More than two-thirds of injury claims under employers' liability and public liability insurance were settled through litigation in 2023 despite government reforms, Central Bank figures show.
In a report on the cost of claims, the regulator found that 68 per cent of claims settled that year were finalised only after legal proceedings had been taken.
These cases accounted for 87 per cent of the overall cost of liability injury claims that year, it said.
Despite reforms aimed at lowering the cost of claims, including the introduction of personal injury guidelines in 2021 to replace the book of quantum, the volume of such cases ending up in litigation increased by 17 per cent in the five years from 2019 to 2023.
The Central Bank’s report, which mines data from the National Claims Information Database, found that average legal costs were less than €1,000 for cases finalised at the Injuries Board, formerly PIAB (Personal Injuries Assessment Board), but were more than €23,000 once they went the legal route.
However, average awards for claimants were the same in either channel at €23,000.
The Central Bank report also indicated that liability premiums increased, by 4 per cent in 2023, despite falling claims volumes and reducing award sizes.
Average award sizes – in cases where claims were less than €150,000 – fell from €23,103 in 2021 to €22,099 in 2023. At the same, average legal costs jumped from €14,603 to €16,725.
Higher legal costs may explain, in part, why premiums have been continuing to rise in the face of reduced award sizes.
The report also noted that insurers had operating profits equating to 13 per cent of income in 2023.
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The Alliance for Insurance Reform said the report made clear that too few cases were being finalised at the Injuries Resolution Board stage and that too many were “embarking unnecessarily” into the costlier litigation channel, although only 4 per cent get as far as a court award.
Grocery store owner and Alliance board member Flora Crowe warned of the potential impact of proposals before Minister for Justice Jim O’Callaghan for increasing personal injury awards . The Judicial Council has recommended a 16.7 per cent rise in compensation levels.
“If we continually review upwards personal injury awards every three years and it takes two-and-a-half-years to settle a claim at the Injuries Board, claimants will simply hold on a few months and bring their case into litigation,” Ms Crowe said.
“Not only will awards increase, but legal fees will increase the cost of claims exponentially as this data shows. Businesses simply can’t afford for this to happen.”
