Personal injury guidelines could pave way to cheaper insurance

Judicial Council considering move, although some judges are thought to have reservations

A protest against sharp increases in the cost of motor insurance, 2016. Photograph: Dave Meehan

A protest against sharp increases in the cost of motor insurance, 2016. Photograph: Dave Meehan

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Agreement by the Judicial Council to new guidelines for personal injury awards is a vital step to lowering insurance costs to businesses, according to a new report from the National Competitiveness and Productivity Council (NCPC). If this approach does not reduce costs and increase certainty for business, then the Government needs to legislate to cap personal injury awards, it says.

The Judicial Council, which includes the country’s 166 judges, is considering whether to sign off on new guidelines proposed by a committee it established to consider the matter, amid indications that some judges have reservations. The proposed guidelines, to be considered by the council on March 6th, have not been published, but are expected to reduce judicial discretion and provide for a reduction in awards, particularly for more minor soft-tissue injuries.

The report from the NCPC says it believes that this is the best approach to reduce awards, but that the outcome needs to be carefully monitored. If the necessary reduction in costs does not happen, the Government should legislate to cap awards, it says. It refers to a report on the issue by the Law Reform Commission, which said a legislative route could probably be found to cap awards, though warning that care would be needed to avoid a constitutional challenge.

Businesses have complained about the rising cost of public and employers’ liability insurance and have criticised the pace of reform plans. Injury awards are currently based on levels set in the so-called Book of Quantum, which the NCPC said had been shown to be well above comparable markets, notably the UK. The Judicial Council guidelines would replace the Book of Quantum, and the NCPC says it hopes it should reduce awards and lead to more certainty and clarity for business.

The court route

It also says that it should dissuade claimants from rejecting awards made by the Personal Injuries Assessment Board (PIAB) in favour of legal action, as both processes would be covered by the same guidelines.

If adopted by the council, the new guidelines would be due to take effect by the end of July. Business interests have expressed concern that the proposals may not go far enough to reduce the level of awards.

As well as calling for the new guidelines, the NCPC – formerly known as the Competitiveness Council and now chaired by economist Dr Frances Ruane – identifies two other key recommendations. It says the Government needs to press ahead with reforms to the PIAB, with some fall-off in claimants using this route in recent years in favour of going to court. The Department of Enterprise, Trade and Employment is currently developing proposals to reform the role of PIAB, which will go out for public consultation.

New measures are also needed to increase competition in the market, including establishing a Central Bank databank for potential new entrants and the independent management of industry claims information.

Insurance reform was identified as an important issue in the programme for government, and the Government has established a new office to oversee the policy.