Judges’ proposal to increase injury payouts would undo motor insurance progress, Justice Minister is warned

Justice Minister Jim O’Callaghan has been told not to “derail” progress made in reducing the cost of motor insurance claims.

There are fears that a move to go along with judges, who have recommended increasing payout guidelines for claims, will send motor premiums higher.

Latest inflation figures show that the cost of motor insurance has gone up for 17 months in a row. According to the Central Statistics Office, premiums were 11.2pc more expensive last month compared with January last year.

Premiums are rising at more than double the rate of general inflation.

Insurers blame an increase in the number of motor claims as well as the higher costs of repairing cars and other vehicles.

The ongoing rise in the cost of motor insurance comes at a time when petrol and diesel prices have risen for four months in a row.

The Alliance for Insurance Reform said recommendations from judges to hike personal injury award guidelines by 16.7pc will add to the surge in motor insurance inflation.

This is not the time to derail the progress being made by the Injuries Board

Mr O’Callaghan is expected to bring Judicial Council recommendations to increase award levels before the Oireachtas.

Alliance chief executive Brian Hanley said: “The proposed blanket increase of almost 17pc in personal injury awards will lead directly to increased premiums for motorists, businesses, sports, community and voluntary groups all across the country.”

He added that such an increase in award levels “will impede the effective functioning of the Injuries Resolution Board at a time when the previous government did all it could to increase settlement volumes there”.

“Legal costs are already a substantial problem and will only increase if this proposal is adopted,” Mr Hanley said.

The Alliance called for the proposed 16.7pc increase to be considered by an Oireachtas committee instead of ­being “rubber-stamped by Government”.

Mr Hanley said: “This is not the time to derail the progress being made by the Injuries Board, or the reforms recently introduced to aid it, in resolving a ­greater volume of claims on society’s behalf.”

The Judicial Council, comprising all the State’s judges, has indicated that the proposed increase in recommended award levels reflects inflation, as the original guidelines were approved by a majority of judges in 2021.

Judges must consider the guidelines when deciding awards and must give reasons for any departure from them.

A 16.7pc increase would bring the maximum award under the 2021 guidelines, which was €550,000, up to about €642,000. This relates to the most serious injury outcomes, such as quadriplegia.

Awards for injuries resulting in psychiatric damage would range from €17,500 to €198,000 depending on factors including severity of the damage and prognosis, if the proposed rises are introduced.

Insurance Ireland agreed with the Alliance for Insurance Reform that the proposed increase in award guidelines will undo progress on insurance reform.

Chief executive of the insurance lobby group, Moyagh Murdock, said motorists have benefited from significant decreases in the cost of cover from 2017 to 2023.

“We believe that the Judicial ­Council recommendation will undo the ­progress achieved under Government’s Insurance Reform Agenda, which initially introduced the guidelines to bring consistency and transparency to court awards,” Ms Murdock said.

“The guidelines have helped the Injuries Resolution Board reduce legal costs and increase claimant acceptance rates and have brought increased competition to the motor market by bringing consistency and predictability.”

Ms Murdock said the Injuries Resolution Board previously confirmed that average awards in 2023 were down 29pc on 2020 levels.

But the increase recommended by the Judicial Council will reverse over half that reduction, she said.

“This will potentially add significantly to the overall cost of claims, which will ultimately feed into the cost of insurance for Irish consumers,” Ms ­Murdock added.

Commentary

We at the Irish Claims Service firmly believe that adjusting personal injury award guidelines to reflect inflation is both fair and appropriate. These awards are designed to provide just compensation for victims who have suffered often life-altering injuries, and to neglect inflationary pressures would be to undermine that fundamental principle of fairness.

Over the last number of years, significant efforts have gone into reforming the compensation process and making it more transparent, but that effort should not come at the expense of people who have been seriously harmed. A person dealing with the aftermath of a serious injury will naturally struggle to meet medical, rehabilitation, and day-to-day living costs that inevitably rise alongside inflation. If damages are not adjusted to keep pace with these economic realities, then, in real terms, compensation will steadily decrease.

It is easy for industry groups and those unaffected by personal injuries to call for keeping awards artificially low. But it is altogether different for someone who has been left with a permanent disability, or requires long-term care, to make ends meet on damages that no longer reflect the true cost of living. It is well for those living comfortably to suggest curtailing the very mechanism designed to provide a modicum of financial stability to those whose lives have been so drastically altered. Such proposals disregard the fundamental aim of personal injury compensation, which is to make good, as far as money can, the harms suffered.

While there have been suggestions that increasing awards will drive up motor insurance premiums, it is important to remember that inflationary adjustments are not a sudden boon to claimants but rather a recognition of the cost burdens that have steadily increased over time. We in the Irish Claims Service also stress that many other factors influence insurance premiums—factors that insurers themselves have acknowledged, including the rising cost of car parts, repair services, and the broader economic situation.

Keeping awards proportionate and fair does not mean turning back progress on reform. Instead, it ensures that any reforms remain grounded in the reality of inflation and the genuine needs of claimants. The Justice Minister and government should carefully balance concerns about potential increases in premiums against the moral and legal imperative to fairly compensate those who have already suffered.

Far from “derailing progress,” a just and equitable awards system underpins public confidence. Ensuring that awards keep pace with inflation is not about delivering a windfall to claimants; it is about preserving the value of compensation that has been shown in many instances to be absolutely necessary for victims of catastrophic or life-changing injuries. The judiciary’s recommendation to raise guidelines by 16.7% is, in essence, ensuring that someone who was compensated fairly in 2021 remains equally well compensated in 2023 and beyond.

We therefore call on the Justice Minister to remember the fundamental purpose of personal injury awards: fairness and adequacy of compensation for those who have suffered physical or mental harm. It is vital that these guidelines reflect real-world economic conditions. Otherwise, it is the most vulnerable among us—those who are dealing with long-term pain, disability, or mental health challenges—who will be left behind.