- CSO figures highlight urgent need to tackle spiralling cost of claims including court awards and legal fees
- Courts Service Annual Report for 2015 highlights a 7% increase in the number of personal injury awards in 2015
- The average award in the Circuit Court increased by 21.2% in 2015, this follows a 13.5% increase in 2014.
Issued 14th July, 2016. Insurance Ireland has again called for action to be taken to address the spiralling cost of claims which is leading to increases in motor premiums.
Figures issued today by the CSO, showing premium increases for the year to June, follow the publication of the Annual Report of the Courts Services this week which detailed double digit increases in awards made by the courts in 2015. The increases in the level of awards and the frequency of awards, as highlighted by the Central Bank and the Courts Service, have created a volatile claims environment that add uncertainty and cost for motorists and insurers.
“We share our customers’ frustration at the increases in motor premiums and recognise the public concern that exists on the issue. High premiums are not in insurers’ interests,” said Kevin Thompson, Chief Executive, Insurance Ireland, “as the threshold of affordability is raised, it leads to more uninsured driving which is a major road safety issue”.
Kevin added, “We have to get costs under control to bring stability to the market. For instance, just this week the Courts Service said that in 2015, the average Circuit Court award increased by 21.2%, following a 13.5% increase in 2014. This is as a result of the change the jurisdiction limits in February 2014. Higher court awards impact on all claims in the system by creating an incentive to pursue a claim to litigation.”
“In addition, our pay-outs for the most common awards like whiplash are dramatically out of kilter with other European countries, with the average award for whiplash in Ireland being €15,000 compared with €5,000 in the UK. High awards lead to high premiums so we have to decide what is affordable”.
As a matter of urgency Insurance Ireland is calling for the following:
1.Strengthen the powers of the Injuries Board to resolve more claims and reduce costly legal fees
2. Further increase the resources given to road traffic enforcement – there’s no substitute for enforcement
3. Internationally benchmark awards: Eight out of every 10 motor injury claims in Ireland are for whiplash and awards here are three times UK awards
4. Fix Setanta: As things stand, insurers are being asked to price a product to factor in the cost of a competitor failing. We can’t think of any other sector where this happens (for example, Dunnes Stores wouldn’t be expected to do this for Tesco so why should insurance companies?)
Ends.
Notes for editors:
The table below outlines the awards for the last seven years:
High Court Circuit Court
€ €
2015: 358,434 16,429
2014: 304,353 13,550
2013: 227,321 11,941
2012: 252,146 11,452
2011: 215,730 12,362
2010: 219,303 12,662
2009: 177,635 13,324
Reference notes:
1. The Central Bank have said compensation amounts & frequency are up by 8%
2. The Injuries Board annual review for 2015: Claims frequency up 6%, note Injuries Board also state in Annual Report their cost is 6.5% versus 60% legal cost in litigated cases
3. Standard and Poors – Premiums to increase as a results of claims environment
4. Competitiveness Council – Legal cost at a six-year high
5. OECD said Ireland ranks as the 8th most expensive country to enforce a legal contract
6. A Health and Safety Review survey found even the reduced Court of Appeal awards levels in Ireland are two to eight times UK awards
7. Court Services statistics – Circuit court awards up 13.5% for 2014 V 2013 and 21.2% 2015 v 2014
8. Compounding all of this was the change in the jurisdiction limits in Feb 2014 for Circuit Court, moving from 38K to 60K, all claims in the pipeline needed to have reserves increased regardless of the above trends
Ends