Personal injury claims to be transformed under new Act
The Department expects to be refunded approximately €22 million in recovered benefits
The Department of Social Protection believes that the new personal injuries scheme is broadly in line with recommendations made by the Law Reform Commission and are similar to provisions in place in Britain, including Northern Ireland
For many years now, compensation awards paid by insurance companies in personal injuries cases have been reduced to take account
of the payment of social welfare benefits arising out of accidents. The rationale relied upon by insurers was that claimants should not be compensated on the double.
The Department of Social Protection and its predecessors looked on in frustration as it unwittingly subsidised insurance companies in the multi-million euro business of personal injuries compensation.
There was no legal provision to allow it claw back the payment of welfare benefits used by insurance companies to keep compensation to a minimum.
From August 1st, this situation is going to change significantly.
On that date, the Social Welfare and Pensions Act 2013 will come into effect and with it, the Recoverable Benefits and Assistance Scheme. From then on, compensators – typically insurance companies – will be under a legal duty to refund certain welfare payments to the Department of Social Protection prior to paying out compensation to claimants in non-fatal personal injuries cases.
The Department expects to be refunded approximately €22 million in recovered benefits.
Insurance companies will have to apply to the Department of Social Protection for a statement of welfare payments – also known as a Recoverable Benefits Certificate – made to a claimant arising out of injuries sustained in any individual case. The certificate will be provided to the insurance company within 28 days after which the appropriate payment must be refunded to the Department. Only then can the claimant be paid compensation for general damages and loss of earnings or profits.
The insurer may offset the refund of recoverable benefits against the amount of compensation for loss of earnings or profits but not against general damages.
The Department of Social Protection will require a full refund of the amount specified in the Recoverable Benefits Certificate unless the Court gives an Order indicating that there was an apportionment of liability between the parties.
For example, where the indemnified party is found to be 75 per cent responsible and the claimant 25 per cent, the Department will seek a refund of 75 per cent of the relevant benefits paid.
On the face of it, it will mean that all of the compensation for a personal injury will be paid by the guilty party or its indemnifier and without any veritable supplement from the Exchequer.
According to Department of Social Protection briefing documents seen by this writer, the purpose of the new arrangement is “to avoid ‘double compensation’ – to ensure that a person is not compensated twice over in respect of the same accident, injury or disease”.