Update on the impact of the Personal Injuries Guidelines
Nicola Dunphy, Solicitor of our Civil Department introduces Emma Slattery Barrister at Law who has prepared an update on the impact of the Personal Injuries Guidelines nine months on from their introduction. Emma is an experienced Barrister who was called to the Bar in 2013 and has a varied practice and we would like to express our thanks to Emma for her excellent review and continued engagement on this topic.
In May 2021 Nicola Dunphy from the Personal Injuries Team analysed the introduction of the Personal Injuries Guidelines (the Guidelines) and their impact on the area of personal injuries litigation.
Nine months on, there are still no judgments from the Courts applying the Guidelines. This is unsurprising given it takes an average of 3.9 years to bring a case to settlement through litigation, and most likely longer to hearing and judgement of a court.
Personal Injuries Guidelines
As we discussed in our previous blog post on the Guidelines, when compared with its predecessor the Guidelines result in a reduction of damages for pain and suffering of up to 50% in some instances. For example, the Book of Quantum provided that general damages in respect of a moderate neck injury (enduring for no more than five years) should be awarded €20,400 – €30,200. In comparison, the Guidelines provide that the general damages in respect of a moderate neck injury, (usually less than five years) should be awarded €12,000 – €23,000.
On the introduction of the Guidelines, in April 2021, the Minister for Justice, Minister McEntee explained some of the rationale for the Guidelines. Minister McEntee said;
“This is a very significant step in meeting our commitment to make insurance more affordable for consumers, businesses and community groups. The commencement of the Personal Injuries Guidelines should reduce costs, and in time, boost competition in the Irish insurance market”.
Average Compensation – Motor Claims
In November 2021 the Central Bank published the National Claims Information Database (NCID) Private Motor Insurance Report. This report analysed data from insurers up to the 31st December 2020.
The report contains some interesting data, for example, of claimants who settled injury claims in 2019 and 2020:
36% settled directly, before the Personal Injuries Assessment Board (PIAB) was involved
13% settled directly, after PIAB was involved
15% settled through PIAB
34% settled through litigation, before a court award
2% through litigation, with a court award.
The Report states that between 2015 and 2020 the average settlement reached was:
Direct with the insurer: €13,822
Assessed by PIAB: €22,928
Litigated through the courts: €45,905
There is a clear link between litigation and increased awards. For example, one can see in Figure 1 below that 85% of those claims settled for a sum between €75,001 – €100,000 were settled through litigation. This is in comparison with 6% of those claims being settled through PIAB and 9% being settled directly with the insurer.
For data collected in this report until the end of 2020, PIAB calculated compensation amounts using the ranges set out in the Book of Quantum. From 24 April 2021 the Personal Injuries Guidelines have been used by PIAB. Therefore, we would expect to see a reduction in the overall average awards going forward.
A Reduction in Award Levels
PIAB issued a report on award values between 24th April – 30th September 2021. This is the first report of this kind since the introduction of the Personal Injuries Guidelines.
Motor insurance claims make up about 70% of all claims submitted to PIAB. In 2020, PIAB say the average award was €22,158 for motor liability claims, whereas since the introduction of the Guidelines, the average award has dropped by 40% to €13,230.
As can be seen in Table 2 below, in 2020 just 12% of awards were below €10,000. However, now nearly half (48%) of awards are under €10,000.
As mentioned earlier, it’s not clear yet how the courts will apply the Guidelines and more importantly how often we will see the courts having reason not to follow the Guidelines. Given this level of reduction in assessments from PIAB, it would appear PIAB are applying the Guidelines in the majority of cases.
A Drop in Acceptance Rates
PIAB was initially introduced to enable people to obtain compensation for personal injuries without the need for legal proceedings, unless either party decides not to accept a PIAB assessment.
PIAB say that “traditionally respondents/insurers accept about 90% of awards and claimants accept over 50%, giving an overall acceptance rate of just over 50% of awards”. However, since the introduction of the Guidelines:
Claimant acceptance rates have dropped by over 9%,
Respondent (i.e. insurer) acceptance rates have increased by over 3%, and
There is a total decrease in the combined acceptance rate of PIAB awards of just under 13%. This will push 13% more cases into litigation, with longer waiting times to conclusion and increased overall costs.
Court challenges to the Guidelines
A number of people have taken challenges to the Guidelines. One case in particular has been selected as the lead case by Mr. Justice Meenan. That is the case of Bridget Delaney. Ms. Delaney is judicially reviewing the decision by the Personal Injuries Assessment Board to assess her general damages at €3,000. She says her claim should have been assessed at between €18,000 and €34,000.
On the 9th February 2022 the High Court is due to hear the first preliminary issue in the case. The preliminary issue raised by Ms. Delaney is whether any of the judges who voted on the introduction of the Guidelines can hear the case or whether they must recuse themselves.
While we wait for the Courts to apply the new Guidelines, or indeed decide one of the challenges, PIAB continue to assess claims on the basis of the Guidelines. There is a clear line in the sand between the assessments made under the former rules, and those made under the Guidelines. The Guidelines are already having a detrimental effect on the stated objective of PIAB, insofar as there is a decline in acceptance rates of assessments and thus more cases being syphoned into the Courts system. We know that the innocent victim of a road traffic accident is receiving circa. 40% less in terms of compensation for pain and suffering, and while the data on whether that is resulting in lower premiums is not available yet, the NCID report does state that 2020 was the most profitable year for the motor insurance industry since 2009.