Ministerial power to cap insurance awards is being introduced because of a threat from the insurance industry to withdraw cover for Irish motorists, The Irish Times has learned.
The amendment to the Road Traffic Bill, introduced by the Minister for the Environment, Mr Cullen, provides the Minister with the power to introduce a cap in future if he considers it necessary to ensure that drivers are covered.
This follows intensive lobbying from the insurance industry, which sought a cap on awards, claiming that the big international insurance houses would no longer underwrite the smaller companies in Ireland because the market had changed. As a result the companies operating in Ireland threatened not to insure Irish drivers.
The Minister was reluctant to accede to the industry's demand for a cap, but proposed the amendment allowing him to introduce such a cap in future if it was absolutely necessary to ensure that drivers would be covered.
The proposal has produced rare unanimity between the legal profession and Ms Dorothea Dowling, chairwoman of the Personal Injuries Assessment Board.
At a breakfast discussion organised by the Irish Insurance Federation last week Ms Dowling said that such a cap would mean very seriously injured people could end up not being adequately compensated for their injuries.
She said that those with minor injuries usually settled their claims first, and in a serious accident involving a number of people this could use up the pool of money provided for under a cap.
The president of the Law Society has urged the Minister not to proceed with the amendment.
In a letter to Mr Cullen, Mr Owen Binchy said that it would mean that catastrophically injured people would be unable to recover the amount, to which they were legally entitled, needed to provide for their care if it exceeded the total under the cap.
Insured people would face financial ruin because their own financial assets would be required to satisfy judgment for the amount in excess of the insurance limit.
In a statement the Bar Council made similar points, saying that the proposal would have an adverse effect on motorists and accident victims, and would only benefit the insurance industry.
"Insurers' profits have quadrupled in the last year in the area, and the Government makes huge concessions to them at every turn, thereby enabling them to increase profits even more," it said in a statement.
"Recent calls by the Irish Insurance Federation to 'debate the cost of compensation' also shows their true agenda. Not satisfied with the other unnecessary breaks the Government has given their industry, they now want to force down compensation levels for innocent victims of accidents and increase profits for their members."