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Insurance reform: bringing stability and lower costs to contentious claims process

Injuries Resolution Board boss expects Supreme Court clearance of guidelines for personal injury awards to reduce incentive to litigate

Injuries Resolution Board chief Rosalind Carroll: 'I think every single one of us who works across the sector has a duty to support the reforms.' Photograph: Bryan Meade

Joe Brennan
Fri May 3 2024 - 05:05

Rosalind Carroll discovered the benefits of sea swimming during the Covid-19 pandemic. “When you go into cold water, suddenly you can’t think about anything else. It focuses the mind on what you are doing at that moment,” says Carroll. “There is no better way to clear your mind.”

Carroll, who is chief executive of the Injuries Resolution Board (IRB), previously known as the Personal Injuries Assessment Board (PIAB), could have done with an early swim on April 9th to help her wade through five complex, significant judgments – spanning more than 400 pages in all – delivered that day by the Supreme Court in a landmark case that had cast a shadow over the recent work of her organisation.

They ultimately confirmed, by a majority of the seven judges, that judge-approved guidelines introduced three years ago – which had brought about a sharp reduction in awards for mainly minor personal injuries – are here to stay.

The guidelines are just one part in a series of reforms over recent years aimed at bringing down the cost of insurance. They also include: expanding the role of the IRB, which has assessed about €2 billion in accepted awards since it was set up 20 years ago this month; duty-of-care reforms brought in last July to address the issue of “slips, trips and falls”; and improved transparency on a traditionally opaque sector, with reports drawing from a new Central Bank database and IRB figures.

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“The Cost of Insurance Working Group was set up [by the Government] in 2016. It’s taken a long time to get to where we are. But I do think the reforms mean that we have put our best foot forward in terms of bringing some stability to a market that has been seen as an outlier for many in terms of the claims environment,” says Carroll.

However, she bristles when it is suggested it may take time for the changes to bed in. “That sounds passive. They need active management. I think every single one of us who works across the sector has a duty to support the reforms.”

Carroll traces a keen sense of duty and responsibility that led to a career in public service back to her early childhood in Blackrock in south Co Dublin.

“My dad died when I was four, on Christmas Day. It was just me and my mum after that, with the help of extended family. But that’s probably contributed to me as a person in terms of building resilience and drive – and independence.

“I had my first part-time job when I was 15, working at a dry cleaners. I worked in a Spar for three or four years. When I was in college, I would have worked, like many people, during the summers in the likes of bars. I would definitely have had a strong work ethic from a young age.”

After completing a degree in social science at the University of Sunderland in England, Carroll returned to Ireland in 2000 at the age of 21 to start her career with Dublin City Council.

“I started off there as a social worker, working a lot with the Traveller community and homeless families. That was a job where you really got to see people trying to access public services from very disadvantaged perspective.

“That experience has stayed with me and shaped what I think public services should be. You’ve got to be constantly thinking about the citizen trying to access or use your service.”

Carroll took a career break after two years to undertake a masters in policy and planning at the London School of Economics and Political Science, before returning to the council in 2004 to work in policy. She joined what was then the Department of the Environment, Community and Local Government between 2007 and 2010 and worked on implementing a rental assistance scheme – a precursor of the Housing Assistant Payment (Hap) – and off-balance sheet financing for social housing when the State was on its uppers.

She would subsequently spend six years with the Housing Agency, working with approved housing bodies and housing associations and ultimately being responsible for the establishment of the regulatory function for the sector.

Between 2016 and early 2020, she served as chief executive of the Residential Tenancies Board (RTB), the regulator for the home rental sector, where she initially focused on putting structure around a fledgling telephone-based mediation service to avoid situations where parties were at loggerheads in the same room and which has improved agreement rates.

That period saw a huge amount of legislative change in the rental sector, not least the introduction in late 2016 of limits on annual rent increase in so-called rent pressure zones, currently capped at 2 per cent. “I concentrated in not setting people up for failure, working a lot on creating awareness around all of the changes,” she said.

The domestic accommodation crisis remains as acute as ever. The latest Government figures show that 13,841 people were accessing emergency homeless accommodation at the end of February, including a record 4,170 children.

This has occurred against the backdrop of a swathe of small, often accidental, landlords exiting the market and a pullback by overseas institutional investment over the past two years, amid rising interest rates, planning challenges and uncertainty over future policy.

Irish Institutional Property chief executive Pat Farrell told a house-building conference in Dublin last month that while strong rental demand should encourage investment, “it is not seen as an attractive market based on the particular policy framework you have here, which has been categorised by chop and change over the past number of years”.

Carroll chooses her words carefully when asked to wade back into her former area.

“We’re definitely in dangerous territory here. But what I would say – and this extends to all types of markets, including insurance – is that certainty is important and changing things over and over again is always going to lead to a level of uncertainty.”

She said a common narrative in the media of “the bad landlord”, tax treatment of rental income and, as a result, cases of property owners having to top up buy-to-let mortgages have contributed to the contraction of “mom and pop” players in this sector.

“Whatever about the owner-occupier sector, the rental sector is going to continue to grow for a number of reasons,” she says. “We need landlords. A tenant needs a landlord, so it cannot be a dirty word. I absolutely believe in getting to a cost-rental model, by the way, but it’s going to take a long time to get to a scale where it’s having an impact on general rental costs. We need to keep all types of landlords in the market.

“We need to focus on all [accommodation] tenures. In fairness, there has been a lot of focus on the rental sector, but we need to now think about the supply part.”

Carroll threw her hat into the ring for the chief executive role in PIAB in late 2019 after the previous incumbent, Conor O’Brien, handed in his notice.

