Insurers must honour pledge to cut costs if awards fall says lobby group CEO

Irish insurance companies "can't get away from" commitments to the Oireachtas finance committee to pass on savings to customers if the Judicial Council moves to reduce personal injury award guidelines significantly, according to the chief executive of the industry's lobby group.

The Judicial Council is set to meet on Friday to consider draft guidelines from its Personal Injuries Committee that will recalibrate the level of damages courts can award in personal injuries cases.

The council will publish the guidelines when they are adopted, “whether on the 5th of February or a later date”, according to Kevin O’Neill, interim secretary to the body.

The guidelines, which will come into force by the end of July, will replace the Personal Injuries Assessment Board’s (PIAB) book of quantum as a benchmark for awards. It follows on from a government-commissioned report that found in 2018 that awards for whiplash-type soft-tissue injuries in Ireland are typically 4.4 times higher than in the UK.

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"It will be very welcome if there is a meaningful reduction in court awards. It will bring certainty to the market and it will assist underwriters and insurers," said Insurance Ireland CEO Moyagh Murdock, noting that senior industry executives have told the Oireachtas finance committee that consumers will benefit if awards decline. "They can't get away from that."

“There are a lot of consequences hanging off this Judicial Council report. It should bring about a significant change to the whole injury claims process in this country and the cost of insurance,” she added.

Top executives from general insurers including FBD, Allianz, Axa, Aviva and Zurich told the Committee in 2019 that their companies would reduce premiums if the Judicial Council delivered on hopes and reduced personal injury award guidelines.

The Alliance for Insurance Reform has called on the judiciary to “have regard to the common good” in their deliberations and reduce awards for minor personal injuries by 80 per cent.

Minister of State at the Department of Finance Seán Fleming told The Irish Times that with judges and PIAB working in future off personal injury awards guidelines signed off on by the judiciary, fewer claimants will bypass the State-run injuries board and resort to the courts.

Legal route

PIAB has complained in the past about what it described as “inconsistency” by judges in their use of the book of quantum, and how come claimants have been trying to “game” the system in an effort to get higher awards.

Mr Fleming said that he wrote before Christmas to the CEOs of the main general insurance companies operating in the Irish market, reminding them of the “commitment that they gave verbally” to the Oireachtas finance committee in 2019. He said he plans to press insurers again when the Judicial Council publishes its guidelines.

Between 2015 and 2019 half of personal injury claims arising from motor incidents were settled directly with insurance companies, with 17 per cent being resolved through PIAB, and 33 per cent going the legal route, according to a Central Bank report published in November.

While the average compensation cheque from litigated cases, at €46,214, was 3½ times the average direct settlement and twice the average PIAB award, it also typically involved €23,409 of legal costs.