Ireland would cost in the region of £15,000 to £18,000 whereas in America a person would be lucky to get $4,000 to $5,000. I understand that the level of uninsured drivers here is between 8 per cent and 10 per cent of the total number of registered vehicles, whereas the average in Europe is less than 1 per cent. This problem must be tackled. If not, the cost of motor insurance will escalate further, especially for young people. Steps must be taken to reduce the accident rates on our roads and the level of compensation paid to accident victims. There is no doubt that with the right commitment from the relevant authorities progress can be made in these areas.
Last December the Garda authorities introduced a major clamp down on drinking and driving. During that period the number of deaths were reduced by almost one-third. I welcome the recent statement by the Minister for Justice confirming that the same procedures will apply this December. This is a very important decision as it is accepted by the public at large that strong action must be taken against those who drink and drive. The Insurance Federation of Ireland in co-operation with the National Safety Council, recently launched a major publicity campaign which cost a lot of money. Their campaign is to encourage the public to be more conscious of road safety and law enforcement.
The high cost of public and employers'  liability is a cause of major concern to industry, shopkeepers, tradesmen, builders, etc. It is now also accepted that many jobs are lost due to excessive public liability and excessive employers' liability premiums. Local authorities, health boards, vocational education committees and other local authorities find the burden of public liability payments in particular extremely difficult. All these groups operate under serious financial constraints and most of us, as councillors are dealing with our local authority estimates at this time. We have been informed that there is a substantial increase in public liability insurance, in many cases so substantial it will result in increased rates for the coming year.
I have been given some figures in the last few days for local authorities public liability insurance. Limerick Corporation were quoted in the region of £2.2 million; it is now £1.8 million. Cork County Council were quoted £1.5 million while Kerry County Council are being charged a premium of almost £430,000 for the current year. It would be much higher but for the fact that Irish public bodies are handling the business. It must be appreciated that they are doing great work for local authorities.
Another matter of concern is the number of fraud claims coming on stream. They are increasing all the time. While many genuine claims are made, fraud must be faced up to by the relevant authorities. I look forward to 1992 when European companies will be allowed operate fully in this country. I hope this will lead to keener competition. I understand that over 70 per cent of the total premium incomes generated in the Irish market are now controlled by overseas companies. Most of the major European countries already have an interest in the Irish market.
I hope the Garda are given more powers to impound cars.
Mr. H. Byrne Mr. H. Byrne
Mr. H. Byrne: I thank Senator Foley for allowing me to comment on what is  a particularly difficult situation in rural areas and I am sure it is the same in the city. As in 1798 when the people of Wexford were the first to rise, on this issue they have again risen by setting up a motor insurance action group. The group have already held three meetings — one in Enniscorthy, one in Wexford and one in New Ross — and they now intend to go national. About 200 people attended each meeting to discuss specifically the cause of young drivers. I am delighted this issue was raised today. I know the Minister present and the Minister who has just left will be aware of the situation because we all hear about it in our clinics from time to time.
Like other Senators, I will give some examples of issues raised at the various meetings; insurance on a 1989 Ritmo was £750; insurance on the same car this year was £1,200. This was for a 25 year old person with a full driving licence and two years no claims bonus. It is very difficult for anybody to understand that. A 19 year old with a full licence was quoted £2,049 third party insurance cover on a Mini. The Mini itself was not worth what he was asked to pay for insurance. That is an absolute disgrace.
Very recently I met two young people who had the same story — they had no claims, were 22 years old and were quoted £800 last year and £1,300 this year. Neither could afford to pay insurance this year which meant they had to do without their cars which in turn, meant they had to do without a job. This is a serious aspect of this problem. They needed a car to get to work and they could not afford to pay the insurance so that either left them as uninsured drivers or unemployed. In either event it is terribly wrong.