The attractions of the role were clear. “I’ve always wanted to work in areas that have impact. Insurance has such an impact on our economy, on businesses, on our ability to ensure we have basic services, whether it’s the local creche or community centre, or the possibility of running a music festival.

“Reasonably priced insurance products are important to support the very basics.”

She joined in March 2020, just before the State went into the first Covid-19 lockdown, triggering the cancellation of 7,000 medical assessments relating to injuries cases at short notice and a move by the organisation from mainly paper-based interactions with the legal sector to electronic communication.

“It was a baptism of fire,” she recalls. “But in some ways, it is easier coming into a new organisation in a crisis situation, because you just have to dive straight in.”

The judicial guidelines recalibrating personal injuries awards to replace the PIAB’s book of quantum benchmark were issued in April 2021. They followed a sharp spike in claims over the previous decade that had, for example, resulted in whiplash-type damage awards in Ireland being typically 4.4 times higher than in the UK, according to a government-commissioned report completed by former High Court president Nicholas Kearns in 2018.

The IRB’s latest published annual report shows that its average award for 2022 had fallen 34 per cent to less than €15,900 from 2020, before the guidelines came into effect. The Central Bank – which began publishing detailed reports on the motor insurance sector in late 2019 – showed in a report for 2022 that half of all injury claims were resolved under the guidelines.

However, the new regime only touched on a small number of litigated claims that year, as most had been filed before the guidelines took effect. The board was dealing with more than 31,000 claims a year before Covid, dropping to a low of about 18,400 in 2022 as a result of a decline in accidents and injuries during the pandemic, before climbing back to about 22,000 last year.

“I don’t think we’ll ever go back to the days of 31,000 unless it’s the result of population growth. There’s been a change in behaviour as a result of the awards recalibration,” she said. “Injuries where the recovery time may be less than six months – like soft tissue injuries in the neck and back – are not coming to us in the same way as they would have before.”

The average motor premium fell 22 per cent between their peak in late 2017 and the end of 2022, Central Bank data showed. However, rates were up 5 per cent in the year to February, according to the Central Statistics Office, on the back of a spike in vehicle repair costs amid wider general inflation.

The Central Bank data – which has also been expanded to include reports on the employers’ and public liability and commercial property sectors – has consistently shown that there has generally been little for claimants to gain from bypassing the IRB for litigation.

The average IRB-settled public liability case in 2022 resulted in compensation of €21,439 and a legal bill of €1,804, according to a Central Bank report earlier this month, for example. The average litigated case settled at €24,910, with legal costs of €22,938.

Insurers noted in recent years that a lot of personal injury cases going through – or likely to end up in – litigation had remained in limbo before the Supreme Court ruling. The test case had been taken by Waterford woman Bridget Delaney, challenging the constitutionality of the guidelines.

The court said the case was “of systemic importance” as it would affect thousands of personal injury cases currently awaiting judicial analysis, “and multiples of that” into the future.

The nuanced rulings saw most of the judges find that it had been unconstitutional to give the Judicial Council the power to set personal injury guidelines. However, the fact that they were subsequently independently rubber-stamped by the Oireachtas through legislation gave them legal effect.

[ Insurers face pressure to cut premiums as court removes injury awards uncertainty ]

The results of a review of the guidelines currently under way (they must be reviewed every three years) will also require legislative ratification.

Meanwhile, laws passed in 2022 to enhance the role of the PIAB – adhering to a Programme for Government commitment but drawing on specific suggestions in a report Carroll wrote – have allowed the subsequently renamed Injuries Resolution Board to start assessing claims for psychological injuries and introduce a mediation service. This started in the area of employers’ liability in December and is being expanded to public liability this month.

The new rules also seek to clamp down on potential fraud by requiring claimants to supply a Personal Public Service (PPS) number and to sign their application form – as well as giving IRB the ability to proactively pass on to An Garda Síochána information on a potential offence.

“We have a legal system which is designed, on purpose, to compensate people where they’ve been wrongly injured,” Carroll says. “And if we focus on that common objective, whether you’re a lawyer for a claimant, an insurer, or us in the Injuries Resolution Board, then we might get somewhere.”

Carroll’s team has used the 20th anniversary of the organisation this month to review its performance to date. “We’ve had 500,000 claim applications in our existence and have dealt with €2 billion worth of accepted awards in that time. And we reckon that it has led to about €1 billion in savings on litigation costs,” she said.

Some indicators have improved recently. Aside from an overall decline in claims, the proportion of claimants consenting to being assessed by the IRB in the first instance has risen to 70 per cent over the past two years. That’s up from a steady figure of about 55 per cent before the new guidelines.

There has also been a rebound in acceptance rates of assessments in the first quarter of this year to about 50 per cent, in line with the long-term average, but up from a rate of 39 per cent in 2021, the year the guidelines came out.

“With the Supreme Court judgment and mediation being rolled out, we should get acceptance rates up to 60-70 per cent,” she said. “And when you add in our ability to now try and keep those more complicated, psychological cases, we’re in a much better space.”

Name: Rosalind Carroll

Age: 45

Position: Chief executive of the Injuries Resolution Board

Lives: Blackrock, Co Dublin with her husband and daughter

Something about Carroll that readers might expect: Like many others, she took up sea swimming during Covid and is now a regular sea swimmer

Something that might surprise: At the start of her career, she worked as a social worker with the Traveller community. She loved the job, which gave her a passion for public service.

Joe Brennan

Joe Brennan

Joe Brennan is Markets Correspondent of The Irish Times

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