Insurers have come under fresh pressure from the Government and business lobby groups to cut premiums after the Supreme Court ruled on Tuesday that judged-approved guidelines, reducing awards for mainly minor personal injuries, have legal effect.
Ministers of State Jennifer Carroll MacNeill and Dara Calleary said in a joint statement that “insurers have a responsibility to reflect this in their premiums”. They added that legal costs in relation to personal injury claims need to be monitored.
The Alliance for Insurance Reform, which represents 46 businesses and civic organisations in the State, also welcomed the landmark ruling.
“Insurers have said that the uncertainty caused by the Delaney case has been a big factor in limiting their ability to reduce premiums based on the new guidelines,” said Padraig Cribbin, chair of the alliance. “Today’s decision dispels this uncertainty and must lead immediately to substantial and sustained reductions in insurance premiums across all sectors of society.”
The ruling was on a challenge that had been mounted by a woman from Co Waterford, Bridget Delaney, who had sought to have the guidelines, which were introduced in 2021, set aside.
The Injuries Resolution Board (IRB), formerly the Personal Injuries Assessment Board, reported a 34 per cent decline in average awards in 2022, the first full year of the guidelines, compared to those under the previous so-called Book of Quantum.
Still, concerns over the Delaney test case have affected claims settlement rates – and left cases going through litigation in limbo – in recent times, according to insurers.
Insurance Ireland chief executive Moya Murdoch said the judgment “will bring much needed certainty to the market and claimants can take comfort that their claims will be dealt with fairly and more expediently through the IRB instead of going through a lengthy litigation process”. Legal costs on litigated cases are a multiple of those resolved through the IRB.
She added: “While it is too early in the process to see the full impact of today’s judgment, it is safe to say it should encourage new entrants into the market which would be very welcome especially in the employers and public liability market, for business and consumers alike.”
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The average motor premiums fell 22 per cent between their peak in late 2017 and the end of 2022, according to Central Bank data, helped by an industry-wide decline in claims costs after the guidelines were introduced.
However, the latest Central Statistics Office data shows that motor rates have increased by 4.2 per cent in the 12 months through February. The increase has largely been down to a spike in motor damage costs, amid inflation for labour and car parts, according to insurance sources.
Half of motor claims settled in 2022 were under the guidelines. However, only a quarter of employers’ and public liability claims were resolved under the guidelines that year, according to a Central Bank report published last week.
Average premiums earned for packaged business policies – covering employers’ liability, public liability and commercial property – rose 8 per cent in 2022, following a level of stability over the two previous years and a 32 per cent jump between 2013 and 2019.
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