Minister for Justice Jim O’Callaghan has bowed to pressure on a plan by the Judicial Council to hike personal injury award guidelines by almost 17 per cent, confirming that he will not ask the Oireachtas to rubber stamp the judiciary’s proposed tweak to payouts.
However, the Minister warned that the decision opens up the risk that judges could start making increased awards outside of the guidelines while the Personal Injuries Resolution Board (PIRB) remains bound by the current guidelines. The PIRB is designed to assess injury cases to avoid them ending up before the courts.
“There is a risk that this combination could drive claimants back to the courts with a consequent increase in legal costs which will make the claims process more expensive,” the Department said in a statement on the Minister’s concerns. “This is something the Minister is very cognisant of and will keep under review.”
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 the first review of guidelines that initially came into effect in April 2021.
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The council of the State’s judges moved in late January to pass on the proposed changes to Mr O’Callaghan. The changes only have legislative effect if they are approved by the Houses of the Oireachtas.
The planned blanket hike had been met with resistance from insurers and business lobby groups, which say that the increase will be passed directly on to consumers and companies.
“The Government has made this decision not for the benefit of insurance companies but for policyholders. In terms of liability insurance for businesses, sports, community and voluntary groups, we have seen substantial decreases in the volume of claims and the size of awards,” said the Alliance for Insurance Reform in a statement.
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It added: “This was a grassroots campaign by local business, sports, community and voluntary organisations who were deeply concerned at the proposed increase in the context of ongoing cost of doing businesses challenges [sic] and wrote in their hundreds to Government ministers expressing their concerns. It is important, and very welcome, that these concerns were listened to.”
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 review on payouts last year applied the general rate of Irish inflation 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”.
The role of the Oireachtas in setting the injury guidelines was clarified by a Supreme Court ruling in April last year. While the court said that 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.
In the Dáil Taoiseach Micheál Martin said that there needs to be a review of the 2019 Judicial Council Act, which covers how the guidelines are set. He said that Minister O’Callaghan has committed to carrying this out.
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.
