Two brothers who suffered similar minor injuries in a motor accident had their claims assessed by the Personal Injuries Assessment Board (PIAB) last year. One claim was in ahead of the other, which was awaiting a medical report.
The first brother was awarded €18,000 in March 2021, a month before the new guidelines came into effect. Three months later, when the guidelines were operational, the second brother was awarded €4,000.
Last month, in what is believed to be one of the first cases under the guidelines to go to hearing, a man who claimed for soft tissue and psychological injuries in a motor accident, in which liability was admitted, was awarded €45,000 at Killarney Circuit Court.
The man had earlier rejected PIAB's award of some €15,000. The €45,000 award has been appealed to the High Court by the defendant driver's insurer. Such cases illustrate the potential impact of the guidelines, already dubbed as "PIGS" by unhappy lawyers.
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Insurers, employers and insurance reform campaigners have, however, generally welcomed them but are waiting to see whether they substantially discourage costly personal injuries litigation and how they play out in the courts.
This week, PIAB, which assesses general damages for motor, workplace or public liability accidents, publishes updated data showing that its awards have almost been halved since the guidelines came into effect in late April 2021.
Claims fell 16 per cent to 26,009 in 2020, and that decline is expected to have continued into last year, though the reductions also reflect the impact of the pandemic – including fewer people driving and in workplaces.
The Central Bank's National Claims Information Database (NCID) for 2015-2019 shows less than half of claims settled directly between claimants and insurers or via PIAB. Most settled after litigation began, but before going to court.
Challenges
The first of a series of challenges to the guidelines agreed by vote last year by the State’s judges will begin its hearing before the High Court in Dublin on Wednesday.
Legal costs in litigated settlements are substantially higher than for direct/PIAB settlements. For example, average compensation for direct and PIAB settlements in workplace claims under €100,000 was €24,232 and €36,320 respectively, with average legal costs at €2,790 and €902. The average compensation for litigated workplace settlements was €69,865, with average legal costs of €35,268.
A PIAB review of its awards in 2,649 cases from April 24th, 2021 to September 2021 shows the average award was 40 per cent lower than the average 2020 award under earlier guidelines, known as the Book of Quantum (BoQ).
Between April and September 2021, most awards – 68 per cent – concerned motor liability, 19 per cent public liability and 13 per cent employer’s liability. Nearly half, or 48 per cent, of awards came in under, compared to 12 per cent in 2020.
While the landscape has changed for certain injuries, those injured and who suffer losses are fully entitled to and will recover the losses they have suffered
Almost three in four awards – 71 per cent – were under €15,000, compared to 30 per cent under €15,000 in 2020. Some 18 per cent were under €5,000.
Claimants were less likely to accept the lower 2021 awards, possibly because they had higher expectations of what they would get in court and because final decisions under the new guidelines have yet to emerge from the courts.
The percentage of PIAB awards that were accepted dropped to 37.1 per cent between April and September 2021, compared to 50.8 per cent in 2020.
Most cases currently before the courts began under the old Book of Quantum guide, and they will be decided by that, rather than by the guidelines accepted after much debate, and some disagreement, between judges.
New regime
By 2024, most cases then before the courts will be decided under the new regime, and the Judicial Council will review matters at that point. Despite that, many lawyers consider the guidelines are already beginning to bite.
William Harvey, a partner in Cork-based firm Martin A Harvey & Co Solicitors, a leading handler of personal injury claims, says: "The assessments from PIAB are dramatically lower. I've never seen such figures for certain injuries in my career."
Clients are advised of the guidelines and about the likely award for their injury under those, says Harvey. “While the landscape has changed for certain injuries, those injured and who suffer losses are fully entitled to and will recover the losses they have suffered.”
Seven out of every 10 PIAB awards are rejected by claimants, says Harvey, but that is not unusual since many claimant fear they may need years of surgery, while others do so simply because they have heard of others doing better in court. Claims dropped by 40 per cent during the pandemic.
He believes the guidelines are having the intended effect in driving cases to lower courts – with former likely High Court claims going to the Circuit Court and Circuit Court claims ending up before the District Courts.
Judges will follow the guidelines, believes Harvey. “They were designed to drop damages. I have cases going back two years where I would have advised damages between €8,000 and €12,000 could be expected, but now it’s more like €3,000-€3,500 or less.
“You can imagine some clients have had colourful conversations with me about that. The guidelines have dramatically reduced damages for certain injuries, even for cases that were taken before their adoption,” he told The Irish Times.
Pass on savings
He hopes insurers will pass on the savings but says he paid a higher motor insurance premium this year while his office public liability insurance remained the same. “[Insurers] now have to hold up their end of the bargain,” he says.
Senior counsel David Nolan, who represents plaintiffs and defendants in High Court personal injury cases, says he knows of a case where a claimant who turned down a PIAB assessment of €70,000 and took proceedings after the guidelines came into effect has received an offer of €30,000.
