Lawyers driving up insurance premiums, says report - Irish Examiner (22/January/2002) Ann Cahill A THREE-YEAR investigation into the insurance industry has blamed solicitors and barristers for driving up the cost of premiums for Irish drivers. In a report, to be presented to Tanaiste Mary Harney next week, the Motor Insurance Advisory Board (MIAB) will recommend sweeping changes to the way accident claims are dealt with and paid out. The report says solicitors and barristers' fees add up to 42% to the cost of paying out for accidents The report recommends: * ending payment of lump sums to victims - they should instead receive an annual payment for their lifetime. * changing the law to force judges to take into account the wider implications of awarding huge sums of money. * a new fast-track arbitration method to decide on claims where possible, as an alternative to expensive court proceedings. * the establishment of a watchdog to make sure the insurance industry passes on the savings to the motorist. The report also accuses many solicitors of being paid on the double when they win insurance claims for clients. In a substantial number of cases, solicitors get an average of 10% from their clients' compensation on top of their fees from the insurance company, because they took the case on a pay-if-you-win basis. Often the client is not aware of the double payment. Fixed fees were abolished to increase competition between lawyers but instead legal fees have increased by 43% over the past six years. The MIAB report blames the €1.2bn a year car insurance industry in this country for failing to look after the interests of its clients. Chairperson of the Board, Dorothea Dowling, says insurance companies and the legal profession have been content with the present system. "The industry has failed to become lean and keen and as a result drivers are paying the cost," she said. Even though accidents are decreasing in Ireland, premiums continue to rise faster than inflation - 57% over the past 10 years - and by more than the amount companies need to cover increased claims, according to Ms Dowling. But the costs to the insurance companies are also the highest in Europe, with legal fees increasing in just three years from 35% to 42% in 1999. Compensation pay-outs also top the EU league. A spokesperson for the Law Society last night said an independent survey in 1996 showed that compensation and legal fees were similar in Ireland and Britain. A spokesman for the Insurance Federation said they support an arbitration system for claims such as the personal injury assessment board proposed by Minister of State at the Department of Enterprise, Trade and Employment, Noel Treacy. Back to Media Index