Alliance for Insurance Reform warns legal costs for personal injury claims 'spiralling'
Insurers made a profit of 13% on employers liability, public liability, and commercial property insurance in 2023, but a lobby group for industry reform has warned that a proposal before the Oireachtas to increase personal injury awards by 16.7% will exacerbate "spiralling" litigation costs.
Insurers made a profit of 13% on employers liability, public liability, and commercial property insurance in 2023, but a lobby group for industry reform has warned that a proposal before the Oireachtas to increase personal injury awards by 16.7% will exacerbate "spiralling" litigation costs.
The Central Bank's National Claims Information Database report for 2023 published on Thursday showed that insurance company profits increased for a third consecutive year on employers liability, public liability, and commercial property insurance, which covers a wide range of policyholders and businesses, from farmers and shops to large manufacturing, construction, and pharmaceutical companies.
Total ultimate claims costs - which include outstanding claims which remain to be settled - for 2023 are expected to be €630m across 31,414 claims.
The report found that just 13% of personal injury cases were settled through the Injuries Resolution Board (formerly known as the Personal Injuries Assessment Board), with the large majority - 68% - of personal injury cases settled through litigation before a court award. Some 10% of injury claims were settled before reaching the injuries board with 5% settled after the injuries board. A further 3% of personal injury cases were settled through litigation after a court award.
Average legal costs are less than €1,000 for cases finalised at the Injuries Resolution Board but over €23,000 once it enters into litigation.
According to the Alliance for Insurance Reform, which represents civic and business organisations from across Ireland, the volume of cases going through litigation will be exacerbated by draft guidelines proposed by the Judicial Council which recommends a 16.7% increase in personal injury awards. The proposals are due before the Oireachtas.
"This report makes clear that too few cases are being disposed of at the Injuries Resolution Board and too many are unnecessarily pursuing the more expensive litigation channel," said Alliance for Insurance Reform board member Flora Crowe, a grocery store owner in Co Clare.
"If we continually review upwards personal injury awards every three years and it takes two and a half years to settle a claim at the Injuries Board, claimants will simply hold on a few months and bring their case into litigation. Not only will awards increase but legal fees will increase the cost of claims exponentially, as this data shows. Businesses simply can’t afford for this to happen."
The 13% profit reported by the insurance industry in 2023 follows operating profits of 10% in 2021 and 14% in 2022. Prior to 2021, the industry had not recorded a material profit since 2011. Insurance Ireland said this equated to an overall 2.1% level of profitability between 2009 and 2023. "The report shows further stabilisation in the Irish market with profitability in 2023, and this is the sort of evidence needed to attract new entrants to the Irish market," said Insurance Ireland chief executive Moyagh Murdock.
"It is very good news to see these sectors stabilise after sustained periods of losses and volatility, but it is very disappointing to see the very high level of claims still going through the litigated route."
The report found that premiums in the sector increased by 4% in 2023 and have increased by 17% since 2020. Insurance Ireland, representing insurance companies, noted that out of 332,000 policies, 90% of premiums are less than €5,000, while over half of all policies had premiums of less than €1,000.
