Insurers say cover still costly as more cases going to court
INSURERS have said they cannot reduce premiums because claimants are rejecting Personal Injury Assessment Board settlements and taking cases to court.
Every case that goes to court is estimated to cost an additional €22,000, Insurance Ireland has said.
But the Alliance For Insurance Reform – which advocates for lower premiums – was sceptical about the explanation from the insurers’ body, and pointed to the lack of competition in some areas.
Alliance For Insurance Reform director Peter Boland said that while motor insurance is trending downwards, liability insurance is not, adding: ‘The only real difference we can see between the two sectors is that there is competition in the private motor sector and very little in the liability sector.’
Insurance Ireland was seeking to explain why premiums are not falling faster – and are in some cases still increasing – despite new judicial guide37% lines slashing the amount of compensation awarded.
It said that the number of people accepting PIAB settlements has fallen by 13% since the new judicial guidelines were introduced.
The average award handed down by the PIAB dropped by 42% after the new guidelines were introduced last year, with the biggest reductions for routine minor injuries such as whiplash. However, the acceptance rate for PIAB awards fell from 51% in 2020 to last year – largely because claimants decided to take their cases to court in the hope of a better outcome.
Moyagh Murdock, chief executive of Insurance Ireland, said: ‘Insurers and Insurance Ireland are increasingly concerned about the growing number of cases that are being rejected in PIAB and then going on to litigation in court.
‘For every case that goes from PIAB to court, that is going to cost an additional, on average, €21,000. Legal costs in PIAB are just under €1,000, but in court, we see from the Central Bank’s reporting last year that, on average, it is €22,000. That, undeniably, is going to have an impact on the cost of insurance.’
She told Newstalk Breakfast that Insurance Ireland wants to assure the public that the PIAB process is ‘fair and transparent’ and largely offers the same outcome as a court hearing. ‘We see that the compensation coming out in court sometimes is less than you would get in PIAB,’ she said.
‘We want the public to be assured the PIAB will treat their case fairly, they will be heard much quicker and they will be compensated for any inconvenience and injury they have suffered.
‘Bringing it to court is just going to cost the insurers a significant additional amount of money and, unfortunately, that has to be absorbed into the cost of insurance and, unfortunately, policy holders ultimately will have to pick that up in their premiums.’
But Mr Boland said: ‘Private motor insurance is trending down 9% over the last 12 months according to our own research. However, [insurers] appear unwilling to pass on the benefits of those same reforms to liability policyholders such as small businesses, voluntary and community groups, sports and cultural organisations and charities, which are experiencing increases of 16% on average.’ He added: ‘The reality is that if the judicial guidelines had increased awards, insurance prices would have increased overnight.’
Process is ‘fair and transparent’