More personal injury claims going to court despite higher legal cost

Just 14pc of personal injury cases went to PIAB over the five-year period

Mark Cassidy, director of economics at the Central Bank, compiled the report

Jon Ihle

June 22 2022 02:30 AM

The proportion of personal injury claims being taken to court increased significantly between 2015 and 2020, leading to higher settlement costs and more expensive insurance premiums for customers, according to the annual report of the National Claims Information Database (NCID).

Cases taken to court went from 52pc of the total in 2015 to 65pc in 2020 as claimants largely shunned the Personal Injuries Assessment Board (PIAB), indicating Government policy to encourage cheaper settlements through the State body made no impact during the period.

Just 14pc of personal injury cases went to PIAB over the five-year period, with the remainder settled directly between the parties.

However, there is evidence that the introduction of the Personal Injury Guidelines and the reduction in claims due to Covid has made a positive impact since then, with the average award falling.

Litigated injury claims cost between two and three times those dealt with in the PIAB when legal fees are included, meaning insurers take a bigger financial hit when cases go through the courts.

Insurers’ income and expenditure on employers’ liability, public liability, and commercial property insurance showed an operating loss of 11pc of total income in 2020.

Those losses translated into higher insurance costs for businesses and other organisations that must carry such policies, with premiums rising 25pc from 2013-2019 and another 2pc in 2020.

“We can see for example from the data that insurers made a significant operating loss on the commercial property line, which contributed to an overall operating loss on employers’ liability, public liability, and commercial property lines,” said Mark Cassidy, director of economics at the Central Bank, which compiled the data and published the report.

“The report also indicates that claims settled through litigation cost more and take longer to settle than those settled directly with the insurer or via the PIAB.”

Public liability claims taken to court averaged about €63,000 when legal fees were included in the total. By contrast, those settled in the PIAB cost €29,000, largely because legal costs were largely excluded.

The difference with employer liability was even greater, with litigated claims costing an average of €107,000 compared to €37,000 via PIAB.

“The report is very clear,” said PIAB chief executive Rosalind Carroll. “PIAB resolves claims with a tiny fraction of the costs of litigation, while delivering similar awards for claimants, much faster.”

She added that there had been a very significant reduction of 42pc in the average personal injury awards last year as a result of the implementation of the Personal Injury Guidelines in April 2021,.

PIAB data will be included in the Central Bank report from next year.

Peter Boland, the director of lobby group Alliance for Insurance Reform said insurers had to reduce premiums.

“Otherwise, all the benefits of the reforms currently being processed, and the recent High Court decisions, flow directly into their back pockets as profit,” he said.