Local authorities and a number of State agencies are exploring the possibility of insuring themselves due to the rising cost of public liability coverage.
The Department of the Environment is in talks with the State Claims Agency on the possibility of self-insurance for local authorities and handing over the management of claims to the agency.
The increasing cost of safeguarding against public liability claims is concerning Government officials. They say the State Claims Agency, unlike a conventional insurance firm, would be in a position to fight more cases even if it meant accumulating large legal fees in the process.
One source said: "The move would be aimed at driving down the number of claims. The State Claims Agency could take a robust line of defence than insurers. Even if it meant losing money, it would be sending out a message that they are willing to fight claims."
Local authorities have been underwritten by the Irish Public Bodies Mutual Insurances (IPB) since it was established in 1926.
The company underwrites the main areas of cover for members, including motor, theft, public liability and employers' liability. It was forced to increase premiums from €18.7 million to €20.2 million over a two-year period.
The company paid €36 million to 3,199 individuals last year who claimed they were injured on the premises of local authorities, health boards or universities.
The increases were fuelled by legal costs and the fall-out from the September 11th attacks, which caused turmoil in the international insurance market.
The IPB, however, says it contests each case vigorously and has been calling for changes in the law, such as a reduction in the statute of limitations for taking a claim, which would bring costs down substantially.
Two local authorities, Cork Corporation and Dublin City Council, have already explored the self-insurance route for claims up to a certain value.
This reflects an increasing trend among large State companies and private firms which have opted to insure themselves in the face of high premiums.
State companies such as CIÉ and Bord na Móna, for example, have appointed their own insurance experts or have contracted out the handling of many claims. Government Departments are, in effect, self-insured, as any claims against them are made against the State.
Large private firms such as Supermacs and Avis have also opted for a form of self-insurance. Employers' group IBEC, however, has warned that some firms were in danger of putting their entire businesses at risk.
The Government hopes four key pieces of legislation due to be enacted before the end of the year will help reduce the cost of claims and the cost of insurance.
