THE GOVERNMENT MUST press ahead with capping the level of insurance pay outs for personal injury claims, according to ISME boss Neil McDonnell. 

Speaking to TheJournal.ie, he said by the time the judicial council is established and begins to make any changes on the level of payouts, businesses will be closed. 

Earlier this week, the Taoiseach said a referendum on capping insurance payouts can’t be ruled out in the future if reforms of the industry fail. 

Varadkar said the government has asked the Law Reform Commission to undertake a detailed analysis as to whether “constitutionally sound legislation” to cap or limit the amount of damages a court may award can be introduced. 

He said public consultation on that matter will take place later this year.

“It will be interesting to see what the Law Reform Commission comes up with because if the other reforms do not work, we need to consider the possibility of legislating in this House to limit and cap awards.

“We should not rule out a referendum down the line if the existing reforms that are planned do not work,” he said.

The comments echoed what junior minister Michael D’Arcy said last year. 

Legislation needed urgently

However, McDonnell said there is no legal impediment to capping damages, adding that the government “just don’t want to do it”. 

He took issue with the Taoiseach’s comments about holding a referendum on the issue, stating that one is not needed. 

A Bill to cap the level of insurance payouts for personal injury claims has passed second stage in the Seanad, receiving cross-party support, he said. 

The Civil Liability (Capping of General Damages) Bill, brought forward by Fine Gael Senator Anthony Lawlor, aims to reduce premiums for customers. 

The government did not oppose the Bill, but stated that substantial amendments would need to be made to it “subject to the advice and guidance of the Attorney General”, according to D’Arcy. 

The chief executive of ISME, an association with 10,500 members from small and medium enterprises, said his members are “gobsmacked” at the glacial pace of the government in tackling rising insurance costs. 

He said it is “very hard to take on good faith the position of the government”, stating that until the Civil Liability Act is passed and the Book of Quantum (which guides the level of awards) is overhauled, there is little hope for businesses. 

High premiums hitting everyone

McDonnell said that three years ago, those that were impacted by the rising premiums were businesses such as those in construction, retail, and distribution.

“But now, everyone who is at risk of being exposed to litigation is being hit,” he said.

Highlighting one member’s case, he said a solicitor who has professional indemnity insurance has seen her premium rise from €1,300 to €39,000, even though she has never had a claim against her business.

He added that businesses that have a public footfall, as well creches and childcare facilities, are under threat of going out of business due to the costs. McDonnell said they are being told that there insurance will only cover the children within the four walls of their premises. 

“This means they can’t let the children outside to play in the back garden,” he said, stating that businesses are being told that if a child falls outside, the underwriters will not honour a claim. 

Citing the Chief Justice Mr Justice Frank Clarke, who said the judicial council must not be rushed, McDonnell said it is clear the timeline could be up to two years before the judicial council is appointed and begins to make real, substantive changes that will be felt in the pockets of business owners.

“Lots of people will not be around in two years,” he said. 

The council will provide a mechanism for investigating complaints against the judiciary, as well as being in charge of training judges. It will establish guidelines for sentencing and for awards of damages in personal injury cases.

Speaking in the Dáil this week, D’Arcy said he expects to make an announcement within days of the seven judges who will sit on the judicial council and participate in the review of the guidelines.

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Calls for action

While business organisations such as ISME are getting frustrated with the lack of progress on the issue, so are opposition parties. 

Sinn Fein’s John Brady as well as Fianna Fáil’s John Lahart told D’Arcy that ”nothing has happened to effect any real change”.

“Jobs are at risk due to the inaction by the Government in tackling the hikes in insurance costs right across the State. Jobs have been lost across the State. Businesses close down weekly. I am working with a number of businesses which provide for outdoor pursuits and activities. They are at risk. One business recently told me that its insurance has gone from €9,000 to more than €60,000 in a couple of years.

“We cannot afford to wait and to hope that something takes place in the future,” said Brady. 

Brady said the Judicial Council Bill appears to be the “only hope that the government is giving to these people but it is built on many ifs and buts. We need action otherwise thousands of jobs will be lost across the State”.

Meanwhile Lahart said community facilities are now also feeling the sting of rising costs stating that Fettercairn Youth Horse Project has seen its public liability insurance rise to €46,000, while Killinarden Community Centre has seen its insurance cost rise from €6,000 to €26,000 in the space of six or seven years.

Defending the government. D’Arcy said:

Those who say nothing is being done are wrong. The objective is to get the five primary areas of personal injury reduced by the end of the year.

He said the single biggest issue with insurance is the level of awards.

“We have passed the Judicial Council Bill. The Judiciary and Chief Justice have been very helpful. The establishment of the personal injury committee within the judicial council will happen in parallel with the establishment of the judicial council,” he said. 

The minister said assurances have been given by the insurance companies that premiums will come down if awards come down and “they have all said that they will”.

“The companies have said the same thing to me in private. I have been to London to meet the London-based underwriters about insurance here in Ireland. They also say that if awards come down, so will premiums, and the risk appetite will be improved. The work is being done.”