Minister for Justice Jim O’Callaghan is preparing to bring a memo to Cabinet on July 8th to pave the way for draft legislation that would give effect to a plan by the State’s judiciary to hike personal injury awards by almost 17 per cent, according to sources.
The board of the Judicial Council, required by law to review the guidelines every three years, proposed in December that payouts increase by 16.7 per cent.
This was adopted by the council of the State’s judges in late January and passed over to Mr O’Callaghan, who must put the amendments before the Houses of the Oireachtas for approval.
The planned blanket hike has been met with resistance from insurers and business lobby groups, who say that the increase will be passed directly on to consumers and companies.
RM Block
Motorists, who had seen insurance premiums fall 25 per cent between 2017 and 2022, have already faced rate increases in more recent years as car parts and labour inflation have driven up damage costs.
A committee of judges that carried out the payouts review applied the general Irish inflation rate seen in recent years to existing awards guidelines. The council said at the time that the committee “did not find it possible to carry out any meaningful analysis of the quantum of court awards given under the guidelines that might inform this review”.
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The Supreme Court ruled in April last year that while it had been unconstitutional to give the council the power to set personal injury guidelines, the fact that the initial guidelines were subsequently independently approved by Oireachtas members gave them legal effect.
There are signs of opposition within the Oireachtas to the planned hike. A number of Senators, mainly from Fine Gael, including Linda Nelson Murray, spoke out this month in the Seanad against such an increase. Sources say that some Fianna Fáil backbenchers have written to the Minister, a member of their party, to express their concern about the proposal.
Robert Troy, Minister of State with the Department of Finance, told the Seanad on June 10th that a decision to accept or reject the planned new guidelines “will not be taken by one particular Minister, because it is a whole-of-Government decision”.
“While the Government fully respects the independence of the Judicial Council, it is essential that any proposed changes are underpinned by robust evidence,” he said. “We must understand the broader implications for the insurance ecosystem, including costs for policyholders and the sustainability of the market.”
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 although 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.”