It will take two to three years to see how it all pans out. The guidelines will add greatly to the workload of the Circuit and District Courts. Both courts will need more judges
Judges new to personal injury cases regularly ask what are the amounts under both the BoQ and the guidelines for the relevant injury, says Nolan. Judges are “well aware” of a series of Court of Appeal judgments cutting a series of awards for minor injuries “and want to get it right”.
“The more serious the injury is, the more likely the sums in the guidelines and the Book of Quantum are to coincide,” says Nolan.
Less-serious cases are dropping a court rank, he says, adding that he believes the High Court will end up with cases involving serious personal injuries only, most relating to medical and clinical negligence, with most settling via mediation. “That’s good, that’s the way it should be.”
Andrew O’Connell, a solicitor based in Killarney, says the guidelines caused confusion after they were enacted. “Some would ask was it even worthwhile taking a case.” Many PIAB offers are being rejected, but “a lot of cases” that would have a €40,000-€60,000 award are now settling.
He believes some insurance companies are letting cases run to see what judges will do and, if they don’t like the result, they will appeal.
It seems some insurers are offering €2,000-€3,000 on top of PIAB awards, he says. “I think it will take two to three years to see how it all pans out. The guidelines will add greatly to the workload of the Circuit and District Courts. Both courts will need more judges.”
Solicitors are also concerned that High Court judges are imposing the costs differential rule, meaning that even if a case is won in the High Court, costs are on the Circuit Court scale, says O’Connell.
“I’m advising clients that judges are human, that even if a case was initiated before the guidelines, judges will be conscious of them.
“It all adds to the risks for plaintiffs. There was a need for recalibration and rebalancing in relation to awards, but the pendulum has swung too far against plaintiffs.”
Like other lawyers, O'Connell has noted a recent ruling by the High Court's Mr Justice Garrett Simons which slashed a proposed €13,000 legal costs bill, part of an "all-in" €30,000 settlement for a child who hurt his hand playing football, to €6,788.
Peter Boland of the Alliance for Insurance Reform says it remains to be seen whether the guidelines will substantially cut the number of personal injury cases, and whether insurers will pass on any benefit to their policy-holders.
While welcoming the fall in PIAB awards since the guidelines became operational, he is concerned about what happens when awards are rejected and cases go to litigation, whether insurers are “topping up” PIAB awards to achieve pre-hearing settlements, and the scale of legal fees attached.
“When PIAB awards are accepted, the legal costs are generally a few hundred euro. Our concern is about the cases which go to litigation, the vast majority of which settle before getting to the door of the court,” he says. “We have no data on the deals between insurers and lawyers. Our primary concern is that, if insurers are topping up PIAB awards, even by a couple of thousand, that’s to the benefit of lawyers as they get all their fees paid; there’s no benefit to claimants or society.”
‘Vested interest’
Lawyers have a “vested interest” in getting claims to the litigation stage, as the NCID data shows that legal costs in litigated settlements are multiples of the legal costs when settlements are reached via PIAB or directly between claimants and insurers, says Boland.
Motor insurance premiums have fallen in recent years and motorists should be seeing a reduction this year in premium costs, he says. “That’s what happens with reforms and competition.”
However, public and employers’ liability cover has risen by an average 16 per cent since the changes, Boland says, adding that the lack of competition in this area means that insurers are under less pressure to cut charges.
Assuming the guidelines withstand constitutional challenge, and are generally adhered to by the courts, Boland says the Government must push harder for insurance reform, including encouraging greater competition.
We will play our part, we will stand by the guidelines and we will appeal where there is no basis for a departure from them
In March, Tánaiste Leo Varadkar said the focus this year will be on legislative reform in the areas of employers' liability, PIAB and competition enforcement, and insurance costs will continue to be monitored to ensure reforms are reflected in premium reductions.
Insurance Ireland CEO Moyagh Murdock says insurers are applying PIAB award reductions when making direct settlement offers, but they have seen a fall in claimant acceptances of those offers similar to the fall in claimant acceptances of PIAB awards.
“We will play our part, we will stand by the guidelines and we will appeal where there is no basis for a departure from them,” she says, adding that perhaps claimants are “getting a bit of a surprise” by the fall in awards.
She is concerned some claims are not being advanced speedily, perhaps due to a wait-and-see approach as to how the courts address claims under the guidelines and/or the outcome of the challenges to the guidelines.
Delays in finalising claims add to costs and may lead to damages for soft tissue injuries creeping up again as claimants whose cases are not heard for two to three years may be less likely to say their injury has resolved within six months, says Murdock.
When cases are litigated, the award differential is about 6 per cent, but legal costs are often 20 times higher, she says. The process should be “streamlined” and claimants “reassured they will be treated fairly under the guidelines”.
Motor insurance bills have shown a "consistent reduction" over the last few years. Central Statistics Office data puts the falls at 8 per cent from December 2020 to October 2021, though public and employers' liability is more complex because of the number of unmeritorious claims, she says.
Insurers are not ruling out reductions in those areas but want Government to amend the duty of care on the public liability side and effect change to the Occupiers’ Liability Act. “Insurers are very committed to passing on savings derived from the reform agenda,” says Murdock.
