Personal injury awards will be reduced because of the recent adoption of guidelines by judges and, it is expected, more claims will be settled without litigation, the Department of Enterprise, Trade and Employment has said.
The claim was made by the department on Monday during a call for submissions about potential reforms of the Personal Injuries Assessment Board (PIAB) scheme, which was established in 2004 to reduce legal costs in the processing of personal injury cases.
The department is seeking to enhance and reform the PIAB so as to bring more cases within its ambit and reduce the number of cases that involve litigation.
"Encouraging more claimants and respondents to avail of the PIAB model should lead to cost savings in the claims environment, and should ultimately lead to reductions in insurance premiums," said the Minister of State at the department, Robert Troy.
PIAB saves tens of millions of euro every year which would otherwise be paid in processing costs by the parties, and ultimately by policyholders, he said.
However, the number of cases being finalised through PIAB has fallen in recent years.
This is despite the fact that a recent report by the Central Bank on motor insurance claims showed that people were "hardly any better off" for instigating litigation for personal injury claims, and often ended up waiting "twice as long for an almost similar-sized settlement".
More certainty
Along with the call for interested parties to make submissions prior to the deadline of April 17th, the department published a document on its website setting out the background to the proposed changes to PIAB.
In the document, the department said the guidelines adopted by the Judicial Council on March 6th last, will replace the Book of Quantum, which was prepared by PIAB and gave suggested awards for different types of injuries, based on the prevailing levels of court and settlement awards.
“ The Guidelines represent a shift in the manner in which general damages are awarded and in the level of those damages,” the document said.
“Awards across all ranges and in all courts, with the exception of awards for the most serious types of injury and catastrophic injury, will be less than heretofore.”
It is expected the new guidelines will bring more certainty and consistency and will lead to more claims being settled through PIAB, and less cases going to litigation, it said. The guidelines should also result in more predictable court awards, so the parties involved in claims should have increased confidence in accepting the amounts suggested by PIAB.
Research by the Central Bank shows the cost of settling claims through litigation accounts for 67 per cent of the actual compensation amount, bringing the average claim cost to more than €40,000.
This compares to legal costs under PIAB of less than 4 per cent of the compensation amount, bringing the total average claim cost to less than €24,000 – a difference of more than €16,000 per claim.
The difference in the time taken to settle claims was also significant, the research showed, with claims that involved litigation taking an average of 4.7 years, as against 2.9 years when dealt with by PIAB.
Among the issues the department is seeking submissions on is whether the PIAB process, which is a desk assessment one, should be expanded to also involve mediation, and whether greater collection and publication of data by PIAB would be useful in ensuring a fair insurance system.
