New judicial guidelines on personal injury awards, recently approved by the Judicial Council, take effect from tomorrow
The Personal Injuries Assessment Board, which assesses all unsettled claims, will also be adopting them.
“Monday next, 26th April, the first working day following the implementation of these new guidelines, is D-Day,” said Peter Boland, Director of the Alliance for Insurance Reform.
“From this day, we expect the cost of motor and liability insurance policy renewals to drop significantly.”
Reformers had been hoping that the revision in the guidelines would deliver an 80% reduction in minor injury damages.
However, the final version will see awards fall by around 50%.
“Insurance premiums are based on future risk and every accident that happens from Monday and the majority of claims already made will be subject to the new guidelines, so the risk associated with every new motor and liability policy in Ireland will drop significantly and that must be reflected in the cost of those policies,” said Mr Boland.
Central Bank analysis has found that 42% of a motor policy cost is made up of compensation payments.
When legal costs associated with such claims as well as broker commissions and reinsurance costs are all factored in, the Alliance believes there is scope initially for at least a reduction of in excess of 20%.
The insurance industry has committed to reducing premiums on foot of the downward revision in the personal injury guidelines.
However, it is not yet clear how soon consumers and businesses will actually benefit, or to what extent.
The Government has also urged insurers to pass the savings on.
Insurance Ireland said that while it is prevented from commenting on future pricing in the market, it is optimistic for the future of insurance in Ireland.
It said that the last time the issue of costs was tackled in Ireland with the establishment of the Personal Injuries Assessment Board, insurers responded positively and consumers benefitted.
“In addition, individual insurers publicly committed to passing on savings arising from meaningful reform at a Joint Oireachtas Committee hearing in 2019,” it stated.
“The new Guidelines, which we note are mandatory, should ultimately result in personal injury claims being processed more efficiently and consistently.”
“We believe the need for expensive litigation will diminish over time and as a result will unclog the Courts as the Personal Injuries Assessment Board will also operate under these new guidelines.”