The spring of 2024 is an important time in insurance reform particularly in the context of the legal costs associated with personal injury claims
A lot has happened in insurance in this country recently, although you might not have realised this if you run a business, voluntary or community group, charity, or cultural or sporting organisation and are still paying stubbornly high public liability premiums.
During 2023, significant reforms were introduced on the duty of care owed to people coming onto another’s premises, bringing them more into line with those of other European countries.
A source of perpetual frustration amongst members of the public arises when trespassers and those who enter another person’s property to commit a criminal offence bring a personal injury claim if something happens to them. The change in the law means it is now much more difficult for them to do so.
More generally the reforms require people to exercise a fair and proportionate degree of care for their own safety when out and about and make it much easier for people to consent to activities they know contain more risk.
In October, a memorandum of understanding (MOU) was signed by An Garda Síochána, Insurance Ireland (on behalf of insurance companies), and the Alliance for Insurance Reform. The MOU is intended to better facilitate the reporting of suspected insurance fraud.
Figures vary about the level of insurance fraud in our society, but everyone can surely agree that it is wholly unfair to those on the other end of such a claim and common sense also tells us that paying out, or settling, in such cases will only increase premiums for business, sporting groups and many others needing public liability cover.
These reforms haven’t happened in isolation and come in the context of a whole-of-society effort to tackle excessively high insurance premiums.
Past reforms include the introduction of the judicial guidelines, replacing the Book of Quantum, that has helped bring about a 41% reduction in the size of general damage awards by the Personal Injuries Assessment Board (PIAB — now known as the Personal Injuries Resolution Board or PIRB) since 2020.
Most notably in recent years, the volume of claims is down 41% since 2019.
So what have all these reforms and improvements meant to policy holders? While there have been some reductions in motor premiums, apart from the rare and the anecdotal, no meaningful reductions in public liability premiums have taken place despite all the changes. It is worth reminding ourselves at this juncture that insurance reform did not occur solely for the benefit of insurance companies.
The spring of 2024 is an important time in insurance reform particularly in the context of the legal costs associated with personal injury claims.
We await a Supreme Court decision on the constitutionality of the judicial guidelines and the same guidelines are also currently being reviewed by the Judicial Council.
The guidelines have led to significant reductions in the size of awards and recommend compensation that is more closely aligned with the injury sustained.
Claims for multiple injuries and the uplift in awards because of it seems to be increasing and is definitely something to watch but hopefully this will be satisfactorily addressed in the forthcoming guidelines review. Following the publication of the Kelly Report in 2020, the justice minister commissioned an independent economic analysis of legal fees in civil cases. This report was due to be published in late 2022 and yet, a year later, has still not been published. The minister needs to do so notwithstanding any pressure being directed at her by internal and external stakeholders.
It is noteworthy that 77% of personal injury settlements are made, not in PIAB or court, but in litigation (involving solicitors, insurers and the parties involved).
One can only wonder why such a volume of cases is settled in this way when presumably the compensation on offer is the same as from the Personal Injury Assessment Board (PIAB) and courts, which are public forums.
There is merit in litigation settlements being anonymously registered so that we have fully transparency around the personal injury claims landscape.
To put all this in context, the recently published report from the Central Bank on motor claims found that the average award in litigated cases for claims less than €100,000 — 94% of claimants — was €22,390 last year, with legal expenses adding €17,872 to the average total cost. In contrast, the average for a PIAB settlement was €15,500, with average legal costs totalling €755.
While 2023 has yielded many welcome reforms, these will only count for something when they can be counted upon by policy holders in the form of reduced premiums.
