Friday 18 October 2019

Varadkar: Insurance premiums will fall if size of whiplash awards decrease

Taoiseach Leo Varadkar. Photo: PA
Taoiseach Leo Varadkar. Photo: PA
Shane Phelan

Shane Phelan

Taoiseach Leo Varadkar has said insurance premiums will fall if the level of damages for soft-tissue injuries, such as whiplash, is brought into line with other jurisdictions.

He said the issue was costing society and it was “hard to believe” there was any justification for the massive difference between the size of awards in Ireland and those in England and Wales.

Speaking at the Law Society’s annual dinner on Friday night, Mr Varadkar pointed to findings made by the Personal Injuries Commission (PIC) last year.

A benchmarking exercise by the commission found the level of general damages in this jurisdiction for soft-tissue injuries was 4.4 times that of the level found in England and Wales.

Leo Varadkar
Leo Varadkar

“Whether it affects premiums or not, it is hard to believe there is any justification for such a wide differential,” he said.

“And of course it has societal costs. Higher insurance premiums, businesses that have to close, jobs and livelihoods that are lost, amenities that are no longer available, and, perhaps most worryingly, changes the way doctors and medical scientists carry out their practice, to the detriment of their patients and society.”

His comments come as the Government remains under sustained pressure to reform insurance costs.

Earlier this week ISME, the body representing small and medium businesses, warned some firms are facing an existential crisis due to high insurance premiums.

One such business, Rathbeggan Lakes Family Adventure Park in Co Meath, announced it would be closing after its public liability insurance bill went up more than 100pc this year to €400,000.

Mr Varadkar said he believed the best way of dealing with the discrepancies between the size of soft-tissue awards here and those in England and Wales was through a Judicial Council.

In its report last September, the PIC recommended the setting up of a council so that judges could recalibrate guideline injury award levels.

The necessary amendment needed to allow this has yet to be finalised, but the junior minister responsible for insurance reform, Michael D’Arcy, has insisted the legislation could be passed by mid-July.

“I think that if we can bring the level of damages awarded in this country for soft tissue injuries and other injuries more in line with those awarded in other jurisdictions, there is going to be a reduction in premiums,” said Mr Varadkar.

“We are seeking commitments from the insurance industry on this point.”

Mr Varadkar told the Law Society event insurers have a major role to play in the reforms.

“We know that those companies make very substantial profits,” he said.

The Taoiseach also gave an assurance judges would still have discretion and the separation of powers would be respected.

The Law Society disputes the link being drawn between award levels and the cost of insurance.

Its president, Patrick Dorgan, told the event the society questioned why the focus of attention was on the level of personal injury awards in Ireland in comparison to England and Wales.

“The true focus of attention, we believe, should be on the levels of premium in the two jurisdictions,” he said.

“We produced to Minister D’Arcy some expert research to demonstrate that when like is compared with like, insurance premiums of all cases are actually higher in the UK than they are in Ireland.

“We believe this demonstrates that the assumed direct link between award levels and the cost of insurance is highly questionable.”

Mr Dorgan said it was “of vital importance” that if there is to be a reduction in awards to accident victims, the Government must also insist on a “cast iron” guarantee that premiums will reduce.

“Otherwise the already excessive profits of insurance companies will simply increase, with reduced awards to victims of no benefit whatever to premium payers,” he said.

Read more here; Plan to cut whiplash awards is shot down by judges

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