The Irish Government’s Action Plan for Insurance Reform, including new guidelines for personal injury awards, was the focus of a keynote speech by Ireland’s Trade Minister Dara Calleary, speaking at Airmic’s Island of Ireland Forum.
He was keen to emphasise the importance of the insurance sector to the Irish economy in his speech to a room packed with risk and insurance professionals in Dublin on 25 September.
Calleary noted that Ireland had negotiated the challenges of Brexit, maintaining its position as the largest exporter of insurance services in the EU, and Europe’s fifth-largest market for direct insurance business and third-largest market for reinsurance.
More recently, Russia’s war in Ukraine and the continued effects of the Covid-19 pandemic have represented a “perfect storm” – the theme of the day’s event.
“Ireland is a small, open economy that is deeply impacted by global events. We live in highly uncertain economic times, with the lingering effects of the pandemic, disruptions in worldwide supply chains and the ongoing war in Ukraine driving inflation and cost-of-living pressures across society,” Calleary said.
The core of his speech was the Irish Government’s Action Plan for Insurance Reform. The 66-point plan aims to:
- help bring down the cost of this key financial service
- encourage more competition into the market, and
- prevent fraud, thus benefitting consumers and businesses alike.
“One of the key innovations to date under the plan is the introduction of the Personal Injury Guidelines, which came into force in April 2021, six months ahead of schedule,” he said.
The guidelines set out the level of damages that may be awarded or assessed in respect of personal injuries. They are used by both the Personal Injuries Assessment Board (PIAB) and the courts to assess compensation in such claims.
“The guidelines have reduced some categories of award…by an average of 40%, which is bringing predictability to the claims environment. The guidelines have brought transparency, consistency and certainty to awards,” Calleary said.
“It is vital that insurers and the courts system now adhere to the new award levels established by the guidelines, so as not to undermine the success already achieved. The use of PIAB by insurers and claimants is also vital.
PIAB is Ireland’s structure for assessing claims for compensation arising from personal injuries sustained because of a motor, workplace or public liability incident.
“PIAB provides a fair and transparent assessment process in which personal injuries claims are resolved in a straightforward and efficient way. The model is a positive one for society as it delivers compensation more quickly, with lower costs and predictable outcomes,” he said.
Data from the Central Bank of Ireland show that the average settlement time for injury claims through PIAB was 1.8 years compared to 4.5 years through litigation, Calleary noted.
The average legal costs for Employers Liability claims (under €100,000) settled via PIAB was €562 versus €18,290 for a litigated claim, despite the average compensation being similar, he explained.
“The PIAB process is much more cost-effective and efficient than litigation. So, I am now progressing a bill to increase the number of personal injury claims resolved by the board without recourse to litigation. My Bill, which I intend to enact this year, will establish PIAB as a new and enhanced Personal Injuries Resolution Board,” said Calleary.
“Central to this will be the introduction of mediation as a new service to resolve personal injury claims. Where the parties do not consent to mediation, the existing process in respect of assessment of a claim remains,” he said.
“We know the cost of claims is a large driver of insurance premiums. This Bill will increase the number of claims settled through an enhanced resolution process and reduce the cost of claims. This will impact positively on the cost of insurance, which is vital for so many groups across our country,” Calleary added.