A new report from the Central Bank has revealed that most personal injury insurance claims in Ireland are resolved through litigation rather than the State’s Injuries Resolution Board. The National Claims Information Database report found that in 2023, 68% of settlements were reached via litigation, resulting in significantly higher legal costs.
High Litigation Costs Impacting Businesses
The report highlights the stark contrast in legal expenses between litigation and the Injuries Resolution Board. Between 2015 and 2023, the average settlement cost for personal liability injury claims under €150,000 was €23,000. However, legal costs for cases handled by the Injuries Board were just €1,000, compared to €23,000 for those that went through litigation.
The Alliance for Insurance Reform has warned that these high litigation costs are putting pressure on businesses. Flora Crowe, a grocery store owner and Alliance Board member, said, “This report makes clear that too few cases are being disposed of at the Injuries Board and too many are unnecessarily pursuing the more expensive litigation channel.”
Concerns Over Increasing Payouts and Costs
Moyagh Murdock, Chief Executive of Insurance Ireland, noted that the full impact of the Personal Injury Guidelines, introduced in 2021, remains uncertain. She pointed to a Judicial Council recommendation to increase award levels by 16.7% as a potential concern, warning that it could drive costs even higher.
The report also found that insurers providing public liability, employer’s liability, and personal injury coverage saw an operating profit of 13% of total income in 2023, a significant rise from the 2.1% recorded between 2009 and 2023.
Rising Cost of Claims
The report indicates that the cost of public liability claims surged by nearly 40% between 2019 and 2023, with employer’s liability claims rising by 31% over the same period. The total cost of claims for employer’s liability, public liability, and commercial property insurance in 2023 was estimated at €630 million from almost 31,500 claims.
While this figure is higher than in 2022, it remains nearly €40 million lower than in 2009, when 50,600 claims were recorded.
Call for Reform in Injury Claim Settlements
Michael Horan, Manager of Regulation and Policy Development at Insurance Ireland, expressed concern over the rising litigation costs. Speaking on RTÉ’s Morning Ireland, he said, “We still are in a situation where too many claims are being litigated. When you have 70% of injury claimants going through litigation, and that’s accounting for 89% of injury costs, that’s just too much and it’s adding costs to the system.”
He pointed out that litigation significantly prolongs the settlement process, taking an average of six years compared to just two years through the Injuries Resolution Board.
Horan urged policymakers to reconsider the Judicial Council’s recommendation to raise personal injury awards, stating that it could neutralize any benefits from previous reforms aimed at reducing claim costs. “Personal injury guidelines were only introduced in 2021, and it is too soon to judge their true impact,” he added.
With litigation costs continuing to mount, industry leaders and business groups are calling for more claims to be processed through the Injuries Resolution Board to ease the financial burden on policyholders and businesses.
