The value of average awards for personal injuries made by the Personal Injuries Assessment Board (PIAB) has fallen by 40% from last year's levels, following the introduction of new Judicial Council guidelines in April.
New research by PIAB shows that between 27 April and the end of September, average awards dropped from €23,877 to €14,233.
The report also shows that nearly half of PIAB’s awards are now under €10,000, compared to 12% prior to the changes.
Based on more than 2,600 claims during the period, PIAB says the level of reduction equates to a total drop in award values over the period of €25.6m.
However, PIAB also found that the rate of acceptance of its awards by claimants fell from 50% to 41% during the period, something it said was not unexpected.
"This report shows that award levels are reducing sharply with the guidelines having a very immediate impact on award levels," said Rosalind Carroll, PIAB’s chief executive.
"As the cost of personal injury claims has been reported as an important factor in the price and availability of insurance, this report is good news for individuals, communities, and businesses who pay for insurance and ultimately for society."
Read more:
New guidelines should see personal injury awards fall
Personal injuries claims numbers see big fall - PIAB
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The recalibration of the personal injury award guidelines by the judiciary in March followed long-standing claims by insurance reform campaigners that the levels were out of step with international peers.
The insurance industry claimed that this was a key driver of the higher costs of settling claims, which fed into higher prices for customers.
The changes adopted by the judiciary caused the revision downwards of many of the awards, leading to savings for insurance companies that they have promised to pass on to customers.
Because the vast majority of the personal injury claims never go to court, PIAB claims it is the main implementer of the guidelines.
However, its data does not include settlements that were made directly with insurers or awards made in the courts.
The report details how 18% of awards are now under €5,000, with 30% between €5,000 and €10,000.
PIAB's analysis found a 40% drop in the value of average motor and public liability awards, with employers’ liability payouts decreasing by 44%.
Average awards for general damages, which includes compensation for pain and suffering, decreased by 46%.
The guidelines did not change special damages, which are costs like medical or travel expenses or compensation for loss of wages.
PIAB claims it will take some time for the full impact of the guidelines, particularly in terms of legal costs and litigation savings, to be seen.
It also says average award values in the future may be affected by the mix of severity and types of injuries.
"However, today’s report clearly shows that the Guidelines, as they effect the monetary value of awards, are having a very immediate effect on values and it is important to remember that both the Courts and PIAB are mandated to follow the Guidelines, which were set by the Judicial Council," said Ms Carroll.
"Reductions in award levels create the perfect environment for a reduction in insurance premiums."
"Combined with the overall sharp reduction in the number of injury claims in the last 18 months, this report shows that overall claim costs are falling very significantly."
Speaking on Morning Ireland, Ms Carroll said the board has come out with the data to bring "transparency to the area" and one objective of the personal injuries guidelines is to have "consistency and certainty."
"The guidelines we use now are also used by the courts so that people would have certainty and if they took an award with PIAB that they would more or less get the same if they went to the court process," Ms Carroll said.
It is important to get the data in terms of direct settlements that happen post PIAB from the insurance companies to get the full benefit of the guidelines, she added.
"PIAB was set up so we can look at claims fairly and independently and stop all the additional costs that litigation can add to claims," she stated.
She said it is early days for everybody, but she would expect if insurers were settling claims they would be using the guidelines with regard to applications that they receive.
She said public liability and employer liability are significant issues where they saw a 44% decrease in employer liability and a 40% decrease in public liability.
"Just in terms of the 2,600 cases they equate to €26m in that period of five months of savings," the PIAB CEO said.
She said there was also a drop in the volume of claims, stating the pandemic was one of the reasons with people not in the workplace and with less cars on the roads.
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Tánaiste Leo Varadkar welcomed the PIAB report saying it shows that the guidelines are having an effect.
"I expect this dramatic drop in award levels to be reflected in reduced premiums for individuals, businesses and volunteer groups and Government will continue to work with the insurance sector to make sure this is the case," he said.
The Alliance for Insurance Reform also welcomed the report but said the trend and the effort that went into generating it will be of no value unless they lead to substantial reductions in insurance premiums.
"While we are seeing some downward movement in motor insurance premiums, the experience of SMEs, voluntary & community groups, sports and cultural organisations and charities is that renewals are actually increasing right now," said Peter Boland, Director of the Alliance.
"Why aren’t they falling? The insurance industry cannot have its cake and eat it. They identified the cost of claims as the key driver of insurance costs and this has been addressed by Government and the judiciary."
"So the risk associated with every policy has reduced significantly and this must be reflected in premiums."
Insurance Ireland said it too welcomed the report's findings and continues to strongly support the new guidelines and the Action Plan for Insurance Reform.
"Pricing is a matter for individual companies and competition law prohibits us from commenting on future pricing in the market, however the National Claims Information Database (NCID) Private Motor Report of November 2020 shows that the average premium fell 9% from Q2 2018 to Q4 2019 and the CSO motor index shows that there has been a further 13% reduction since then," said Moyagh Murdock, CEO, Insurance Ireland.
"The last time Ireland introduced major reform with the establishment of Personal Injuries Assessment Board (PIAB) in 2004, insurers responded positively and consumers benefitted."
"It is good to see the downward trend in motor insurance, but there are other areas of the market that remain very challenging, particularly Public Liability and Employer's Liability insurance."
"It is essential that the other measures in the Action Plan for Insurance Reform are progressed in order to address these issues, such as the strengthening of the powers of PIAB, the rebalancing of the duty of care between business and the citizen, and increasing competition in the market."
