The Tenth Progress Report of the Cost of Insurance Working Group covers the work carried out in the second half of 2019.
While on an overall basis, good progress has been made on the implementation of the Working Group recommendations, the Minister of State acknowledges that the cost of public liability insurance in particular remains an issue for small businesses and voluntary groups. However, he believes that the significant work carried out over the last 6 months of 2019 in implementing the CIWG’s recommendations, will lay the foundations for fundamentally transforming our insurance market through its focus on providing greater transparency and for putting in place the necessary structures to enable award levels to be brought down. These key developments are as follows:
- The Judicial Council Act 2019, enacted on 23 July 2019, provides for the establishment of the Personal Injuries Guidelines Committee (PIGC), which is tasked with drawing up guidelines on the level of damages which should be awarded in personal injuries actions, and which will replace the Book of Quantum. The Judicial Council, at its first formal meeting on the 7 February 2020, has nominated 28 April 2020 as the date of the establishment of the PIGC.
- The Law Reform Commission’s (LRC) detailed analysis of the possibility of developing constitutionally sound legislation to delimit or cap the amounts of damages, which a court may award in respect of some or all categories of personal injuries, is well underway. The LRC published an Issues Paper on 11 December 2019, entitled Capping Damages in Personal Injuries Actions, which set out the constitutional issues and detailed four possible legislative models for capping award levels. The LRC has invited submissions from any members of the public up until the 6 March 2020.
- The Central Bank published its first Report of the National Claims Information Database on the 16 December 2019 showing the impact that the cost of settling claims is having on the cost of insurance. In addition, the Report indicated the efficiency and savings that result where personal injury actions with award levels below €100,000 are settled through the Personal Injuries Assessment Board (PIAB) rather than through litigation in the courts. (PIAB is nearly 2 years quicker and nearly 20 times cheaper in relation to legal costs)
- The Consumer Insurance Contracts Act 2019, enacted on 26 December 2019, is another important step in increasing transparency in the insurance market. This Act reforms and modernises the law of consumer insurance contracts and is based on the 2015 Law Reform Commission Report on Consumer Insurance Contracts.
These, in conjunction with previous legislative changes, (e.g., the Personal Injuries Assessment Board (Amendment) Act 2019) should result in improvements for businesses, community groups, etc. with regard to the cost and availability of insurance. In addition, these reforms are having a significant impact with regard to private motor insurance (CSO figures from December 2019 show that the price of motor insurance is now 27.4% lower than the July 2016 peak).
Minister of State D’Arcy commented as follows on the Tenth Progress Report:
“Much progress has been made, in particular with regard to motor insurance, however I acknowledge that there is still much work to do particularly in relation to the cost and availability of insurance for small businesses, and voluntary/community groups. I remain of the view that the single most essential challenge, which must be overcome if there is to be a sustainable reduction in insurance costs, is to bring the levels of personal injury damages awarded in this country more in line with those awarded in other jurisdictions. I am pleased that the Personal Injuries Guidelines Committee designate has commenced its work and that the Committee will be formally established on 28 April. What this means is that it will have to submit new personal injury guidelines to the Judicial Council by 28 October at the latest. While I cannot influence the Committee in how it does its work, I hope it will recognise that there is a basis for a substantial reduction in award levels. If this were to happen, I would expect the insurance industry to take account of such reductions in its pricing.
I also welcome the invaluable data provided in the first Report of the National Claims Information Database, which confirmed that the cost of settling claims, both in respect of the award levels granted and the legal fees associated with pursuing litigation, are adding substantially to the cost of insurance for consumers in the private motor market. I believe one of the key messages emerging from this exercise is that the role of PIAB is critical to getting settlement costs down. This is reflected in the fact that the NCID Report indicates that the average settlement for litigated cases under €100,000 is just over €23,000 whilst the accompanying average legal costs are just over €14,500. When this is compared with the average PIAB award of just over €22,500, and its average legal costs of €753, it raises questions about how the differential in legal costs can be justified.”
Cost of Insurance Working Group - Tenth Progress Update
Background Note to Editors:
The Cost of Insurance Working Group, chaired by Minister of State for Financial Services and Insurance, Mr Michael D’Arcy, was established in 2016 and is comprised of representatives from the Department of Finance, the Department of Business, Enterprise and Innovation, the Department of Justice and Equality, the Central Bank of Ireland, the State Claims Agency, and the Personal Injuries Assessment Board. It has produced two reports since its establishment. These are:
- The Report on the Cost of Motor Insurance was published in January 2017 and made 33 recommendations with 71 associated actions to be carried out in an agreed timeframe, and
- The Report on the Cost of Employer and Public Liability Insurance was published in January 2018 and made 15 recommendations with 29 associated actions to be carried out in an agreed timeframe.
There is a commitment in both Reports that the Working Group will prepare regular updates on its progress. Updates have been published on quarterly basis since 2017, and from 2019 have been published on a biannual basis. All Updates provide details on how the implementation of the recommendations are progressing, with a particular focus on the action points, which are due for completion during the respective period, covered.
The last of the deadlines in the Action Plan of the Motor Report passed at the end of 2018, while all of the deadlines in the Action Plan of the EL&PL Report have now passed (latest was Q4 2019). Of the 33 recommendations in the Motor Report, 31 have either been completed, are categorised as “ongoing” and in respect of which work is continuing, or have been concluded in so far as the direct involvement of the Cost of Insurance Working Group is concerned. Of the 15 recommendations in the EL&PL Report, 14 have been completed.
This Progress Report also includes an update on the implementation of the recommendations of the Personal Injuries Commission Reports.