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//Can Insurance Premiums be Reduced?

Can Insurance Premiums be Reduced?

The Personal Injuries Commission (PIC) report has made important recommendations for ways to reduce insurance premiums and legal costs in the insurance sector.

In a similar vein, a recent Court of Appeal decision has highlighted that cost differential orders will be made to effectively penalise parties who bring proceedings in the incorrect court jurisdiction, which will further assist the insurance sector in keeping legal costs down.

Personal Injuries Commission Report

The recent Personal Injuries Commission Report emphasised that awards in Ireland are up to five times higher than in comparative jurisdictions. This presents Ireland with an important opportunity to consider an appropriate rebalancing and recalibration of awards in an effort to reduce insurance costs overall.

Judicial Council Guidelines

A lack of consistency and certainty in awards was a crucial component in highlighting the difficulties of managing claims. The PIC opined that the statutory establishment of a Judicial Council to compile guidelines for appropriate general damages for personal injury claims should be expedited. The implementation of appropriate guidelines should lead to greatly increased levels of consistency in awards, inspire an increase in the frequency of early resolution of claims and reduce insurance costs overall. The PIC advocated that when compiling the guidelines, the judiciary should consider Court of Appeal decisions, the PIC benchmarking exercise results and the Quebec Whiplash Associated Disorder scale and that the guidelines should be reviewed every three years.

Fraud

The PIC recognised that exaggerated and fraudulent claims have an adverse impact on overall claims costs including insurance premium costs. The development and deployment of suitable strategies to prevent and detect such fraudulent activity could address the issue. Fraudulent activities currently carry a low risk of detection and an even lower risk of prosecution. This tends to foster and encourage exaggerated and fraudulent claims where the lure of high rewards is further enhanced by the almost negligible prospect of punishment. It recommended the immediate establishment of an Irish Garda Fraud Investigation Bureau and encouraged criminal prosecutions. It suggests that a claimant should be obliged to notify a defendant or insurers as early as possible to enable them to fully investigate the accident and retain invaluable evidence such as CCTV footage.

Costs Differential Orders

With increasing alacrity, proceedings are being issued in a higher jurisdiction than necessary thereby increasing costs. Section 17 (5) of the Courts Act, 1981 gives the trial judge discretion to award to the defendant, the difference between the costs actually incurred and those that would have been incurred had the plaintiff issued proceedings in the correct jurisdiction, with the plaintiff paying the difference to the defendants.

A recent Court of Appeal decision highlighted the significance of Section 17 (5). In O’Malley v Mc Evoy the plaintiff issued High Court proceedings and was awarded the sum of €34,808 which fell within the Circuit Court jurisdiction. The High Court refused the defendant’s application for a costs differential order. However, the Court of Appeal considered the legislative intent and emphasised the appropriate exercise of discretion. In making the costs differential order, the Court of Appeal stressed that the defendant had specifically warned the plaintiff a year or more prior to the trial that the proceedings were in the wrong jurisdiction and that an application for a costs differential order would be made.

Conclusion

There is currently considerable momentum and an incentive to reduce insurance costs through consistent award levels, detection and financial punishment of criminal and fraudulent claims, as well as deterrents to issuing proceedings in the incorrect jurisdiction. Only time will tell if these measures will actually reduce insurance premiums.

2018-12-04T16:19:10+01:00December 10th, 2018|Publications|

About the Author:

Audrey Browne is a Senior Solicitor in our litigation department, having joined the firm in 2017. Prior to joining the firm, Audrey gained experience in all areas of civil and […]

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