The MIAG, as they now call themselves and about whom you will be hearing much in the very near future, feel that the Government impose too many things they consider it their right to impose. For instance, they impose 50 per cent tax on  the price of a car at the point of entry; they increase the price of petrol by approximately 70 per cent through various taxes; tyres or spare parts, garage bills and everything to do with a car has VAT added to it. Drivers must pay a road tax and, of course, must have a drivers' licence. What does the motorist get back from the Government? Have we good roads? Have we State aided driving schools? Have we State controlled insurance? The Government insist on all their rights but deny that they have a duty to the driver, say MIAG. The State says: “I will give you a driving licence but a private company will decide whether you will drive”.
The aims of the organisation are: first, third party insurance to be available to all with no categories or age criteria; second, to gain recognition from the Oireachtas as a body representing motorists. They hope to achieve those aims by examining the possibility of third party insurance being provided by the State and funded by a levy on motor fuel. That is interesting. It has been done elsewhere and it should be given some consideration; third examine the possibility of setting up a mutual insurance company; fourth, call for a public inquiry into the cost of insurance. This has been mentioned in every part of the country; fifth campaign for greater competition between insurance companies. When a person is given a quotation by one insurance company he will go to another for a second quotation but both quotations will be identical. There appears to be a cartel operating in this area. People are also worried about the 1992 derogation. Being the responsible group they are the MIAG are asking for better driver education; and sixth, they intend to establish branches countrywide. I do not say that as a threat but that will happen because people are concerned. In short they suggest better driver education, better roads, MOTs open market insurance and life annuities to replace lump sums.
 I will deal with public liability and compo, as it is now known, or “compensationitis.” About four years ago in Clonroche, County Wexford, Wexford County Council saw there was a nice lime kiln on the outskirts of the village. Through the social employment scheme they developed the Kiln as it was in olden times. It looked tremendous and enhanced the village. Some youngsters from the housing estate across the road climbed up on the Kiln that had been newly refurbished, fell off, sued the council and got £3,000 for what would be regarded as a slight injury. That prevented Wexford County Council developing coastal walks.
I can identify with what Senator Cullen said with regard to farmers. It was understood that the hunt could come in on the land and people could come in to take a turnip or to pick mushrooms. Now if people walk on the land the farmers ask them to leave because they are afraid of what might happen. In short, we are talking about a very big issue which we must address.
Mr. Cosgrave Mr. Cosgrave
Mr. Cosgrave: I welcome the Minister to the House and the newly appointed Minister of State who was here previously. I wish him well in his new role.
The motion before the House is topical and it is one that we on this side can easily support. There are no simple answers and it is only by concentrating minds that we will solve the problems which exist in relation to the high cost of motor insurance and inter-linked matters like claims, rules of the road, driving tuition and also in relation to the question of civil liability insurance and how it affects business in so many ways.
There is no doubt that we have become much more claims conscious. Years ago when people were involved in accidents like falling in the street, slipping in a shop or getting off a bus they would just get up and say they were all right. Now the first thing on many people's mind is: what  is this worth to me? This can cause problems for the genuine people who claim from time to time. In my practice I have seen people with little or nothing wrong with them and in days gone by they would not have contemplated a claim. Nowadays there are many more litigious minded people out there. It is too simplistic to blame lawyers totally. Lawyers have a certain responsibility and obviously they have a role to play.
I remember the justification of insurance companies that the reason for high insurance costs was the jury system and having a couple of barristers in on cases. Juries were abolished and what happened? Nothing. If lawyers and other bodies have a case to answer, certainly the insurance companies also have a case to answer. For example, a person of 47 years of age applying for insurance from a Limerick address was quoted £286 as against £588 paid by another person. That is difference of £300. The company charging £286 are not running a charity so how much profit are the company charging £588 making? We must have further discussion and dialogue in relation to this. I welcome the inter-ministerial committee which has met. It should go on meeting and reviewing matters.
It should go from this House, from the Dáil and from every decent quarter that we will have no truck with uninsured drivers and that they will face the full rigour of the law. I agree with having a minimum jail term in relation to that offence. I know certain justices send people to jail for second offence but the question of their being jailed on a first offence should be examined. I propose that uninsured cars be impounded.
