Extensive changes to the motor insurance industry in the Republic, including measures to curtail court awards, are recommended in a report to be published today. The Motor Insurance Advisory Board's long-awaited report makes 67 recommendations. Mark Hennessy and John McManus report
It also suggests an annual review of motor insurance quotations be carried out by the planned financial services regulator. Any indications that particular classes of drivers, such as young motorists, are being treated unfairly should then be referred to the Equality Agency who could bring a prosecution under the Equal Status Act, which outlaws discrimination in the provision of services on the basis of age or gender.
The legislation to establish the Irish Financial Services Regulatory Authority was published by the Government yesterday. IFSRA will operate within a reorganised Central Bank and take over responsibility for regulating insurance companies from the Department of Enterprise and Employment. The Central Bank will be reorganised as the Central Bank and Financial services Authority of Ireland to reflect its wider role.
The MIAB recommends that the Government should reverse month-old legislation enabling the Circuit and District Courts to make higher awards. Under the Courts and Court Officers Act, the Circuit Court will be able to award up to €100,000, rather than the existing £30,000 limit, while the District Court's limit will rise from £5,000 to €15,000. Rejecting the Minister for Justice, Mr O'Donoghue's, view that the changes would keep cases out of the more expensive High Court, the MIAB believes the lower courts' awards would inflate to the new limits.
A non-adversarial tribunal should be established to deal with claims where liability is not contested, along the lines being considered by the Personal Injuries Advisory Board, it proposes. Statistics should be published regularly about the scale of damages being awarded to "assist early settlement of cases" - following the example of the Judicial Studies Board in the UK, it advises.
In addition, judges should not awarding lump sum damages. Instead, victims should be given annual payments that could vary according to their predicted needs during their lifetime.
Proposing a series of measures to cut costs, the MIAB said legal costs had increased by 43 per cent over the past six years - despite efforts in 1996 to introduce greater competition. Solicitors should be forced to be more open about the fees they receive in "no foal, no fee" cases. Currently, they take a percentage of the client's awards, though an insurance company covers their bills.
The Department of Enterprise, Trade and Employment should put insurance companies under closer scrutiny. Currently, the Department's annual "Blue Book" publishes the companies' financial returns.
In future, Enterprise, Trade and Employment should follow "the practice elsewhere in the EU to improve the quality of public information", according to the MIAB report. A protection fund should be set up to ensure that drivers covered by an insurance company which goes into liquidation are not forced to take out second policies, the MIAB proposes. Last year, 8,000 motorcyclists and 1,000 classic car owners were left without cover after the UK-based Independent Insurance collapsed.
The seed capital for the protection scheme could be found in the fund set up to rescue the PMPA in the 1980s. Currently, this has a €23 million surplus.
The MIAB includes civil servants, gardaí, insurance firms and brokers, industry and consumer lobby groups.