Article originally published on the RTE website – https://www.rte.ie/news/2017/0426/870443-insurance-costs
Insurance Director Says Inconsistent Awards Damage Market
A lack of consistency in the courts on personal injury awards is a “real problem” for the insurance industry, a Limerick-based insurance claims director has told a business gathering in Shannon.
Addressing an event on the impact of liability claims on the insurance industry hosted by Shannon Chamber of Commerce, Willis Towers Watson claims director Niall O’Neill said that the widely differing awards given by judges “makes for an impossible way to do business”.
Outlining that the insurance cycle is currently in a “hard market” phase meaning that cover is difficult to price due to rising costs, Mr O’Neill said that the industry is earning a net premium of over €1bn but with the costs of claims, commission and expenses, a net loss of €291m is being made.
Mr O’Neill said that the “war stories” of “egregious” court claims were affecting the industry greatly in the past number of years.
He said increasing the circuit court limit was the single most damaging development to the insurance sector in recent years.
That, coupled with the loss of experienced High Court judges to the Court of Appeal, “left a vacuum in the lower courts” as it raised questions about the need for judicial training, he said.
He said 23 of the recent 36 High Court appointees have less than three years experience in dealing with personal injury claims, leading to substantial monetary awards being dished out.
Citing a number of claims awarded before the Limerick courts, Mr O’Neill said that a number of cases saw large awards given by judges with less than three years of experience at the bench.
The average personal injury award in all cases at the High Court in 2010 was €220,000, but in 2015, that average figure rose to €316,000, he said.
Mr O’Neill said research showed that the average payout at the circuit court was in the region of €16,000 but “alarmingly, the combined average personal injury award was up 98% since 2009 to €124,000 in 2015”.
He added that the increases in the Book of Quantum values for personal injuries do not reflect the need for international benchmarking, saying: “Whiplash is an Irish injury for Irish necks as the Book of Quantum indicates awards over €15,000 in Ireland as opposed to a maximum payout in the UK of £5,000.
“How can we compete on an international level if you have these variances?”
Court trends are sending out the wrong message, Mr O’Neill said, as he noted media reports from the Limerick sessions of the High Court where “crazy amounts” were given to claimants.
“Anecdotally, I was informed of a recent case where the claimant sought €130,000 in damages and the defending insurance company offered €110,000 to settle the case before hearing.
“This was not accepted and the trial went before the judge who eventually awarded €625,000. This needs to be addressed,” he said.
“Consistency is vital in the courts and amongst the judiciary, therefore, it could be asked if there is a need for judicial training?”
Detective Inspector Declan O’Sullivan, attached to Anglesea Street Garda Station in Cork, presented the results of a recent intelligence-led operation carried out by the force into staged traffic accidents.
The resulting operation led to more than 50 arrests, and over 40 convictions at the circuit court, including one lengthy prison sentence for the “organiser of these staged accidents”.
As a result, he said that there were lessons to be learned for the insurance industry including to be wary of claims involving cars with high occupancy, newly-purchased policies and hired cars.
“There needs to be more dialogue between the gardaí and insurance companies,” Det Insp O’Sullivan told the Shannon Chamber business breakfast meeting.