The insurance disc system has, hopefully, led to an increase in the number of insured cars but there are many cars being driven without insurance. People who drive uninsured cars should be treated in the same way as we treat the crime of attempted murder. If they are involved in a fatality or in a bad accident  which affects the breadwinner in a household, many people are affected. We pay for that. It should go out from this House that we are going after uninsured drivers. We should look at the possibility of setting up a traffic squad who would do the rounds of car parks and also deal with cars on the road. Uninsured cars should be impounded and one should not be able to pay later as is the case with a television licence. All Members would agree with that. Driving an uninsured car is one of the most heinous of crimes.
We must look at the matter of claims, how they are processed and penalties in relation to starting claims in the wrong jurisdiction. There should be some kind of tribunal where certain claims could be dealt with quickly. Mention was made of putting certain values on a whiplash injury or a broken arm or broken leg. One would have to be careful in relation to that because no two accidents are the same. Someone could break their leg and make a reasonably good recovery while someone else with a similar injury might never recover fully. It would be very dangerous if we came to the stage where a certain value was put on say, a broken leg. In one case doctors may diagnose a full recovery and in another case they may diagnose certain medical problems. One has to be careful in relation to that. In recent times certain judges have been taking a much more practical view of things and they are not just dealing in enormous amounts of money in relation to claims.
I do not know whether the insurance industry have given a concrete response to the query regarding costs not reducing despite the abolition of juries and fewer barristers employed on cases. I have not heard much from them. We should ask insurance companies about the quotations they offer. I cite the case of a girl living in Dublin. She is aged 33 and basically uses her car for social, domestic and leisure purposes and for taking her to and from work. She wanted third party  fire and theft cover. Without naming any insurance company, I will read the list of quotations. I quote from Consumer Choice, page 349 of November 1991. Premium prices range as follows: £502, £459, £398, £355, £592, £450, £443, £437, £473, £493, £440 and bottom or top of the class depending on which way one wants to look at it are £303, £593 and £441. There is a vast range of quotations available to a woman for third party fire and theft premia. On the presumption that the cheapest company at £303 is not doing it for the good of their health or at a loss, how much profit is made by the company charging £592 or £593, £290 extra? This question should be examined. The inter-ministerial group should continue examining such issues. Public inquiries into all sorts of areas have been requested and there is a case for an inquiry into the excessive cost for motor and liability insurance.
Anyone nowadays with a pub, restaurant or shop finds public liability insurance an ever increasing burden. All it takes is somebody to slip or fall and ready cash must be paid up front, and people do well out of the accident. In relation to civil liability insurance, some owners can be careless or happy go lucky and they need to get their house in order and look at the problems arising. People who run public facilities such as these should carry certain insurance safeguards and there is a certain amount to be said in favour of insurance companies who demand that the owner pay the first £1,000 or couple of thousand pounds of a claim. These small claims taken when someone slips on a restaurant floor or going into a pub toilet may be irresponsible.
Young people are heavily loaded by motor insurance companies and they are entitled to drive without excessive burdens. Senator O'Toole mentioned earlier that the difference in premia between the 25 to 30 year old group and older people is not so great, so I do not think the younger group constitute such a liability  but at times they are being unfairly penalised.
At a future date we may debate this matter again but, in the meantime, I hope a report will be commissioned and an inquiry held involving various vested interests such as the Incorporated Law Society, the Bar Council and various insurance companies. With great ado, insurance companies said that once we got rid of juries and second barristers in claim cases insurance prices would drop. How many people here have had a reduction in their insurance bill of late? The insurance industry must also get their house in order.
This is a very timely motion which we should also address at a future date. I hope that responses will in time be made to what I have said. It is an important matter for many people, particularly as 1992 approaches. We need to look at all aspects of the question but no single person, party or reason is to blame. There are many reasons for the present situation and they all need to be examined.
