Proposals to reduce minor injury awards won’t stop compo ‘gravy train’, business groups warn

The Tánaiste Leo Vardakar said the new guidelines were a “really important step in the right direction” while Justice Minister Helen McEntee said she hoped the new guidelines would “bring consistency, reduce litigation and reduce awards”, which were a major driver of insurance costs.

The Personal Injuries Insurance Board (PIAB) said the new guidelines should lead to reduced insurance premiums. 

“The ultimate impact that we should expect to see from the new guidelines is a reduction in the cost of insurance,” PIAB Chief Executive Rosalind Carroll said, adding it should lead to greater market competition in time.

The new guidelines replace the Book of Quantum rules on the amounts awarded for personal injuries but fall short of the 80% reduction sought by business groups and campaigners.

The proposed cuts of around 50% across a range of personal injuries will not go far enough to bring insurance costs down, business groups have said, pointing out that compensation claims for minor injuries were the single biggest contributor to high insurance premiums.

Ireland, they said, is an outlier in Europe and has to date paid out damages for minor injuries, such as bumps, bruises and mild whiplash injuries, that were four times that paid in the UK and several times more than in other European countries.

Call for intervention

The Alliance for Insurance Reform, which represents 41 civic and business organisations, called on the Tánaiste to intervene and place additional caps on minor injury awards.

The Alliance gave an example of a minor thumb injury, which has been reduced from €21,200 to €12,000 but compares to equivalent damages of €4,582 in England and Wales.

“We have now written to An Tánaiste Leo Varadkar, in his role as Chair of the Cabinet Committee Sub-Group on Insurance Reform, asking Government to intervene immediately, take control of the situation and cap general damages such that damages for minor injuries are reduced by an average of 80% compared to the previous Book of Quantum guidelines,” Director of the Alliance, Peter Boland, said.

ISME, which represents the small and medium enterprise sector, said it was “shocked” by the proposals which would “keep the personal injuries gravy train running” and “barely dent” the cost of insurance.

“It is clear that Government must now fulfil its obligations to citizens and society and press on with enactment of the Civil Liability (Capping of General Damages) Bill 2019, which lapsed in the 25th Seanad,” Neil McDonnell, CEO of ISME said.

The Irish Hotels Federation (IHF) said reductions of at least 80% were required to bring Ireland back to international norms. The federation said more resources must be given to gardaí to address the serious issue of insurance fraud.