Personal injury awards down 40% due to new guidelines, report finds
The value of average awards for personal injuries made by the Personal Injuries Assessment Board (PIAB) has fallen by 40% from last year’s levels, following the introduction of new Judicial Council guidelines in April.
New research by PIAB shows that between 27 April and the end of September, average awards dropped from €23,877 to €14,233.
The report also shows that nearly half of PIAB’s awards are now under €10,000, compared to 12% prior to the changes.
Based on more than 2,600 claims during the period, PIAB says the level of reduction equates to a total drop in award values over the period of €25.6m.
However, PIAB also found that the rate of acceptance of its awards by claimants fell from 50% to 41% during the period, something it said was not unexpected.
“This report shows that award levels are reducing sharply with the guidelines having a very immediate impact on award levels,” said Rosalind Carroll, PIAB’s chief executive.
“As the cost of personal injury claims has been reported as an important factor in the price and availability of insurance, this report is good news for individuals, communities, and businesses who pay for insurance and ultimately for society.”
The recalibration of the personal injury award guidelines by the judiciary in March followed long-standing claims by insurance reform campaigners that the levels were out of step with international peers.
The insurance industry claimed that this was a key driver of the higher costs of settling claims, which fed into higher prices for customers.
The changes adopted by the judiciary caused the revision downwards of many of the awards, leading to savings for insurance companies that they have promised to pass on to customers.
Because the vast majority of the personal injury claims never go to court, PIAB claims it is the main implementer of the guidelines.
However, its data does not include settlements that were made directly with insurers or awards made in the courts.
The report details how 18% of awards are now under €5,000, with 30% between €5,000 and €10,000.
PIAB’s analysis found a 40% drop in the value of average motor and public liability awards, with employers’ liability payouts decreasing by 44%.
Average awards for general damages, which includes compensation for pain and suffering, decreased by 46%.
The guidelines did not change special damages, which are costs like medical or travel expenses or compensation for loss of wages.
PIAB claims it will take some time for the full impact of the guidelines, particularly in terms of legal costs and litigation savings, to be seen.
It also says average award values in the future may be affected by the mix of severity and types of injuries.
“However, today’s report clearly shows that the Guidelines, as they effect the monetary value of awards, are having a very immediate effect on values and it is important to remember that both the Courts and PIAB are mandated to follow the Guidelines, which were set by the Judicial Council,” said Ms Carroll.
“Reductions in award levels create the perfect environment for a reduction in insurance premiums.”
“Combined with the overall sharp reduction in the number of injury claims in the last 18 months, this Report shows that overall claim costs are falling very significantly.”
The Tánaiste welcomed the PIAB report saying it shows that the guidelines are having an effect.
“I expect this dramatic drop in award levels to be reflected in reduced premiums for individuals, businesses and volunteer groups and Government will continue to work with the insurance sector to make sure this is the case,” he said.
The Alliance for Insurance Reform also welcomed the report but said the trend and the effort that went into generating it will be of no value unless they lead to substantial reductions in insurance premiums.
“While we are seeing some downward movement in motor insurance premiums, the experience of SMEs, voluntary & community groups, sports and cultural organisations and charities is that renewals are actually increasing right now,” said Peter Boland, Director of the Alliance.
“Why aren’t they falling? The insurance industry cannot have its cake and eat it. They identified the cost of claims as the key driver of insurance costs and this has been addressed by Government and the judiciary.”
“So the risk associated with every policy has reduced significantly and this must be reflected in premiums.”