Mr. Mooney Mr. Mooney
Mr. Mooney: I will share my time with Senator McGowan if that is in order. God bless Consumer Choice magazine and the Consumers Association; its current issue was timely given the topic of this motion. I am sure Senators on both sides of the House would have found it difficult to procure the relevant statistics but for the assiduous work carried out by the researchers of the Consumers Association of which I am a member. I congratulate them not only on this motor insurance survey which have been rightly quoted voluminously here this evening but on the many surveys they have carried out in the public interest. It was interesting listening to Senator Cosgrave and to other contributions this evening to note that the emphasis is being placed on motor insurers for high premiums and on the legal system for condoning or encouraging or at least accepting very high settlement claims. While I accept  that those are valid areas for criticism and analysis, I would like to suggest looking at other reasons many insurance companies now are not prepared first, to give acceptable quotes to young first time drivers but also that premia are so high for seasoned drivers like myself and others here.
The Consumers Association tell us that on average 9,000 accidents take place on Irish roads every month and I was pleased to learn that the growing level of disquiet in the insurance industry and among consumers led to the establishment in December 1990 of a special inter-ministerial committee to examine ways of reducing insurance cost. I would be interested to learn from the Minister whether that committee is still in being, whether they have actually made a submission to Government and what stage their deliberations are at.
The main items for discussion by the Committee were road traffic law reform, enforcement of road traffic law, the courts system and the motor insurance market. The first two should be looked at in greater depth than the latter two which have already been the subject of much analysis which should continue. How many of us, however, driving on Irish roads in late evening or at night, have met cars which are obviously not 100 per cent roadworthy, with only one headlight or two incompatible headlights? People make right hand turns without any prior warning and coupled with the poor state of many of our roads bad driving in recent years has led to a high incidence of accidents. It would be churlish of me not to commend the Government's programme for road improvement and all of us travelling to the west must be grateful for the continuing developments on the western side of the city. I am not criticising these commendable improvements.
Road traffic law reform should be looked at seriously. Recently I wrote to the Minister for the Environment suggesting, among other things, that to help  the speedy and orderly flow of traffic the Government might consider introducing permission for drivers to take a right hand turn against a red light. This system has been operated successfully in the United States for many years. One frequently finds that this particular prohibition leads to frustration, people break through red lights and accidents happen.
The other factor to be noted, although I do not know how it might be reversed, is that Ireland has become a more litigious society in recent years. This has been pointed out by several speakers and the whiplash phenomenon seems to be the flavour of the month. This is a bit like the back injury syndrome which has been touted for so long. There is no doctor or medical expert in the world who can disprove a patient's word that they have a back injury because it is such a nebulous form of ailment. Whiplash also seems to be a rather abstract medical condition which is growing in popularity. I am not suggesting that the people with genuine whiplash injuries are not entitled to receive compensation but we cannot expect to be paying cheaper premiums if we are partly responsible for pushing prices up.
I welcome this inter-ministerial commission and look forward to reading their deliberations, particularly their pronouncements regarding road traffic law reform and enforcement of road traffic law as it applies to motor vehicles and to the standard of driving here. Then perhaps we might be able to start reducing premiums and eliminating, I hope, the most outrageous quotations that many of our young drivers receive. I have heard of a young driver of 24 years who bought a car for £3,500 who, when he received an insurance quotation for £2,100 was obliged to sell the car. That should not happen in a modern democracy.
Mr. McGowan Mr. McGowan
Mr. McGowan: Insurance companies  are quite happy with conditions prevailing here and they will continue to put forward theories and reasons they have to maintain high premium costs. Coming from a Border county I find it difficult to accept that a driver living in County Tyrone can get insurance for about half the price quotable in County Donegal. I do not accept that drivers in the North are better than those in the Republic. There is more competition in the North and the Government there has imposed certain restrictions and controls over insurance companies which we certainly need here. I urge the Minister to pursue this matter because everybody is interested in the topic and many contributions have been made but despite strong, unanimous recommendations, will we achieve anything? Are we moving forward? The Minister would have to convince himself and others that the Government are in a position to take action.
The word “insurance” is important. Nobody running a school, arranging an outing or opening any kind of club can afford to say we will do this, that or the other. The first question is: are you insured to do it? Insurance is now an important part of our economy and the Government must be seen to be taking action. This is an important national issue, and I would like to see progress being made.
