Dr. Neil Walker:

IBEC is the national voice of Irish business on a wide range of policy issues, including environment, health, safety and related insurance. Some of the factors driving up motor insurance premiums in Ireland are impacting on other forms of insurance as well, notably employer liability, EL, and public liability, PL. This is to be expected given that the third-party element of every motor policy is essentially covering public liability risk. Since the underlying cost drivers are similar, the remedies that IBEC is proposing to keep down the cost of liability insurance should benefit private motorists as well as employers. A recent survey of our members suggests that EL and PL premiums taken together equate to nearly 3% of company payroll. Billions of euro are at issue each year. If these premiums start to rise as rapidly as they already have for motorists, it will have a damaging impact on competitiveness and hence on jobs. There are concerning signs that this is starting to occur. We want the Government to take urgent action to head it off at the pass.

In our view, the courts system is a big part of the problem. Only a small proportion of personal injury claims result in court awards. However, the sums awarded there set the benchmark for a far larger number of settlements negotiated out of court or on the steps of the court. Since the arrival of a new cohort of judges in 2014, personal injury awards have been rising steadily. There seems to be a high degree of inconsistency as well, as others have mentioned, with some court awards being far above the guideline amounts set out in the Injuries Board book of quantum. The Injuries Board is effectively competing with the courts and is regularly outbid. Naturally, this encourages claimants to reject the Injuries Board recommendations and proceed to litigation. We expect the second edition of the book of quantum will feature increases in the guideline amounts, bringing them more closely in line with what the judges, and hence the insurers, are doing. This might reduce the incentive to litigate, but it could also drive up insurance costs even further, simply providing a new benchmark for the courts to regard as a starting point for ever greater awards. Court awards in England and Wales pay far greater heed to the UK Judicial College guidelines, and it is little wonder given that these are endorsed by senior appeal court judges. It is also clear from our research that the British guideline amounts are far lower than ours across a range of common personal injuries. Whiplash, referred to previously, is simply the best known example of this disparity and the figure is somewhere in the region of 300%. IBEC would, therefore, like to see a reduction rather than an increase in the guideline amounts, and to have these reductions endorsed by a senior member of the Judiciary. We are keen to see a greater granularity, in other words, more categories with narrower ranges. Above all, we want far greater consistency in the application of these guidelines by individual judges. By reducing the perceived risk for insurers, this will hopefully foster competition in the market.

The legal profession can be part of the solution. The law courts are increasingly clogged with personal injury cases dragging out over months or years. IBEC would like to see the Law Society of Ireland encourage greater use of pre-trial protocols to cut unnecessary delays in discovery and procedure. This would benefit injured claimants and respondent companies alike. The insurance regulator and the insurance companies have important roles to play in containing costs. The lack of meaningful information on claims settlements and provisions for future liabilities make it difficult for customers to know whether their premiums are cost-reflective. The Central Bank, concerned only with solvency, seems to be advising insurers that they need to raise their EL and PL premiums. We question whether this is justified by the evidence. IBEC is keen to see a pooling of insurer data for the purpose of cost analysis. This should include a code of practice with common reporting standards. It may entail setting up a black box to ensure compliance with competition law. This type of mechanism has been shown to work effectively and at reasonable cost in other sectors, notably the producer responsibility schemes for recovery of waste electrical and electronic equipment.

Lastly, there needs to be a tightening of the legislation governing the claims process. Claimants should be obliged to co-operate with the Injuries Board. For example, if they want the option to reject a recommendation, they should not be allowed to refuse an independent medical examination when requested. In conclusion, to echo the title of our recent report, it is time to reduce the burden of personal injury claims.