John Clendennen (Offaly, Fine Gael)
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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.

Michael Moynihan (Cork North-West, Fianna Fail)
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I thank the Deputy for raising this hugely important Topical Issue and convey the apologies of my colleague, the Minister for Justice, Deputy Jim O’Callaghan, who regrets he cannot be here due to another commitment.

On behalf of the Minister, Deputy O’Callaghan, I thank the Deputy for raising this important matter here today and for giving me the opportunity to provide clarity on the manner in which the personal injuries guidelines are drawn up and implemented. I state at the outset that it is not a matter for the Minister for Justice to approve the adoption of the guidelines. Under the Judicial Council Act 2019, the Judicial Council, which, as I am sure the Deputy is aware, is independent in its functions, has the responsibility for drawing up and reviewing the personal injuries guidelines.

The first issue of the personal injuries guidelines came into effect in April 2021 and these guidelines have had a clear and significant cost saving impact since their introduction. That being said, the guidelines were challenged in the Delaney v. PIAB case, in which the Supreme Court upheld the guidelines, but identified deficiencies in the underpinning legislation which was amended by the Oireachtas in the Courts, Civil Law, Criminal Law and Superannuation (Miscellaneous Provisions) Act 2024. In accordance with the 2019 Act, as amended, the Judicial Council has conducted a review of the guidelines and submitted draft amendments of the guidelines to the Minister for Justice to enable the laying of the draft amendments before the Houses. The draft guidelines submitted to the Minister by the Judicial Council propose an across the board increase of 16.7% in compensation amounts. This figure aligns with the increase in the harmonised index of consumer prices over the period from when the guidelines were last agreed in 2021.

Section 7(2B) of the 2019 Act requires the Minister for Justice to lay the revised guidelines before each House of the Oireachtas as soon as is practicable. The Minister will, therefore, shortly be laying the draft amendments before the Oireachtas after which a resolution regarding the draft amendments can be considered. The legislation provides that the draft guidelines must be approved by a resolution of both Houses of the Oireachtas before they can be brought into operation. The Oireachtas will have an opportunity to debate the matter once the resolutions proposing adoption of the guidelines are tabled. I must stress, however, that the legislation passed by the Houses last year does not provide for the amendment of the guidelines by the Oireachtas. When the resolutions have been approved by the Houses, the Judicial Council will then meet to formally adopt the guidelines. This is in keeping with the 2019 Act adopted last year.

John Clendennen (Offaly, Fine Gael)
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I thank the Minister of State. In no uncertain terms, this will lead to an increase in premiums and costs to every one of the societal areas I mentioned in my earlier contribution. General damages awards in Ireland remain significantly higher than in Europe. Increasing them further will only put more businesses at a competitive disadvantage and place even more pressure on strained sectors of society. We have made meaningful progress on insurance reform but adopting this proposed 16.7% increase in general damages would be a step backwards. It would undoubtedly lead to higher premiums and undermine the good work to date.

There are three areas we need to act on. First, we must defer this proposed increase in general damages. Now is not the time to impose further costs on policyholders and businesses. Second, we need greater transparency. There is a data vacuum around cases settled after the IRB rejection but before court. I propose amending legislation to require these settlements be registered with the Injuries Resolution Board or another suitable agency or agreed independent body so that we can get regular reports in a timely and objective manner as to what is happening between the IRB and court.

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Third, we need to rebalance the system. Claimants should either have a clear incentive to accept IRB awards or a disincentive to reject them. For example, if a claimant does not achieve a set premium over the IRB offer through litigation, they should be liable for their own costs.

If awards continue to be reviewed upwards every three years and if it takes two and a half years to settle a case, claimants will wait it out and litigate. This creates even further uncertainty for insurers, it increases legal fees and, ultimately, it drives up premiums. I urge the Minister of State to convey the message to the respective Minister to act now to protect the integrity of insurance reform and ensure a fair, sustainable and affordable system for everyone.

Michael Moynihan (Cork North-West, Fianna Fail)
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I again thank the Deputy for raising the matter and providing me with an opportunity to go through the issues. I listened very closely to the points the Deputy made and I am aware of the views expressed by some stakeholders that the proposed increase will have the effect of increasing premiums. This is something we have to consider in the future in terms of how the Act operates. Members of the House will have an opportunity to discuss this in fuller detail when the resolutions are presented.

On a more general level, the Minister for Justice is acutely aware of the issues with insurance reform and it continues to be a key priority for Government. The new programme for Government commits to the publication of a new action plan for insurance reform, with a focus on encouraging further competition in the market and working with the stakeholders to enhance transparency and affordability across all types of insurance. The Cabinet subcommittee on insurance reform will continue to monitor the effects of the action plan for insurance.

Over the years, the issue of insurance premiums, payouts and the constant issue for some businesses of even finding insurance is a really concerning one for Government, for the Minister and, indeed, for me because we have worked on it over many years. I will relay everything the Deputy has said this morning to the Minister and to the Government.