Donohoe sees ‘no compelling case’ to regulate claims-harvesting firms

Pearse Doherty unhappy the Minister has opted for the ‘route of least resistance’

The average whiplash award in Ireland is 4.4 times that in the UK. Photograph: iStock

The average whiplash award in Ireland is 4.4 times that in the UK. Photograph: iStock

 

The Minister for Finance Paschal Donohoe has said he does not see a compelling argument for regulating firms that tout for business in personal injuries claims and sell the information on to lawyers.

Replying to a recent parliamentary question from Sinn Féin TD Pearse Doherty, Mr Donohoe acknowledged that “claims-harvesting” practices by so-called claims management companies (CMCs) had been highlighted by consumer groups in recent years as a factor behind elevated Irish insurance costs.

The Minister said his officials had researched this area, engaging with parties including the Law Society of Ireland and a body that regulates CMCs in the UK.

“Following this examination, I do not believe there is a compelling argument at present for putting in place a regulatory regime for CMCs in Ireland,” he said.

Firstly, he said the number of such firms operating in Ireland was low, having fallen from about 60 in 2016 to “around half a dozen more recent”. As many as 40 claims-harvesting websites have been taken down as a result of actions by the Law Society, including the securing of two High Court orders.

“Secondly, it would appear that many of the websites which are operating in Ireland may not actually be located within the jurisdiction nor within other EU countries,” he said, adding that this made it difficult and costly to determine the ownership of such sites.

‘Stringent rules’

In addition, the Republic had “stringent” rules in relation to how solicitors could advertise and generate business, he said.

“Fourthly, it is our view that the setting up of a supervisor would afford CMCs a level of legitimacy and recognition which is certainly currently absent in Ireland,” he said.

Insurance firms argue that high insurance costs in the Republic – where the average whiplash award is 4.4 times that in the UK – are partly the result of injured parties being able to bypass the Personal Injuries Assessment Board (PIAB) and go to court.

Mr Doherty said he was “disappointed” the Minister had “opted for the route of least resistance”.

“His analysis boils down to trusting the legal profession when they say it’s not a problem,” he said. “From speaking to business owners, I believe this is an issue and one where the option of regulation must be kept on the table.”