Insurers, business lobby groups and the Injuries Resolution Board (IRB) have called for an overhaul of how personal injury awards guidelines are set, amid concern that a planned 16.7 per cent hike to payouts will widen the gap with other European jurisdictions when it comes to whiplashes and other minor injuries.
Minister for Justice Jim O’Callaghan’s officials are working on draft legislation that would bring about the increase, which has been put forward by the Judicial Council under an awards guidelines regime that came into being four years ago.
A Supreme Court ruling last year confirmed that the council had the power to set guidelines, as long as they, and any changes, are rubber stamped by both Houses of the Oireachtas.
A number of insurers and business representative groups have used a Department of Finance public consultation on future insurance reforms to register concerns about the planned blanket increase to personal injury awards, the frequency with which they are reviewed and the extent of powers the judiciary has.
Aviva Insurance Ireland said that while the 2021 guidelines brought down overall injury awards, the going rate for minor neck injuries where recovery is made within six months is up to €3,000, 5½ times higher than that in the UK.
“The large disparity is before the 16.7 per cent increase proposed by the Judicial Council, which, if introduced, will make the gap even larger,” Aviva said. “Comparing Aviva’s claims in the UK and Ireland, attritional claims like whiplash represent 30 per cent of the cost of motor insurance premium in Ireland compared to 10 per cent of premium in the UK in 2024 and lower still in Europe.”
“We estimate that the cost of implementing the 16.7 per cent increase is €74 million, which ultimately will be paid for by customers.”
Aviva, Allianz Ireland and Insurance Ireland each called for the guidelines to be benchmarked against European countries.
“Legal expenses and award levels for lower-value claims remain disproportionately high and are not aligned with those observed in the UK and other European jurisdictions,” said Allianz.
“Before any inflationary adjustments are made to the personal injuries guidelines, it is essential to conduct a comprehensive benchmarking exercise with our European counterparts to ensure a proportionate and evidence-based approach.”
Alliance for Insurance Reform, a lobby group for business and civic organisations, said the periodic review of awards should be extended from three to seven years.
“The guidelines ought not to be both reviewed and subsequently applied by the judiciary,” the alliance said in its submission to the Department of Finance.
“Rather the former responsibility should be delegated to an independent commission comprising a variety of members, reflective of the many stakeholders and policy considerations involved.”
Small business lobby group ISME also called for judges to be removed entirely from the setting of awards guidelines. It claimed, in addition, that “there is too much judicial discretion improperly exercised in favour of losing plaintiffs” in the injury cases that end up in court.
The IRB said the current three-year review cycle does not allow guidelines to be embedded. It suggested it should be extended to five years. It also called for clarity on what happens if the Houses of the Oireachtas does not approve amendments.
“Under the current guidelines model, there could be several versions of the guidelines in use dependent on whether a claim has already been assessed or if legal proceedings have been initiated,” it said. “A situation cannot exist whereby the same injury, the same claim, that has been rejected within the Injuries Resolution Board goes into the court system and a different set of guidelines is used to value compensation.”
