Bringing consistency to personal injury awards

1st November 2016

The effects of the new Irish payments scales and guidelines for the award of personal injury claims are already being felt in the market

August saw the publication of the revised book of quantum for Ireland, which provides guidelines on the award of personal injury claims.

Without doubt it is a major step forward for the market when taken in context with the significant changes and effects that have been placed on the Irish market over the past 15 years.

During that period Ireland has seen the advent of the euro and in 2003 the establishment of the Injuries Board, followed a year later by the first book of quantum, then the establishment of the Irish Court of Appeal, coupled with the economic crisis.

All have had their own impact in shaping today’s insurance claims environment in Ireland and provided challenges for the London market and other insurers operating in the country.

The Injuries Board was set up in an effort with two core aims: first, to speed the award of personal injury damages; second, to reduce the cost of litigation and with it the cost of the claims process, but negating the need for lengthy and costly court litigation.

Widespread agreement

However, there is widespread agreement the original book of quantum, which was designed to set the level of injury claim awards, coupled with setting up of the Injuries Board, created a situation that increasingly saw claims taken to circuit and high courts across the country.

In the past the board had a tendency to provide awards plaintiff solicitors believed they could better by some way in the courts and were therefore confident to reject the board’s arbitration and decision in favour of the courts, where there have been in years past very generous awards handed down.

This created a difficult environment for insurers and their claims departments, which found it increasingly hard to reserve accurately for claims, given the high degree of margin for error should the claims be taken to the courts.

Over the past two to three years we have, however, seen the Court of Appeal taking a more conservative approach to the awards that have been made in the High Court with some high-profile cases seeing those awards reduced considerably on appeal. It has had the effect of making circuit and High Court judges think harder about the level of the awards they are prepared to make, given the Court of Appeal’s approach.

What the revised book of quantum delivers is a degree of certainty for claims managers and insurers on the level of awards that will be made. It enables insurers to better calculate exposures, claims and with it reserving levels. The original book of quantum was quickly viewed as out of date and the hope is the revised publication will have a greater degree of longevity.

Since its introduction in August its effects are already being felt.

I have had conversations with plaintiff lawyers who say they are now reconsidering their willingness to head for the courts, given the higher awards made by the Injuries Board. There is no longer a clear belief taking the case to court will result in a higher award and, should the award not exceed that made by the board, the plaintiff will be liable to an order for costs.

It is fair to say the Court of Appeal has also been turning the tide on personal injury claims.

While the new book of quantum delivers greater certainty, what it does not do is tackle the issue of the discrepancy between the level of awards in Ireland to those elsewhere.

For instance, a low-grade whiplash injury is likely to see an award of around €15,700 ($17,145) in Ireland. This needs to be compared to a figure of between £2,500 ($3,039) and £3,500 for a similar injury sustained in the UK.

However, what we continue to see is insurers factoring this differential into their pricing models.


Normal levels

Elsewhere, the professional indemnity market has now returned to what can be described as normal levels following the claims witnessed by the sector five to six years ago in the middle of the Irish property crisis, which mirrored that of London in the late 1990s.

Insurers are and will continue to highlight the very different levels of awards made in Ireland compared to the UK and others parts of Europe, but the biggest benefit of the new book of quantum remains the degree of certainty it will bring to the claims department.

London’s close ties with the Irish market remain intact and we have been heartened by the interest and response we are already receiving to our planned event on the changes in the Irish claims market we will hold in February next year at the Old Library in Lloyd’s.

At present the biggest uncertainty the Irish insurance market faces in common with the rest of Europe remains the terms and the impact of the UK’s exit from the EU.