The Gazette 1987

JULY/AUGUST

1987

GAZETTE

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-

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.

try is not of itself the author of

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

by 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

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