Legal costs make up 41% of litigated public and employers’ liability injury settlements

Legal costs accounted for 41 per cent of the average cost of settling Irish public and employers’ liability personal injury cases resolved through litigation in the first half of last year, according to Central Bank figures.

Most injury claims were settled via litigation during the period, with 71 per cent of injury claims and 89 per cent of injury costs settling in this channel during the period, the bank said in a report published on Thursday based on National Claims Information Database (NCID) figures.

Injury claims made up 95 per cent all settled public liability (PL) and employers’ liability (EL) cases during the period.

While judicial guidelines introduced in April 2021 for personal injury cases have set much lower benchmarks for awards than the previous reference point, the so-called book of quantum, the fact that it takes almost five years for litigated cases to be settled meant that the new guidelines were only used for 3 per cent of settlements in this area in the first half of last year.

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The total cost of settling the average litigated PL case during the period was €70,744, compared to €20,632 for those resolved directly with insurers and €25,088 for those dealt with by the Personal Injuries Assessment Board (PIAB). However, the average legal bill for litigated cases was €29,003, compared to €4,908 and €1,576, respectively, for those settled through the direct and PIAB routes. Claims settled directly with an insurer or through PIAB generally take less time to resolve.

Legal costs accounted for €36,639 of the average EL settlement through the litigation channel, the latest data showed.

Michael Magner, a member of the board of the Alliance for Insurance Reform, on Thursday called on Minister for Justice Helen McEntee to “expedite” a Government-commissioned review of legal fees “and take all necessary steps to ensure a meaningful and sustainable reduction in legal fees”.

As the Central Bank report only covers half-year data on the EL and PL sectors, it does not give premium movements or the earnings within the industry for the period.

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The total cost of settled EL and PL injury claims in the first half of 2022 was down 12 per cent on the average between 2015 and 2019, mainly as a result of a sharp slump in activity resulting in claims during the height of the Covid-19 pandemic.

“The NCID report notes that the overall impact of the personal injury guidelines on average claim costs is limited as claims settled via litigation represent the largest proportion of the total claims cost, and to date they have not yet been materially impacted by the guidelines,” said Moyagh Murdock, chief executive of Insurance Ireland, the industry lobby group. “It will likely take some time for the guidelines to take effect in the litigated settlement channel due to the protracted length of time from claims first being reported and settled.”

Ms Murdock welcomed the enactment this week of new laws aimed at balancing a property owner’s or business’s responsibilities with those of customers or the general public.

“Under the previous law, there has been an imbalanced and unfair onus on businesses and owners when it comes to commonplace injuries like slips, trips and falls,” she said.