'Colossal' drop in personal injury awards which fall by 42% after new guidelines

The Personal Injuries Assessment Board’s average award last year dropped by 42 per cent in the wake of new guidelines slashing awards for minor personal injuries entering into force and fuelling calls for cheaper insurance.

Almost half – 49 per cent – of awards were under €10,000, compared to just 12 per cent of awards in 2020. The overall average general damages award across the motor, employer and public liability claims was €11,583, a drop of 47 per cent on the €21,850 average in 2020.

The PIAB report concerns 4,731 claims assessed by it between April 24th, 2021 – when the guidelines came into effect after being approved by a majority of the Judicial Council – and December 31st, 2021.

The number of claims has fallen 31 per cent since 2019, when PIAB received 31,078 applications, to 21,410 last year but much of that decline is attributed to the impact of the Covid-19 pandemic.

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Irish motor insurers last year enjoyed their highest level of profitability since at least 2009 – as the level of road accidents and claims declined during Covid-19 restrictions, according to a Central Bank of Ireland report – reaping profits equaling 12 per cent of total income.

Insurance reform

In an interview with The Irish Times, Rosalind Carroll, chief executive of the PIAB, said the guidelines had had an "immediate and colossal" impact on awards.

“The talk about an insurance reform agenda has been going on for about 20 years but this is the first time I would say there has been a significant change in the sector,” she told The Irish Times. “Even though it was talked about for so long, there was an element of ‘No’, even when our first numbers came out after the guidelines. We sent out one of our first letters to a solicitor representing a claimant and they thought it was a typo.”

The guidelines have effected a “recalibration” of awards in line with international norms as well as the intended certainty and consistency of awards, as reflected in the 42 per cent overall drop in award values mainly for minor injuries, she said.

Readjustment period

However, the acceptance rate for PIAB awards last year fell to just 37 per cent from a 51 per cent acceptance rate in 2020, mostly because claimants, rather than insurers, rejected the awards, believing they could do better in court.

Some claimants may have been advised they would get near the old higher award, but they needed to be sure that they had taken all factors into account, including age and employment, she said. “People’s mindsets will need to change, there is a readjustment period for them.”

Only a small percentage of personal injury cases are actually decided by the courts, as the vast bulk settle after litigation is initiated but before any court hearing. Because most cases currently before the courts were initiated prior to the guidelines, it will take perhaps two more years before their impact is clear but already they are widely regarded among affected parties as a “gamechanger”.

Last November, Insurance Ireland, the insurers’ lobby group, said premiums for motorists had fallen by 24 per cent between December 2017 and October 2021, but high legal costs remained a concern because, so far, cases are being settled at the PIAB.