Compensation 'inflated' by new award limits
Published 13/04/2016 | 02:30
Compensation levels for personal injury claims appear to have been inflated by the decision of the last Government to raise limits on judicial awards, the State competitiveness watchdog has warned.
The National Competitiveness Council has called for the impact of the decision to raise limits for awards in the district court and the circuit court to be explored.
Former Justice Minister Alan Shatter increased the limit for district court awards from €5,000 to €15,000 and circuit court awards from €38,000 to €60,000 in 2013.
The aim of the changes was to cut down on the number of cases heard in the higher courts, and the substantial additional costs associated with such litigation.
At the time Mr Shatter rejected claims the move would have an inflationary effect on personal injury claims and result in increased premiums.
However, in a recent bulletin on insurance costs, the council said: "Rather than reducing legal costs, this change appears to have contributed towards inflation."
According to the council, insurance prices in Ireland have increased well in excess of EU trends.
Insurance prices across the board have increased by 29.6pc since 2011, while motor insurance spiked by 33.5pc in the same period.
Insurers have claimed a rise in the size of awards and legal costs is a factor in premium increases.
However, the Law Society has disputed this, saying legal fees are not driving up insurance costs.
It has also disputed figures cited by the council to back up claims legal fees did not drop significantly during the recession.
The council said the absence of official data made it difficult to quantify how much of a factor legal services costs were on insurance costs.
It said it hoped the long-awaited Legal Services Regulatory Authority would bring more transparency to costs.
A new legal costs adjudicator is also set to replace the taxing master to deal with legal costs disputes.
The introduction of the authority has been delayed by the talks to form a Government and the Seanad elections.
The Department of Justice said the approval of both houses of the Oireachtas would be required to fill the authority's board.
A chief executive has also yet to the recruited.
The competitiveness council has also advised the Government that significant reforms are needed in the courts to cut down on the high cost of legal services.
It said changes to court procedures could bring about significant savings.
Suggestions include the inclusion in court rules of a specific order allowing for the pace of litigation to be supervised, with measures to penalise any unnecessary delays.
It has also recommended technological solutions, such as greater computerisation, use of electronic forms, websites and electronic registers, as well as more active management of cases.