The Supreme Court decision stating that courts must comply with personal injury award guidelines prevents a potentially major blow to the Government’s initiative to lower insurance expenses.
A majority of four to three in the Court confirmed that allowing the Judicial Council to define the new personal injury guidelines was beyond constitutional boundaries. This impacts any future modifications, but the Court found that the subsequent independent ratification of the guidelines by the Oireachtas legally enforced them.
It was predictable that a constitutional challenge to these guidelines, which commenced in April 2021, would occur since awards granted under these guidelines are significantly less than the previous measures set by the Book of Quantum. As an example, with these guidelines, the plaintiff’s ankle injury damages were €3,000, while they would have amounted to €34,000 under the previous system.
The possibility of further legal action cannot be dismissed, but the bar has been set high by the Supreme Court for additional challenges. The clarity provided by the verdict is likely to further motivate claimants to circumvent the courts and opt for the less expensive path provided by the Injuries Resolution Board (IRB).
The IRB’s aim is to decrease the cost for insurers to settle claims, which should in return lead to lower premium costs for customers and businesses. The IRB’s first full operational year – 2022 – reported a cost-saving of €40 million and a 34 per cent reduction in average awards.
Ascertaining the degree to which these savings and the further decrease in insurance company costs due to adopting new guidelines by the courts are being passed to customers is tricky due to the obscure nature of insurance pricing. However, the decrease in awards suggests that it’s high time for lower premiums. It’s incumbent on the industry to fulfil this and the Government should do everything in its power to ensure this comes to fruition.