The latest data on private motor insurance claims would indicate that the low hanging fruit in the cost of personal injury claims have been picked.
The introduction of the Personal Injuries Guidelines in 2021 and their subsequent adoption by the Injuries Resolution Board (IRB) has seen average motor personal injury settlement costs fall from €38,008 in 2020 to €36,775 last year. This equates to a fall of almost 20 per cent allowing for inflation. Motor insurance premiums have remained flat on the same adjusted basis.
This may be about as good as it gets as regards a step change in the cost of personal injury claims. Almost two-thirds of motor injury claims under €100,000 are now settled via two routes, directly with insurers under the guidelines or via the IRB.
But the number that are still resolved via litigation remains stubbornly high, even though nearly all of these cases eventually settle outside of court. They also usually result in a similar outcome for the claimant as going through the IRB, yet they account for two-thirds of legal and other costs. Average awards from either channel are at around €19,700, but the IRB charges €791 against average litigation costs of almost €20,000.
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Some claims are always going to be litigated, particularly where there is a dispute over liability or the facts, but there is clearly more work to be done to ensure that claimants understand that the court process takes longer and is unlikely to produce a materially different outcome.
Reducing the cost of unavoidable litigation is part of the wider challenge of improving the administration of justice; the difficulty and complexity of this task is demonstrated by the current dispute over criminal legal aid payments to solicitors.
Taken in the round, the introduction of the injuries guidelines and their adoption by the IRB can be seen as a policy success when judged against the goal of reducing the cost of motor insurance claims. The apparent failure of the insurance industry to pass these savings on in full to customers is another issue.
