As is the case with Brexit, some readers may be questioning whether reform of our insurance claims costs will ever happen. This is understandable as the debate has been ongoing since 2015. However, readers should be aware the implementation of the key reform, a judicial council with the power to recalibrate compensation guidelines for personal injury, is at a critical stage and remains vulnerable to attempts to cast doubt on its necessity.
There appears to be an ongoing attempt to question the need for cost reforms with some citing a lack of an independent picture of the cost of claims in Ireland.
This is slightly bemusing given the publication of the Personal Injuries Commission report last year in which insurers provided all their claims data for independent verification. The data included all claims paid either directly by insurers, through the Personal Injuries Assessment Board, on the steps of the courts or in the courts for the years 2015, 2016 and 2017. Its findings were stark; our injury compensation awards are 4.4 times those in the UK and for all claims up to €100,000, the average award rose by more than €900 each year.
The central recommendation of the Personal Injuries Commission is to allow the judicial council, when established through the Judicial Council Bill, to recalibrate the current guidelines for personal injury compensation.
The significance of this Bill should not be underestimated. Although court settlements represent only a small proportion of all personal injury claims, the amounts settled for become the new reference point for all comparable unsettled claims.
Multiples of UK
This is compounded by increases in personal injury cases before the courts. According to RTÉ Investigates, from 2007 to 2016, there was a 33 per cent increase in personal injury cases lodged in the High Court and Circuit Court.
Our injury compensation awards are 4.4 times those in the UK and for all claims up to €100,000, the average award rose by more than €900 each year
Some have argued recent reductions in certain High Court awards by the Court of Appeal indicates the system is fixing itself. This is not the case. The Court of Appeal primarily reviews cases from the High Court, not the Circuit or District Courts where most litigation relating to personal injury takes place. In addition, an analysis of some of the High Court awards reduced by the Court of Appeal shows the revised awards are multiples of those for comparable cases in the UK.
After some delay, the Judicial Council Bill is being advanced in the Seanad but there is uncertainty regarding when it will be enacted and when the judicial council will complete its work to set new compensation guidelines. Clarity is urgently needed on a timeline for this work and, when completed, its recommendations must be consistently adhered to.
In addition to the data on costs and awards already supplied by insurers, additional regular information on settlement costs is needed and this will be addressed when a National Claims Information Database is established this year. Insurers are working with the Government to deliver this project which will show trends including breakdowns of legal and medical costs, to help inform policy solutions to these costs.
Underwriting losses
In recent months the impact of high costs in insurance on businesses has been brought into sharp focus through small business owners telling their stories. That such a situation has arisen is deeply concerning given the solutions have been available for many years.
The insurance markets covering these businesses are extremely volatile. From 2013-2017, the underwriting losses in the employers’ liability and public liability markets were €349 million; and in 2017 alone, they were €49 million. No business can sustain such losses indefinitely and insurers are no different.
From 2013-2017, the underwriting losses in the employers' liability and public liability markets were €349 million
The businesses affected by this volatility are rightly holding all stakeholders, including insurers, to account. They want predictability in their insurance costs and they want action on what has been promised, including the Judicial Council Bill.
Such challenges have been faced before and reform was achieved. In the early 2000s, the claims settlement system was reformed through the Motor Insurance Advisory Board which introduced the Personal Injuries Assessment Board, among other measures. The benefits of these measures were almost immediately obvious to all policyholders as costs reduced dramatically.
With the right will, this can be done again. The focus of all interested parties in 2019 should be on passing the Judicial Council Bill to recalibrate awards and bring about real reform in the interests of policyholders.
Kevin Thompson is the chief executive of Insurance Ireland