The Gazette 1987

GAZETTE

JULY/AUGUST

1987

An Accident Compensation Act

The New Zealand solution for an Irish Problem?

In the wake of recent criticism of our own profession by dis-

satisfied litigants and criticism of the Court System in High

Court accident cases by insurance companies, it occurs that

perhaps for some considerable time now the tail has in fact

been wagging the dog, as we are as much ourselves the vic-

tims of the system as are the other parties concerned. There

is no doubt that the effectiveness of the insurance industry's

public relations capacity has exceeded that of our own. This

has been borne out most succinctly by the proposed enact-

ment of the Courts Bill 1986 abolishing Juries in certain

Sctions before the High Court.

Whether the proposed abolition be wondered whether the in-

will have a beneficial effect in surance industry within this coun-

terms of cost effectiveness and

convenience to litigants to a large

extent remains moot. But in-

surance companies clearly have a

view on this matter. They have, in

unison, howled " w o l f " at the Jury

System for some years now. More-

over they have defended increasing

premium rates with consistent

criticism of the legal system and its

inherent inefficiencies. Delays prior

to hearings and the two senior

system have come in for particular

attack.

While some of their complaints

have much to commend them,

they are clearly not the source for

all the ills currently affecting the in-

surance industry in Ireland. Quite

clearly the dramatic increase in the

number of accident compensation

claims, which have in turn arisen

from increased road use, lagging

safety standards in industry and in-

deed the increasingly litigous per-

sona of the general public are more

compelling factors. Indeed the pro-

blems of the insurance industry are

not confined merely to the number

of claims arising. Anyone with

even a layman's appreciation of the

improprieties disclosed by the col-

lapse of the PMPA and more

recently the Insurance Corporation

of Ireland, will realise t hat

managerial ineptitude constitutes a

far greater danger to the industry's

efficiency and profitability than

the disposing of claims brought

against it.

Coming back to my premise as

to whether the tail has been wag-

ging the dog or vice versa, it must

try is not of itself the author of

Michael P. Coghlan, M.A.,

Solicitor

many of its own misfortunes and

has successfully used the legal

system and other local factors to

disguise its own inherent incapac-

ity to offer reasonable cover and

reasonable compensation to Irish

workers and road users etc.

Secrecy is pervasive within the in-

surance industry. As a result it is

difficult to obtain cogent infor-

mation such as to justify the high

premium rates for motor and pro-

perty insurance which currently

pertain. Statistical information,

concerning the levels of accident

compensation, the number of

cases dealt with, the amount of in-

surance revenue generated, the

mean average quantum per case

etc., is generally a secret closely

guarded by the Insurance Com-

panies against one another and

against the public in general. The

reasons for this are to a large ex-

tent justifiable. Nevertheless, the

atmosphere of secrecy has created

a lack of perspective both within and

without the insurance industry itself.

Premium increases have occurred

without justification or explanation

in the past. On 1st December, 1951

the Irish Standing Committee of Ac-

cident Officers Association (a group

representing 37 Insurance Companies

operating in Ireland at the time)

increased premiums by 25% for

private cars and by 1 5% for com-

mercial vehicles. This was subse-

quently decided by an advisory

body to the Minister for Industry

and Commerce to be effectively

double the increase required at the

time. In the light of such occur-

rences as these, it is understand-

able that public subscribers should

remain sceptical and hostile. This

becomes even more apparent in

the area of professional indemnity

cover which has recently drawn

our own profession to new heights

of invective.

The question now to be address-

ed is what must we do (a) to pro-

perly regulate the insurance

industry so that it performs pro-

fitably and efficiently, and (b) to

protect the consumer from spirall-

ing costs. In this connection there

have been a number of attempts by

Government Committees in the

past to synthesise the problems

and suggest improvements for the

running of the insurance industry.

In 1972 the O'Connor Report sug-

gested increased control of the in-

dustry by Government and certain

changes in the law on liability. An

addendum to that report went fur-

ther to suggest that an instalment

payment scheme in cases of death

and personal injury to victims of

road accidents should be introduc-

ed. There was no unanimity,

however, on more radical solutions

to the industry's problems.

In 1974 the Honahan Committee

reported on the increase on motor

insurance premiums and recom-

mended that each insurer should be

required to submit to the Depart-

ment of Industry and Commerce a

bona fide scheme of compensation

(thereby giving the department a

power of veto over the said scheme).

Since the Honahan report little for-

ward movement has occurred. At

the time, and perhaps reflective of

the economy in general, the pro-

blems within the insurance industry

were not perceived as being critical.

Times have now clearly changed.

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