Madam, - Your article, "Power to cap insurance awards for Minister" (December 15th) is misleading in a number of respects.
The Road Traffic Bill will allow the Minister for Transport to set the minimum guarantee which all authorised motor insurance policies must provide for injury claims. It will not allow capping of compensation awards.
It will have no practical effect on the level of claims payments to the victims of road traffic accidents, or on the price or availability of motor insurance.
All that is needed is a finite minimum guarantee.
No one in the insurance industry is calling for a minimum figure that would expose policyholders to the risk of having inadequate cover.
Whilst the Minister has yet to decide what the new requirement will be, insurers have suggested a minimum figure of €40 million, sufficient to meet any conceivable claims situation.
The need for a change from the unlimited indemnity required in motor policies at present arises from the imminent withdrawal of unlimited reinsurance protection by foreign reinsurers.
In the absence of such protection, motor insurers in Ireland cannot provide unlimited cover and would be unable to provide policies that comply with the existing Road Traffic Act rules.
What is at issue is the introduction of a minimum guarantee, not a cap or a maximum limit.
However high the minimum figure is, it is likely that additional cover will be available for those who feel they need it. For example, although the law now requires only €200,000 of cover for property damage, motor policies invariably provide at least €30 million.
This issue is entirely independent of the debate on the appropriate level of compensation for personal injury.
On that question, despite what is alleged - without foundation - by the Bar Council, insurers are not seeking lower compensation levels. We have merely tried to highlight the fact that injury awards are higher in Ireland than in other countries, and that this fact has an impact on the premiums we pay for our motor and liability insurance. - Yours, etc.,
MICHAEL KEMP, Chief Executive, Irish Insurance Federation, Insurance House, Molesworth Street Dublin 2.