An important aspect of the insurance question is the case of first time drivers. In Ireland one can drive unaccompanied with a provisional licence and I get the impression that insurance companies are quite happy to allow that situation to continue. In Northern Ireland, Britain and other countries, a provisional licence does not allow you to drive unaccompanied. I wonder why the law here is different and why insurance companies are not concerned? The Government should impose rules and regulations on insurance companies operating here so that parameters are established for all concerned.
 The level of claims is exacerbated by our lack of success in prosecuting those who vandalise cars, especially in Dublin. Can anyone believe that a car parked outside a house will remain undamaged overnight? Those who vandalise cars are not punished severely enough and that is a significant factor in the cost of motor insurance. I urge the Minister to take a strong initiative to see that the Government set down controls and regulations within which insurance companies would be forced to operate.
Éamon Ó Cuív Éamon Ó Cuív
Éamon Ó Cuív: This is one of the most important motions to come before this House in a long time. The wording of the motion itself is critical because it asks the Minister for Industry and Commerce to take urgent steps to remedy a situation. In other words, the time for talking is long past, it is 20 years past, and the time for action is now.
The first thing we have to realise is that the insurers are only part of the problem. The basic problem lies with people's expectations of compensation. To pay out high compensation one must charge high premiums. That fundamental situation must be addressed.
People's attitude to law enforcement is another factor in the cost of insurance. I place no value on the driving test. A survey would reveal high success rate in driving tests for the 20 to 25 age group, particularly among male drivers, in other words, they can drive well when they are put to it and are obliged to learn the rules of the road but that does not mean they drive well all the time, and thereby lies a dilemma. If we are going to do anything about reducing insurance costs we need to ensure that the rules of the road are realistic and that they are enforced. In Ireland we tend to indulge in overkill with some laws then say it is impossible to apply them. The 55 m.p.h. speed limit on national primary routes is a perfect example of legal overkill because even careful, conscientious people do not adhere to it. Laws must be enacted that  can be applied rigorously. A very good system applies in Sweden, where, for every mile over the speed limit, one is charged so much until I think, ten or 15 miles over the limit when they go for one's licence.
We must enforce the rules of the road all the time; we must improve our road conditions; and we must address the problem of young drivers. Many surveys highlight the risk factors involved. I imagine that if a study was undertaken to ascertain when young people are primarily at risk it would be found to be between midnight and 4 a.m. coming home from social events. In my experience except around Christmas time one is rarely stopped in those hours particularly in rural areas. We have all had the experience of picking up a Sunday morning newspaper to read about three or four people killed in a huge accident. In the interests of humanity, and especially our young people, leaving aside insurance costs, it is about time we got tough.
I suggest that in cases of accidents where no criminal proceedings are taken by the Garda Síochána, that we examine the question of “no fault” insurance. I refer to smashes where it is very hard to determine who hit who. We get into long legal wrangles as to who is going to mend whose car which seems to be a ridiculous waste of resources, of time and a ridiculous additional cost, particularly where there are no personal injuries. Those who go out on the road, allowing that there is no criminal negligence on the part of either driver, take a risk like going out on a football or hurling pitch that they might be involved in an accident and they should be insured to cover that risk. If one reduces the cost of insurance, one also reduces the cost of comprehensive policies which cover that risk. Some new insurance policies allow one cover on the basis that a “no claims” bonus is not affected by accidents not involving personal injury.
Uninsured driving, if we are honest  with ourselves, persists because we do not have the willpower to stop it. It is impossible to tax a car in this country without a valid insurance certificate. With modern computer technology it is possible for the authorities to print out a complete list of untaxed cars on the day after tax lapses. I know that, technically speaking, one could have an uninsured driver in a taxed car where there would be insurance but that means narrowing the angle very much. Untaxed cars should be taken off the road because of the high risk that their drivers are also uninsured. If we want to reduce the cost of insurance we will have to take tough measures. Senator McGowan has pointed out that Northern Ireland enjoys low insurance costs but they do not have a similar level of insurance abuse. I favour assessment in cases where there is no criminal liability.
