Injuries Resolution Board proposes rethink on whether it can sanction the paying of legal fees
Such a move would represent a massive U-turn because the board was set up 20 years ago with the express intention of avoiding costly legal fees.
Under current legislation, the board can sanction the paying of legal fees only in very limited circumstances.
In a submission to the Department of Finance, as part of the public consultation on a new Action Plan For Insurance Reform, the Injuries Resolution Board says that 95pc of claimants using its services are represented by a solicitor. The fact that it does not pay legal fees means people often reject its settlement offers, the submission states.
Close to half of the settlement offers made by the board are rejected. However, legal fees often end up being paid by insurers' lawyers after the claim leaves the Injuries Resolution Board, the submission says.
'For a large proportion of claims that leave our system, legal fees are incurred thereafter and paid,' the submission said.
The Injuries Resolution Board, formerly known as the Personal Injuries Assessment Board, is the state body allowing people to resolve personal injury claims without having to go to court. It deals with road traffic, public liability and workplace personal injury claims.
Most injury claims have to go to it before going to court, and can go to court only if an assessment by the board is rejected by either side. The longer a claim lasted before being resolved, the higher the legal fees, the board said.
The submission said that many insurers offered to pay legal fees where the claimant's solicitor agreed to accept the award initially recommended by the Injuries Board after the claim had left the Injuries Board system.
This meant that the board should consider paying legal fees. The submission states: 'In the interests of resolving claims at an earlier juncture for all concerned, 20 years after the establishment of the board, the question of legal fees needs to be considered.'
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Such a move may undercut lawyers who have a financial interest in getting cases out of the Injuries Board to generate fees for themselves.
The Injuries Board calls for consideration for a 'scale of fees' that it would pay. It understood that typical legal fees would be between €1,000 and €2,000, reflecting that fact that Injuries Board assessments are resolved much faster than if they are litigated.
A separate submission from the Competition and Consumer Protection Commission says that resolving personal injury claims through the Injuries Resolution Board is faster than litigation and has lower legal costs.
Central Bank research has found that settlement costs for claims of less than €150,000 are €23,000 for both cases settled by the Injuries Board and for those involving litigation. For cases taken through the Injuries Board, the legal costs are €1,000. But if they involved litigation, the legal costs rise to €23,000.
More than 70pc of claims are settled by litigation, representing 89pc of injury settlement costs, the Central Bank found.
And legal costs have risen despite the Personal Injuries Guidelines, used by both the courts and the Injuries Board, having dropped by up to 40pc in the past few years. And judges have controversially recommended that award guideline levels rise by 16.7pc, which the Government has yet to endorse.
The Competition and Consumer Protection Commission submission calls for more data on legal costs.
Fast-food giant Supermac's, whose owner Pat McDonagh has long campaigned for insurance reform, submitted that there should be insurance pricing transparency legislation.
The company wants mandatory disclosure by insurers of the key components contributing to premium calculations. It also wants insurers to be forced to justify 'significant year-on-year premium increases, with oversight by a regulatory body'.
The Alliance for Insurance Reform submitted that broker charges account for an increasing proportion of the overall cost of insurance and that brokerage firms are being sold for huge multiples.
'Many brokers now charge a fee based on a percentage of the cost of the policy. This is inherently unfair to consumers as the 'worse' the premium they secure for them, the more money they will make. We believe this needs further examination,' the Alliance stated.
Representative group for small businesses, ISME, said there is 'no moral hazard for fraudulent claims'.
The Convenience Stores and Newsagents Association (CSNA) called for insurance companies to 'devote more time and resources to investigating claims rather than paying up due to a cost-benefit analysis'.
Some 70 submissions were made, but the Law Society, which represents solicitors, and the Bar Council, which represents barristers, do not appear to have made submissions.
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