More people are rejecting insurance settlement offers from the State’s Personal Injury Assessment Board in the hope of getting a larger award in courts.
Insurance companies claimed this was why motor insurance premiums were not falling by much more.
Industry lobby group, Insurance Ireland, told an Oireachtas committee the low take-up of PIAB settlement offers presents “significant uncertainties” for them.
The industry was commenting on why there has not be a large fall in premiums a year after personal injury guidelines were agreed by the State’s judges.
Official statistics show that motor premiums fell by 11pc in the year to March, but other forms of insurance actually rising in cost.
A big fall in premiums was expected when the Judicial Guidelines on awards were put in place.
The guidelines recommended reducing award levels for minor injuries by around 50pc.
This was expected to see motor premiums fall by at least 20pc.
Personal Injury Assessment Board (PIAB) award levels have fallen by 42pc on average since the guidelines were implemented last year.
However, the acceptance rate of PIAB assessments has reduced from 50pc to 37pc as more claimants move to litigation.
Central Bank research has shown that there is little difference is the award levels between PIAB settlement offers and what people get when they go to court.
However, it takes years to get a court award, while the legal costs are substantial.
PIAB is a state body set up to support the resolution of personal injuries claims without the need for litigation.
Insurance Ireland’s chief executive Moyagh Murdock told the Oireachtas Finance Committee: “We are concerned at the decreasing acceptance rates of PIAB awards by claimants since their introduction.
“It is reasonable to assume that this trend is leading to more cases going to litigation,” she added.
Ms Murdock said personal injury guidelines had the potential to “represent a milestone for the Irish insurance market if they are consistently applied”.
Sinn Féin finance spokesperson Pearse Doherty has proposed an amendment to the Judicial Council Bill 2021 to force insurers to set out exactly what cuts in premiums they have implemented due to the lower award levels.
He accused Insurance Ireland of pocketing savings from lower awards and failing to pass them on to policyholders.
Alliance for Insurance Reform director Peter Boland told the committee his organisation was frustrated at what it said was the extremely slow.
This is at a time when many say high insurance costs represent a threat to their business.
The alliance represents charities, businesses and voluntary groups and sports clubs.
He accused insurers of pocketing the benefits of lower award levels and failing to pass these on to policyholders.
Mr Boland said: “Of all the major challenges facing Ireland right now, insurance is the one that government can fix quickest.
“But reforms are not moving fast enough.”
A survey it carried out of policyholders to mark the first anniversary of the judicial guidelines found that 42pc of respondents said that insurance costs are threatening the future of their organisation. Almost of third said insurance costs are preventing them from providing certain services.
Mr Boland said: “Ultimately, 90pc of respondents to the survey said that Government is not doing enough to address the issue of insurance costs.”
It wants the duty of care obligations imposed on businesses and voluntary groups to be rebalanced.
It also wants PIAB to be reformed.
Legislation to address this is moving slowly through pre-legislative scrutiny, it said.
The State must robustly defend the multiple Constitutional challenges to the guidelines being pursued by the legal profession intent on protecting the revenue stream generated by personal injury litigation, the Alliance said.
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