We also need to be honest about the payments system. Medical costs should be covered by an initial deposit and then by continuing payment as costs occur. A deposit would ensure that no out of pocket expenses accrued to the person making the claim. Loss of wages should be paid on an ongoing basis and not in a lump sum. It is not fair to the person getting the award because it is a temptation to spend money they might need in later life in cases of a serious accident, and it is also impossible to determine what loss of wages a person is going to incur as time goes on.
We should face up to the fact that no money is going to compensate for pain and suffering. Over-compensation in monetary terms is only pushing up the price of insurance and making it more difficult for some people to get insurance at all. There should be standardised payments here as in other countries for pain and suffering and these should be pitched at a reasonable level.
I would like to go on to the question of employers' liability insurance. As an employer I know that the cost of this  form of insurance is astronomical. There is a common perception that no matter how somebody gets injured in the work-place the responsibility falls on the employer. That is not so and negligence has to be proved. It is about time that employers' liability insurance became mandatory. However, to compensate for the cost involved I feel that unless an employer can prove total negligence on the part of the employee compensation should be paid which is the de facto if not the de jure situation at present. The dispute is taken out of the court, put into the hands of assessors and people are paid on the scale I mentioned.
As an employer I think the next measure would bring down the cost of employment insurance. In high risk industries, particularly, careless employers are being subsidised by careful operators applying factory law correctly. Similar to the situation pertaining to lifts, cranes and hydraulics, every employer should have to get from his insurance company an annual certificate to display on his premises saying that his premises had been examined and that they conformed to the various factory inspection Acts. A factory inspector could check the book and ascertain that the insurance company were happy that all reasonable care was being taken to ensure worker safety. This would eliminate many work-place accidents and reduce the cost of employers' liability insurance considerably.
We also have to look at the question of liabilities in such places as playgrounds. It is becoming impossible for schools, county councils etc. to provide facilities for young people. The concept of “own risk” seems not to exist at all and, consequently, many good and useful activities for young people are being discontinued because it is impossible to insure the risk.
When it is quite clearly stated that people are doing things at their own risk that concept should be accepted and, therefore, no loss should be incurred  unless one could prove seriously defective equipment, etc. Furthermore, the idea that one could have a playground with a fence around it and a gate on it and that somebody getting into that playground at night could make the owners liable for their injury makes a farce of the notion “taking reasonable precaution.” In public parks etc., which are properly maintained with reasonable supervision the concept of “own risk” should apply and people should be encouraged to take out cheap insurance in the form of personal accident policies for themselves and their children to cover the type of risk involved there.
It is about time we took practical steps to reduce the cost of insurance. This time a deal should be done with insurance companies before any changes are made to guarantee that certain Governmental changes which would reduce the cost of claims, of processing claims, of law, etc. should be followed immediately by reductions in the costs of premia. If people could see both things happening simultaneously they would accept a tightening up of the enforcement system which tends to operate very loosely in this country. We need application of the law, fitting compensation to damage and a new attitude towards insurance claims, etc.
Tá an-áthas orm gur cuireadh an rún seo faoi bhráid an tSeanaid. Phléamar feidhm an tSeanaid ar feadh cúpla seachtain agus is dóigh liom gur chruthaigh an díospóireacht seo gur féidir leis an Seanad gníomhú mar “forum” ina n-ardaítear ceisteanna a chuireann as d'fhormhór muintir na tíre. Tríd an gcaint anseo, tá súil agam go bhfeicfimid beart á dhéanamh faoi chostas scannalach árachais in Éirinn.
Question put and agreed to.
An Leas-Chathaoirleach An Leas-Chathaoirleach
An Leas-Chathaoirleach: When is it proposed to sit again?
Mr. Mooney Mr. Mooney
Mr. Mooney: Tomorrow at 10.30 a.m.
Seanad Éireann 130 Motor and Liability Insurance: Motion (Resumed).