The total cost of settled personal injury claims made under personal and employers' liability insurance policies during the first half of the year was 12% below the pre-Covid average, new data released by the Central Bank of Ireland shows.
The Central Bank says this was primarily due to a drop of a quarter in the total number of settled claims when compared to the pre-Covid average.
The mid-year report of the National Claims Information Database shows a reduction in settled claim numbers was only seen in claims made direct to insurers and through the Personal Injuries Assessment Board (PIAB).
In contrast the number of claims settling through litigation channels has remained relatively stable, the analysis shows.
The average cost of an injury claim settled through the direct and PIAB channels also fell in the first half of 2022, when compared to the pre-Covid average.
Claims settled directly with an insurer fell 1%, while the cost of those settled through PIAB plummeted 20%.
However, the cost of an injury claim settled through litigation rose by 3% during the six months.
Whilst there has been a large reduction in the number of claims settled directly and through PIAB, this has only resulted in a 12% reduction in the overall cost of settled injury claims in the first half of 2022.
This is because the claims settled through litigation, which account for the majority of claims and claim costs during the period – has seen a small increase in the number and average cost of claims compared to the pre-Covid average.
Overall, the report shows that injury claims made up 95% of the costs of settled claims in the first half of last year and two thirds of the actual claims.
The bulk of injury claims continue to be settled through litigation, with 71% of injury claims and 89% of injury costs settled through this channel.
Just 22% of injury claims settled during the period across all the settlement channels were done so using the new Personal Injuries Guidelines that were introduced in April 2021.
For claims settled under the guidelines in the first half of 2022, the average cost was 37% lower for claims that settled directly before PIAB, 54% lower for claims settling directly after PIAB and 35% lower for claims settling via PIAB compared to claims settled in 2020 under the old Book of Quantum.
Insurers are applying the guidelines to the majority of claims now settling under the direct and PIAB channels.
But overall, the report states that the Personal Injuries Guidelines have not yet materially impacted the cost of claims settled through litigation.
That is because just 3% of claims settled through litigation in 2021 and the first half of 2022 were settled under the guidelines.
The analysis claims it will likely take time for the guidelines to take effect in the litigated settlement channel due to the long duration between the accident being reported and the settling of a claim, which is 5.2 years on average.
"Successive NCID reports have consistently shown that the litigated channels still accounts for the majority of claims costs," said the chief executive of Insurance Ireland, Moyagh Murdock, who was reacting to the latest data.
"This further highlights that the strengthened role of PIAB to increase settlements though mediation and without unnecessary litigation is critically important," she said.
"We have recently seen from the publication of a recent European Commission report that the high level of litigation costs in Ireland continues to be a cause of concern," she stated.
She added that the recent signing into law of the changes to the Occupiers' Liability Act on the duty of care in Ireland is an important step.
"Insurance Ireland has continually stated that a rebalancing of the standard is crucial to ensure sustainable cover is available to small and medium enterprises and consumers into the future," she added.
"We have called for these measures for many years, which should make the Irish insurance market more reasonable, practical and proportionate for claimants, businesses, sporting clubs and community groups alike," she added.
The Alliance for Insurance Reform welcomed the fall in the cost of settling liability claims.
"Importantly, it appears that insurers are sticking to the Judicial Guidelines in terms of direct settlements," said Michael Magner, owner of the Vienna Woods Hotel in Cork and a board member of the Alliance for Insurance Reform.
"In light of these reductions there is a compelling argument to pass on savings to liability policy holders without any further delay and any premium increases would simply be unconscionable," he added.
The Alliance said it was calling on the Government to 'hold insurers feet to the fire’ on this and deliver the long overdue premium reductions.
