Insurance
Judges have voted to reduce damages for soft tissue injuries but business lobby groups say the reductions don’t go far enough, writes John Kinsella
New personal injury guidelines should lower the cost of claims. It will take a while for insurance premiums to reduce too
Personal damages awards for minor injuries in Ireland are among the most generous in Europe. As a result, public liability insurance costs for business are a huge burden for enterprise, sometimes so much so that the business is no longer viable.
Finally, some change is on the horizon. On March 6, the Judicial Council formally adopted new Personal Injuries Guidelines which, in theory, should reduce the cost of claims and therefore reduce insurance costs too. The guidelines received a mixed reaction from lobby groups, who contend that the guidelines don’t go far enough and that judges will still have discretion to work around them anyway.
The process of fixing the new injuries compensation process was itself curious. The Judicial Council was established in mid-2019 by an Act of the Oireachtas to represent the judiciary and to formalise operations such as education and training for judges and investigating complaints against judges. The Act also delegated to judges the power to determine personal injuries and sentencing guidelines, which some argue should be a function of the legislature.
A sub-committee of the Judicial Council went away to consider amendments to the Book of Quantum, the existing reference for fixing personal injuries awards. This committee drew up the new guidelines, which were then voted on by members of the judiciary on March 6.
The vote was a close-run thing. 146 of 168 Council members participated in the virtual meeting, with 83 voting in favour and 63 against the guidelines. Neil McDonnell, who heads up lobby group ISME, observed: “It remains very difficult to see how the process of adoption of these guidelines by the judiciary, followed by their enactment by the Oireachtas, does not constitute a breach of Article 15 of the Constitution, which confers the powers to make laws exclusively on the legislature.”
The headline change has been the alteration to minor injuries, which now have a nominal cap of €12,000. According to ISME, this should bring most within the remit of the District Court, where legal costs are fixed by scale. The Personal Injury Assessment Board (PIAB) will also be bound by the new guidelines once they are established by law.
Credit for forcing the new guidelines on the judiciary and the legal fraternity is largely down to the Alliance for Insurance Reform (AIR), which assembled under the one banner 41 civic and business organisations from across Ireland, representing over 55,000 members with 700,000 employees. When the guideline details were announced, Alliance director Peter Boland expressed the organisation’s dismay at the new level of quantum outlined by the judges.
According to Boland: “Getting insurance costs down means cutting the general damages paid out for minor, fully recovered injuries. It would have taken reductions of 80% to the damages handed out for such injuries in order to do so.” In Boland’s opinion, examples of minor injuries that remain too high following the Judicial Council review include:
● Minor thumb injury (no sprain, no breakage). Was €21,200, reduced to €12,000 (-43%). Currently €4,580 in England and Wales.
● Whiplash. Minor, substantially recovered. Was €15,700, now €6,000 (-62%). Currently €4,190 in England and Wales and will drop to €1,490 in May. Up to €1,125 in Germany. Unlikely to receive compensation in Sweden.
● Whiplash. Minor, full recovery expected. Was €19,400, now €12,000 (-38%). Currently €7,600 in England and Wales, will drop to €4,760 in May.
● Whiplash. Moderate. Was €30,200, now €23,000 (-24%). Currently €13,220 in England and Wales.
● Back. Minor, full recovery expected. Was €18,400, now €12,000 (-35%). Currently €7,600 in England and Wales.
● Ankle. Minor. Was €23,100, now €12,000 (-48%). Currently €7,410 in England and Wales.
For ISME, the positive developments in the new guidelines include:
● Scarring and burns are dealt with on a standalone basis. This is an improvement on efforts to quantify scars on a ‘per-stitch’ basis. There is
also guidance on whether scars are visible or disfiguring.
For the first time, there is clear guidance on the issue of PTSD. This has been featuring more regularly in PI cases of late, especially in motor cases, and most especially in those involving injuries for minors.
There is solid new guidance on pre-existing conditions and injuries. Courts may now only award for them to the extent that the claimed injury has made them worse.
There is more explicit guidance on how courts should treat multiple injuries.
The District Court has jurisdiction to handle claims up to €15,000, and legal costs are lower than for the Circuit Court, the next rung on the litigation ladder. However, Neil McDonnell believes clear instruction on the quantification of awards levels provides a road map to the legal profession on how to increase awards.
