• Cost of settling motor claims went up 23% in just 6 months so now is not the time to increase these costs further. 

• Awards are higher here than virtually anywhere else – who does the government think will end up paying for it all?

• No excuse for liability insurance premiums not to come down for business, sports, community and voluntary groups as the cost of claims continues to reduce. 

• Report also makes clear there is no justification for so many claims being settled in litigation as it does not benefit the vast majority of claimants. 

Today’s NCID report from the Central Bank (1) makes clear the government’s looming increase in personal injury awards (2) couldn’t come at a worse time for policyholders.

The report found that the cost of motor claims rose by 23% in the first 6 months of last year, with the increase being attributed to an increase in the volume of motor claims and a steep rise in the cost of damage repairs caused by inflation. Commenting on today’s report Tracy Sheridan, owner of Kidspace play centres in Rathfarnham and Rathcoole and Board member of the Alliance said: ‘The only bright spot had been the reduction in the cost of injury awards and now the government is set to increase these by 17%. If this happens there will be no check on costs. We are already seeing month on month premium increases as the cost of living continues to spiral out of control. The government needs to stand up for policyholders, not make things more difficult for them.’

‘The increase in awards will raise premiums further and adversely impact the volume of claims settled at the Injuries Resolution Board (5). The government has not said a word about the planned increase for the last six months and there has been no opportunity for public debate either. This is wrong.’

The Central Bank also released its NCID liability report for H1 2024. The picture here is markedly different to motor. Reflecting on the report Tracy Sheridan said “there really is no excuse for liability premiums not to come down for business, sport, community and voluntary organisations as the cost of claims continues to reduce. Today’s report shows the cost of settling liability claims is down a further 10% in just the first six months of last year, making ongoing premium increases impossible to justify.”

The Central Bank report also finds no benefit for claimants settling their cases outside of the Injuries Resolution Board and in the litigation channel (3). Awards in both channels average €26,000, however the overall cost of settling the claim increases significantly when legal costs are accounted for in the latter. For cases under €100,000 (94% of claims), legal fees rise from €597 at the Injuries Board to €24,786 in the litigation channel (3). This is something that needs to be specifically addressed in the government’s forthcoming action plan for insurance reform.

—ENDS—

FOR FURTHER INFORMATION CONTACT: contact@insurancereform.ie or Alliance CEO, Brian Hanley at 086 8620 974.

Notes:

1. The focus of this Mid-Year Private Motor Insurance Data Release is to provide updated information on: 
   1. Settled Claims Trends
   2. The Personal Injuries Guidelines – This data release is based on data up to and including the first half of 2024. 
2. ‘Minister for Justice Jim O’Callaghan is preparing to bring a memo to Cabinet on July 8th to pave the way for draft legislation that would give effect to a plan by the State’s judiciary to hike personal injury awards by almost 17 per cent, according to sources.’ See: Minister to bring memo to Cabinet on plan to raise personal injury awards by almost 17% – The Irish Times
3. Graphs showing volume and value re litigation costs
   
4. The Alliance for Insurance Reform brings together 47 civic and business organisations from across Ireland, representing over 55,000 members, 700,000 employees, 614,000 volunteers and 374,000 students in highlighting the negative impact of persistently high premiums and calling for real reforms that will quickly reduce liability and motor insurance premiums to affordable levels and keep them that way. 
5. Concerns with increasing the personal injury guidelines and the process underpinning it:
   1. The proposed blanket increase of almost 17% in personal injury awards will lead directly to increased premiums for motorists, businesses, sports, community and voluntary groups all across the country. It will impede the effective functioning of the Injuries Resolution Board at a time when the previous government did all it could to increase settlement volumes there. Special damages for actual financial losses (e.g. lost salary, medical treatment etc.) correctly track inflation, but this does not seem a logical approach for the additional compensation known as general damages for pain and suffering. Legal costs are already a substantial problem and will only increase if this proposal is adopted. Awards today are still significantly higher than in most other countries, but the 2021 Guidelines helped address this somewhat by providing greater specificity between injury type and award level, resulting in greater consistency and an overall reduction in award values (even if savings had yet to be passed on to policyholders by insurers). The Oireachtas is required to consider the proposals, so it is essential the proposed increase is not merely rubber-stamped by Government. Our recommendation is that, as a matter of urgency, the matter be assigned to the relevant Oireachtas Committee so it can be thoughtfully considered in an open forum and with proper public debate on the appropriate path forward.
   2. ‘The Committee has not found it possible to carry out any meaningful analysis of the quantum of court awards given under the Guidelines to date that might inform this review.’ So said the Board of the Judicial Council whist at the same time recommending a 17% increase in personal injury awards to the Oireachtas. The new Guidelines were only introduced in 2021 and in the absence of meaningful analysis as to their adequacy or effectiveness, a blanket increase in line with inflation is very difficult to justify. 
   3. The Judicial Council Act 2019 made specific provision for the type of rigorous analysis the legislature wanted from the Judicial Council in respect of its 3-year reviews. Presumably the legislature thought it couldn’t prescribe specifically the nature of the Judicial Council’s review, however it did make express provision for the following: 

Section 18 (7) The Personal Injuries Guidelines Committee, and any person authorised by it to act on its behalf, may, for the purpose of performing its functions…

(b) consult with such persons as the Committee considers appropriate, including the Personal Injuries Assessment Board,

(c) conduct research on damages for personal injuries including—

(i) the level of damages awarded by courts in the State and by courts in places outside the State, and

(ii) settlements of claims for damages for personal injuries… 

No such engagement took place with the Injuries Resolution Board despite the thousands of cases the Board processed since the Guidelines were introduced in 2021. Moreover, no comparative research was undertaken and had it been, it would have been abundantly clear that awards in Ireland continue to far exceed those in other jurisdictions.