Dermot, thank you for the introduction and for the invitation to speak today at this webinar.
We all know that for too long, the cost and availability of insurance has had a negative impact on our economy and our society. As we begin to reopen our economy and seek to grow enterprise and create jobs, the availability of insurance cover at a reasonable and fair price will be more important than ever.
We in Government recognise the need for stronger reforms and that is why this Government has committed to bringing down the cost and increasing the availability of insurance for motorists, homeowners, businesses, and voluntary groups alike. It is acknowledged there is no simple solution to do this, no silver bullet. It requires ambition and action - that is, sustained action - right across Government. The Action Plan for Insurance Reform does this and with 66 actions to be delivered across Government, it is one of the most important programmes that this Government will undertake.
It was George Bernard Shaw who said that progress is impossible without change – and let us be clear, change is underway. Over the last number of months, I have engaged with consumers, businesses, community groups, and representative bodies, and the resounding message from all has been the urgent need for change in the personal injuries sphere.
We know that the cost of claims is a large driver of insurance premiums and we know award levels in Ireland are high relative to other jurisdictions. This needs to change.
We also know that that there is little certainty about award levels and there is a culture of resolving claims through litigation. This needs to change.
And change is coming.
The Personal Injury Guidelines which came into effect on April 24th are a significant step change in how personal injury claims are dealt with in Ireland. Our overriding intention in Government in legislating for the development and commencement of the Guidelines is to address the economic impacts of high insurance costs, while ensuring fair compensation when someone is injured through no fault of their own.
In legislating for the introduction of the Guidelines, Government has been mindful that most personal injury cases are processed through PIAB and not the courts. As a result, the date of assessment is the commencement point for the Guidelines and means the Guidelines will apply to approximately 15,000 claims currently in the PIAB system.
The Guidelines significantly reduce award levels for many categories of common injuries, particularly those of soft tissue, and provide further detail on how these should be assessed. Of note, is that a number of common injuries will now move to the jurisdiction of the District rather than the Circuit Court, thus reducing associated legal fees.
The Guidelines also provide guidance in relation to injuries previously not included in the Book of Quantum and will be used by both PIAB and the judiciary. Therefore, in addition to the lower awards and legal fees, the Guidelines should help to bring more certainty to claimants and insurers, and as such reinforce the benefits of using PIAB to settle claims. Compared to the Book of Quantum award levels have reduced across nearly all ranges but the level of reduction varies from 31% to 69% depending on the severity of injury.
As both PIAB and the Courts will apply the new Guidelines, one of the most significant benefits should be that parties to a claim have greater certainty in what awards will be given in cases. This should mean more cases being resolved through PIAB and through early settlements which would reduce costs and time taken to settle claims significantly.
This should help bring greater consistency and transparency to the process and ultimately bring award levels and premiums down faster. In this regard, Government is mindful that the insurance industry has previously committed to reduce premiums in line with lower award levels. My colleague, Minister Fleming has been meeting with the main insurers in the Irish market to press the need for premium reductions in response to the implementation of the new Guidelines. The engagement to date has been positive, with all insurers indicating that they will reduce premiums in response to these developments.
I am conscious however that while most claims will not proceed to court, court judgements will be an important element of people buying into the new process. The longer it takes to see cases being addressed in the courts, the longer it will take to see the full benefits of the Guidelines. It is also important that insurers’ in settling claims do not undermine the Guidelines by paying over the guideline figures to achieve a settlement and avoid litigation costs. This could potentially undermine PIAB assessments and the benefits of the Guidelines.
Both I and the cabinet committee sub-group on insurance reform chaired by An Tánaiste will be closely monitoring the impact of the Guidelines in the coming months as they take effect. In addition, under the Action Plan on Insurance Reform, the Department of Justice will report on the implementation of the Guidelines by December 2021. From a policy perspective, it will be important that we can measure and assess the impact of the Guidelines as soon as possible.
Reform of PIAB is another important instrument for change in the personal injuries sphere.
Since its establishment the PIAB model has delivered major benefits by providing a low-cost, quick, and fair option in injury compensation. It is a model that has worked very well however we know the number of cases being finalised through PIAB has fallen in recent years and thus we need to ensure a robust framework and efficient process for it to continue to be a success and to enable more cases to be brought under its ambit. Just last month, Minister for Justice, Helen McEntee, and I published legislation to bring Garda compensation claims within the PIAB process. It has been clear for some time that the existing Garda Compensation scheme needs to be replaced with a more efficient process and this legislation should allow Garda Síochána members and their families to avail of a quicker resolution of their claim. It should also benefit the State in terms of lower legal and administrative costs.
We know the PIAB process works, and I am committed to seeing its role is enhanced to address personal injury claims effectively and efficiently. As Minister of State with responsibility for PIAB, I was keen we approached the reform of PIAB with ambition – to push the boundaries in what we can achieve under its ambit, underpinned by a robust and comprehensive legislative framework. My officials have been working tremendously hard over the past year, along with the Office of the Attorney General and with PIAB themselves, to ensure it is the most effective and efficient process for personal injury claims. In March I launched a public consultation on what new measures we could introduce to enhance the role of the PIAB, and I am pleased to say that there has been an excellent response to the consultation.
Submissions to the consultation are showing that there is a consensus that the time is right and the time is now to strengthen and enhance PIAB. I have also been struck by the positive feedback received indicating that the service provided by PIAB is a valuable one and really makes a difference. This is reflected in the Central Bank’s reports which show legal costs are 15 times greater when claims are settled via litigation rather than through PIAB and take almost twice as long to settle.
The esteem in which PIAB is held is a credit to the important work that has been undertaken by the Board, the Executive team, and the staff of PIAB over many years. In seeking to enhance and reform PIAB, I intend to build on this strong platform. The overarching principle of my approach is to have more personal injury cases resolved through PIAB in a faster timeframe and with lower costs compared to litigation. I am also looking to introduce mediation into the PIAB process. An advantage of mediation is that parties can avoid potentially prolonged litigation and may arrive at a mutually satisfactory outcome for the parties in a shorter space of time. I am also looking at the data available to PIAB and how we can best use this to increase transparency around claims.
Informed by the public consultation my Department is preparing the General Scheme of a Bill to enhance and reform PIAB which is currently being drafted and which I hope to seek Government approval on in the coming months. I am confident that meaningful change will arise in PIAB which will benefit the Irish economy and society.
I want to conclude by acknowledging PIAB’s work in implementing and operationalising a new system so quickly after adoption of the Guidelines by the Judicial Council. I wish Rosalind and her team every success as they implement the Guidelines and I look forward to continuing close engagement with PIAB as we progress our plan for reform to facilitate more personal injury cases being resolved by PIAB in a faster timeframe and with lower costs.
Thanks again for the opportunity to speak and I look forward to the deliberations arising from this morning’s webinar.