He explains: “The guidance on PTSD, and the introduction of a new category for ‘Minor brain damage or head injury, if any’ increases the likelihood of an increased volume of multiple injury claims. The combination of a minor neck injury, a minor brain injury, and PTSD would see the whiplash caseload staying in the Circuit Court, perhaps with an uplift in quantum.
“In the UK, the Civil Liability Act 2018 has radically recalibrated downwards awards for minor injuries. So even with an average 52% reduction in awards for minor injuries, we remain far from addressing the 4.4 multiple in Ireland vs. the UK established by the Personal Injuries Commission. Ireland will still be paying out extremely generous awards to people with little or nothing wrong with them.”
lllThe new guidelines take effect once Section 99 of the Judicial Council Act 2019 is commenced by the Minister for Justice, and they will replace the Book of Quantum. However, the guidelines will apply only to injuries that have not yet been assessed by PIAB. According to ISME, on the current timelines it takes to assess awards, this suggests a lag of up to two years before all injuries are assessed under the new rules. When the guidelines become operative before the courts, if judges depart from the award caps, they will have to identify the facts upon which they have relied for doing so.
Insurers are also underwhelmed by the Judicial Council’s review. Insurance Ireland says that the reductions could have been much greater had the proposals sought to bring Ireland more into line with the UK and other European countries, particularly on the issue of soft tissue injuries.
CEO Moyagh Murdock commented that insurers are concerned that for soft tissue injuries such as minor neck injuries an award range of €500 to €12,000 is indicated. “Interpretation of ‘substantial recovery’ is going to have a significant bearing on the awards, and there is still a risk of judges making widely varying awards of damages in respect of relatively comparable injuries,” Murdock added. “Insurance Ireland believes that meaningful reductions in award levels will benefit consumers and lead to decreased volatility and increased competition in the market over time.”
What AIR members want to know is when their insurance premiums will decrease. Not this year, would seem to be the answer. Peter Boland notes that it will be years before it’s clearer whether or not, or to what extent, awards of damages made by Irish courts are responsible for the levels of insurance premiums. Nevertheless, there should be immediate downward pressure on legal outlays, as the guidelines provide greater certainty as to the level of damages likely to be awarded by a court if the case proceeds to trial.
According to Boland: “It is expected that this will lead to more early settlements, and therefore a reduction in the legal costs of both claimants and defendants. Where lower awards apply to a category of injury, it will result in many cases in future being commenced in a lower court. This also has an impact by reducing the costs recoverable.”
Before a personal injuries claim reaches court, it firstly must go through the Personal Injuries Assessment Board. Costs escalate sharply when claimants step outside the PIAB framework, as they are entitled to do. Central Bank research in 2019 found that the average legal costs of settling personal injury claims in PIAB were under €800 compared with c.€16,000 where a claim is settled through litigation.
PIAB currently has c.19,000 claims waiting to be assessed, and these will be subject to the new guidelines. PIAB chief executive Rosalind Carroll believes the new Personal Injuries Guidelines should result in more predictable court awards.
“This will mean parties involved in claims should have increased confidence in accepting PIAB awards and there will be no incentive to go to costly, unnecessary, and lengthy litigation. In this way, the new guidelines can significantly contribute to reduced claims costs, which insurers claim have contributed to high insurance premiums.”
ISME’s Neil McDonnell says that personal injuries awards constitute c.40% of the cost of the typical motor insurance policy. “On average therefore, we would expect to see a reduction of 52% in minor injuries awards to produce a 22% reduction in premiums, excluding any reduction in legal costs. Only time will tell if this will happen, but we will push PIAB to maintain an accurate database of claims information to see if there is an increase in multiple injury claims as a result of the Judicial Council’s guidelines.”
The all-island public procurement market is worth €12.1bn and offers significant opportunities for SMEs to win steady business and increase their sales. However, applying for public sector contracts can be daunting for many businesses, who may not know where to find out about public sector contracts or are cautious about tendering. The irony is that public sector buyers are keen to work with smaller companies, as they tend to be more invested in securing a positive outcome and are often agile, innovative and very accessible.
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InterTradeIreland has a number of tendering supports to help businesses tender successfully for public sector contracts.
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