Transparency about where money goes can help get a grip on insurance costs
The plan sets out a structured schedule of actions and is built around six core themes, which reflect a comprehensive approach to reform. The emphasis on legal reform, innovation, and affordability aligns well with the challenges facing the sector. It is also encouraging to see 10 priority actions, which target the most pressing issues.
The plan's emphasis on enhancing the efficiency, authority, and impact of the Injuries Resolution Board (IRB) is welcomed. Action 3 is a priority reform aimed at reducing litigation, lowering costs, and improving the speed of claims resolution. Preventing claimants from modifying their claims post IRB and introducing legal costs for its claims are pragmatic steps that will encourage early resolution and discourage unnecessary litigation and delays. This will promote consistency in how injuries are assessed as currently, the IRB and the court are effectively assessing different cases due to the introduction of additional reports for those claims going into court. This has prevented the IRB from reaching its full potential.
Another positive step is the commitment to report on accepted IRB assessments, rather than just those issued, half of which are typically rejected. This will enhance transparency and support future improvements.
Action 4 proposes benchmarking Irish injury awards against those in the UK and other European countries. This raises questions, as similar analysis was believed to have informed the 2021 Personal Injuries Guidelines. Insurers are now compiling data to support this work. While the focus is currently on the UK, it's vital that the scope includes European jurisdictions with less prevalent compensation cultures. These systems offer valuable insights into achieving fair compensation while maintaining market sustainability.
It's been over 20 years since the Troika identified Ireland's high legal costs as a barrier to competitiveness. Yet legal fees remain a major driver of insurance premiums. The development of legal cost scales under Action 6 is long overdue, having first been proposed in the 2020 Action Plan. Although scoping was completed in June 2022, further progress was deferred pending sufficient data on the impact of the Judicial Council's Personal Injuries Guidelines, likely in the hope that reduced awards and litigation would lessen the need for further reform.
However, legal costs remain a persistent issue. According to the 2024 National Claims Information Database (NCID) mid-year report, motor injury claims under €100,000 that settled through litigation saw legal costs rise on average to €18,859, compared to just €836 through the IRB, some 22 times higher. These costs now represent 94pc of the average compensation award and 48pc of the total claim spend in the litigation channel. While average compensation has fallen by 17pc, the total cost per claim has only decreased by 1.6pc, meaning the benefit of lower awards has been largely offset by rising legal fees.
Similarly, tougher penalties and enhanced intelligence sharing on fraud in Action 12 would help protect honest policyholders and restore trust in the system. Further investment in the Garda Fraud Bureau will be key to ensuring the success of this initiative.
Action 21 proposes amendments to the Judicial Council Act that could extend the review period for the guidelines from three to seven years. The current review cycle is too short to allow reforms to take root, contributing to instability and unpredictability, which are precisely the issues the guidelines are meant to address. These changes, along with mandated consultation with the IRB in the review process and clearer Oireachtas oversight, will help ensure that the guidelines remain relevant and balanced.
While proposals such as the introduction of pre-action protocols and case management in personal injury claims have not been prioritised in either the 2020 or 2025 reform plans, they have the potential to deliver significant impact. Pre-action protocols encourage early resolution of claims and reduce the need for litigation. Where court action is necessary, structured case management would ensure claims are handled efficiently. Together, these measures could help reduce legal costs, speed up outcomes, and ease the burden on all parties involved.
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Insurance reform is not a one-time fix. It's an ongoing process that requires persistence, adaptability, and more importantly, collaboration between government, industry, legal professionals, and consumers. The new Action Plan offers a strong foundation. It reflects a shared commitment to change and a recognition that lasting progress only happens when insurers, policymakers, legal professionals, and consumers work together.
Lisa Dennehy is chief claims officer at Aviva Insurance Ireland DAC
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