Insurance overhaul - Savings must be passed on to consumer

The insurance industry has at last seen the introduction of a legal measure which has long been sought to tackle the compensation culture with the publication of the Civil Liability and Courts Bill, 2004 yesterday.

In publishing the bill, Justice Minister Michael McDowell has taken a major step in curbing the nefarious practice of making false or grossly exaggerated claims, which last year cost the insurance industry considerably over an estimated €100 million.

It should begin to have an impact before the end of the year because there is no reason why the legislation should not be in place by then, having gone through all stages of the Oireachtas.

The bill represents a tough approach to eradicate the compensation culture which is substantially contributing to higher premiums, representing as it does 2.5% of total premiums, which is higher than the European average for such claims.

When the legislation is in place it will undoubtedly have a positive effect on the cost to the insurance industry, a saving which must be passed on to the consumer.

Hitherto, the Irish Insurance Federation has claimed that one of the factors which would reduce the cost of insurance, especially motor insurance, would be a reduction in the level of fraudulent claims.

The Minister for Justice is putting in place a series of curbs which should deter people, other than the most foolhardy, from making such claims.

If they persist, the fact that the bill requires evidence to be supported by a sworn affidavit means that those who make false claims will have committed an offence, making them liable to possibly 10 years in jail and/or a fine of up to €100,000.

The bill proposes to reduce the time limit for bringing actions from three years to one, as well as the establishment of mediation conferences to assist parties in settling actions without a full trial.