The Gazette 1986

GAZETTE

sepTemBER 1986

In the main, civil actions for compensation for an

injury at work are settled outside the court: this is the

case in 90% to 95% of all claims.

A spokesperson for

the insurance industry claims the reason for this is the

uncertainty and the sheer cost of such court procedures.

Awards which insurers consider to be completely out of

proportion to the injuries are frequently made hence

insurers decide to cut their potential losses and settle out

of court.

The money paid out in claims naturally

governs the premium — business organisations are

continually being told that as their claims have gone up

so their premiums must increase accordingly. It has

been stated that "more cases will have to be fought — it

is really a question of the long-term view

vis-a-vis

the

short-term advantage. If a certain number of cases were

fought then it would have a knock-on effect. Few relish

the ordeal of being cross-examined in the witness box

and a frequent remark by plaintiffs after a two or three

day hearing in court is "had I know what I was letting

myself in for I would have settled years ago". The

knowledge that an accident and claim does not automa-

tically lead to an insurance company running around

with a cheque book would be of benefit to all, and in

this matter the insurance companies have been their own

worst enemy, as they now realise."

There is little

doubt that one successful claim against a company

spawns a number of similar ones. To quote from the

Barrington report:

". . . we detected some uneasiness about present

arrangements which (as one employer put it)

provide opportunity for employers

(sic)

and

workers 'to milk the system'. This was an

expression of a vague, but nevertheless, real

concern that if people in large numbers do not

exactly put their hands under the chopper, one

might well believe it to be possible. Allied to this

were concerns about malingering, compensation

neurosis and just plain fiddling."

An example of the uneasiness mentioned above could

be taken from Mr. Larry Goodman's experience. When

the level of industrial injuries claims at his factory just

outside Dundalk reached epidemic proportions his

insurance bill soared to £750,000. His suspicions about

the reasons for this were heightened when it transpired

that the eighty claims of one thousand pounds each for

fingers cut open by butchers' knives compared with just

two similar claims in two comparable factories

elsewhere in his empire. When the Unions protested that

the plant was unsafe, he threatened to close it if the level

of claims was not dramatically reduced. Overnight the

factory suddenly became a less hazardous place for

butchers' fingers.

No fault liability

The latest recommendations in relation to employer

liability comes from the Oireachtas Committee on Small

Business. The Committee has recently recommended

taking occupational injury claims out of the jurisdiction

of the Courts and placing such claims in the hands of a

tribunal to assess claims on a no-fault liability basis.

The Barrington Commission, made up of represen-

tatives of Industry, Trade Unions and Central and

Local Government, had this to say in 1983:

-"Although the concept of a no-fault system has

some merits in that it permits to some or more

degree and open appraisal of accident causation,

we find it difficult to come to a reasoned

conclusion on whether such a fundamental change

in the present system would be justified on that

basis alone. We feel that many aspects would have

to be weighed in the balance, notably issues of the

equity and effectiveness of the compensation

system. As regards prevention, in our discussions

with various experts, we hear many say that a

no-fault system could be counter-productive.

They would argue that automatic compensation

was incompatible with prevention, that it restricts

rather than increases the likelihood of care being

taken and this removes an element of responsi-

bility."

CONCLUSION

Industry must take the Initiative

The conclusion surely is that it is up to Irish Industry

to take the initiative towards solving the problems

connected with Employers' Liability Insurance and

claims. Suggestions towards this end are given

hereunder. These might be used in combination or

singly depending on the problem being experienced by

the individual company. One suggestion not included in

the list is that a company forego insuring.

Employers' Liability Insurance not compulsory

Employers' Liability Insurance is not compulsory in

Ireland. As an alternative to having insurance an

employer could give a guarantee that he would handle

all claims himself. However, with some awards reaching

in excess of half a million pounds few companies are

capable of carrying the risk. "There have been cases

where, because the employer was uninsured, the

Plaintiff, in pursuance of his claim ran the risk of

jeopardising fellow workers by going against the assets

of the company. This of course creates a particular

problem which Trade Unions, acting on behalf of an

injured member have encountered."

For this reason a

partnership of industry and unions should be considered

to jointly attack the problem.

How Industry can solve the Liability Insurance problem

1. Establish an Insurance Consumer Organisation —

Businesses are consumers too.

2. Establish a National Insurance Industry — funded

re-insurance programme.

3. Establish Group Insurance Schemes, or "Insurance

Pools" to negotiate better rates.

4. Any changes in the legal system must be followed

by a reduction of rates by the Insurance Industry.

5. Rates based on experience of claims record, rather

than category.

6. Risk management.

7. Calamity Cover — company carries risk up to a

certain threshold.

8. Prevent insurers from acting in concert to raise

premium rates.

9. In-house settlements in association with Legal

Adviser, the claimant to have a solicitor of his

choice.

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