Personal Injury Award Increase Scrapped | 16.7% Rise Reversed
personal injury Award Increases Scrapped, Benefiting policyholders
The proposed 16.8% increase to personal injury compensation guidelines has been effectively blocked by the Goverment, a move welcomed by consumer groups and expected to prevent a rise in insurance premiums. The decision stems from a requirement within the legislation governing the guidelines: they only come into affect with a vote of approval, which will not be sought.
The guidelines, used by both the courts and the Injuries Resolution Board (IRB) to determine compensation for personal injury claims, were recommended for increase by the Judicial Council. Had the increase been approved, it would have significantly raised the value of personal injury awards.
Insurers and consumer advocates had voiced strong concerns that such an increase would inevitably lead to higher insurance costs for both individuals and businesses. The National Competitiveness and productivity Council also recently advised the Government to reconsider the proposed changes.
While Minister O’Callaghan will still present a memorandum to Cabinet next week outlining the proposed increase, he is not expected to request a resolution for its approval, effectively halting the changes.
Potential Impact on the Injuries Resolution Board
Despite shelving the increase, Minister O’Callaghan is expected to raise concerns about the potential consequences of not updating the guidelines. He fears a divergence between court awards and IRB settlements. As the IRB is legally obligated to adhere to existing guidelines,a lack of increase could lead claimants to bypass the board and pursue claims directly through the courts,potentially increasing legal costs and overall expense.This concern is highlighted by recent figures from the IRB, which revealed it saved €76 million in “avoided costs” last year by resolving claims outside of litigation. The IRB’s 2024 Annual Report also shows that insurers and respondents consented to resolution in 70% of claims submitted. Established in 2004,the IRB aims to provide a more efficient and cost-effective choice to conventional litigation for personal injury claims.
“Decision for policyholders,not Insurers”
The Alliance for Insurance Reform has strongly welcomed the Government’s decision,stating it reflects a consideration of broader policy factors,including existing award levels compared to other jurisdictions and the potential impact on the IRB’s functionality.
“The Government has made this decision not for the benefit of insurance companies but for policyholders,” the Alliance said in a statement. They also criticized insurers for failing to pass on recent savings to customers, prioritizing profits over affordability. The group called for continued pressure on insurers and for the next insurance reform action plan to address this issue.
The Alliance noted that liability insurance for businesses, sports, community, and voluntary groups has already seen considerable decreases in both claim volume and award size. They emphasized the need for a revised process to ensure fair settlements for claimants alongside affordable insurance for policyholders.