John Clendennen (Offaly, Fine Gael) | Oireachtas source

I thank the Ceann Comhairle for selecting this Topical Issue. Over the past number of years very significant progress has been made on insurance reform. The importance of insurance and the security and protection it provides for policyholders cannot be underestimated and it must be readily available and affordable. The impetus for and the objectives of all the recent reform was very simple. Insurance premiums were too high and were posing an existential threat to charities, voluntary organisations, homeowners, motorists and many small and medium enterprises. We had the extraordinary anecdotal examples where playgrounds and community volunteer facilities were closing or restricting activities, primarily due to crippling insurance costs. Positive change has occurred and I commend the recent Government commitment to implement these reforms. We have seen some reductions in premiums from certain insurers but many believe a wider commitment from the industry is still lacking.

In January, the Injuries Resolution Board reported a 40% drop in claims and a 37% decrease in annual awards since 2019, while personal injury guidelines have also yielded a reduction in awards of approximately 35%. Yet, premiums continue to rise. The Central Bank recently reported that liability premiums increased by 4% in 2023 and 17% since 2020. Despite falling claims, insurers' profits rose by 13%, amounting to €175 million. There is an evidential imbalance and one could argue that in recent years public liability and employers' liability has been impacted by ongoing uncertainties around the personal injury guidelines. The most recent report from the National Claims Information Database includes some alarming figures regarding legal costs and claims. A resolution through the Injuries Resolution Board costs approximately €1,000 in legal fees with an average award payout of €23,000. When the same case moves to litigation the award does not change and yet the legal fees jump to an average of €23,000. Claimants are no better off and must wait for years longer while, essentially, these additional legal costs are passed on to policyholders.

One must question why so many cases are sufficiently intractable and complex to warrant moving beyond the Injuries Resolution Board when one considers that only 4% of these cases end up in court. There has been a 17% increase in the number of cases going the litigation route between 2019 and 2023. The additional legal costs from these cases are feeding into higher premiums for policyholders. Many believe there are no down sides to the litigation route as there will be no additional award. This in an absolute fallacy. Insurance companies do, and will, pass on the additional legal costs in higher premiums for very hard-pressed policyholders. Legal fees added 63%, or €123 million, to the cost of settling liability claims in 2023 alone.

There is also a major gap in data, in particular around claims settled after leaving the Injuries Resolution Board but before reaching court. We need greater transparency to fully understand the cost drivers. All of these costs are increasing uncertainty with growing challenges at a time there is growing concern and uncertainty around how the US tariffs will materialise and impact people.

Adding to this uncertainty is the latest proposal from the Judicial Council to increase personal injury awards by 16.7%. While special damages or actual losses should reflect inflation, there is no justification for increasing general damages for pain and suffering. These increases will directly drive up premiums and I urge the Minister and the Government not to proceed with this proposal at this time.

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