Categories: Press Releases

by Brian Hanley

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PRESS RELEASE

1st June 2023

The Government commissioned report on legal fees is now a year overdue.

Further slippage cannot be permitted given the impact high legal fees are having in driving up insurance premiums.

  • “Legal costs are a key contributor to the high insurance premiums people, small businesses and voluntary groups’ face. Daily we hear about events being cancelled or organisation’s growth stifled because of these costs.”
  • “After the Indecon economic report is submitted a further legal analysis is required before draft proposals are even circulated.”
  • “Who is this delay benefiting? It isn’t helping motorists and it certainly isn’t helping hard pressed businesses or voluntary groups.”
  • “We call on the Minister to ensure that Indecon’s report is submitted to Government without any further delay.”

The Alliance for Insurance Reform has called on Government to ensure the economic assessment on legal costs it commissioned from Indecon International Economic Consultants that was due for submission this time last year[1], is submitted to it without further delay.

Flora Crowe, Alliance Board member and grocery stores owner said: “Legal costs are a key contributor to the high insurance premiums people, small businesses and voluntary groups’ face. Daily we hear about events being cancelled or organisation’s growth stifled because of these costs. We welcomed the Government’s decision to commission “An Economic Evaluation of Options to Control Litigation Costs” but cautioned that the time frame for its completion not be allowed to drift. Unfortunately, this is what has happened making it essential that the report is presented to Government without any further delay.”

She also said: “After the Indecon economic report is submitted a further legal analysis is required before draft proposals are even circulated. We note from the Justice Department that such an analysis is scheduled to take six months[2] but given the interminable delays in addressing legal costs going back more than ten years to the time of the Troika members of the Alliance are deeply concerned that this will be put on the long finger again. We call on the Justice Minister to ensure the Government’s commitments in this area are honoured.”

Alliance Board Member and owner of Kidspace play centres in Rathfarnham and Rathcoole, Tracy Sheridan asked, “Who is this delay benefiting? It isn’t helping motorists and it certainly isn’t helping hard pressed businesses or voluntary groups.”

Legal fees account for 33% of the total cost of litigated personal injury settlements in Ireland[3] – a cost that goes directly to the cost of insurance.

We call on the Minister to ensure Indecon’s report that was due for submission this time last year is submitted to it without further delay. The quality of Irish people’s lives and livelihoods is greatly impacted by the exceptionally high legal fees arising in personal injury cases and they cannot afford to wait any longer.

ENDS

For further information contact: contact@insurancereform.ie

Mobile: 086 826 6036

Notes

Legal Costs in Ireland

In 2011, as part of its rescue package, the Troika insisted on the following Structural Reforms:

“Government will introduce legislative changes to remove restrictions to trade and competition in sheltered sectors including:

  • the legal profession, establishing an independent regulator for the profession and implementing the recommendations of the Legal Costs Working Group and outstanding Competition Authority recommendations to reduce legal costs.”[4]

Despite the insistence of the Troika more than a decade ago, there is no evidence that legal fees have reduced. Indeed, Central Bank analysis of legal fees for private motor insurance related personal injury claims shows that quite the contrary has happened, with legal fees increasing by 31% in the 8 years from 2015 to 2022.

The National Competitiveness Council (NCC) selected legal services costs as one of six areas of focus in its report on Ireland’s Competitiveness Challenge for 2019 and noted: “There is growing evidence to suggest that the cost of settling a claim in Ireland is: (i) more expensive than in comparable jurisdictions; and, (ii) has increased dramatically over the last number of years. These changes reflect both increases in the amounts awarded and the number of claims made.”[5]

The Alliance for Insurance Reform notes that insurance premiums for SMEs, voluntary and community groups, sports and cultural organisations and charities continue to spiral, with many organisations now struggling to get cover at all. Our ongoing policyholder survey measures the increase in average liability renewals at +14% in 2022, on top of unsustainable increases in previous years. So the work of the Minister and Department of Justice on key reforms is critical in delivering affordable insurance premiums as a matter of urgency.

Footnotes:

[1] Justice Plan 2022 p.28

[2] Justice Plan 2022 p.28

[3] See Notes

[4] European Commission Directorate-General for Economic and Financial Affairs, “The Economic Adjustment Programme for Ireland” Occasional Papers 76, p.66

[5] See pp. 267-271 of the Report on the Review of the Administration of Civil Justice for more background information on the issue of legal costs in Ireland.