Motor insurance prices ‘could rise 30%’

Motor insurance premiums will soar by 30% if the Government pushes ahead with increasing award limits of district and circuit courts, according to the Irish Brokers Association (IBA).

The changes will encourage more people to go to court rather than settle their case, the IBA claims, resulting in a repeat of what happened in the 1980s when young drivers were virtually uninsurable.

The umbrella body for Irish insurers wants the Government to rethink the Courts Bill which is due to be debated in the Dáil today. The bill — which was introduced in the Senate last week — will increase the financial ceiling on cases that can now be dealt with by both courts.

The IBA argues that a rise in premiums is an unintended consequence of increasing the limits of personal injury claims in the district court from €6,384 to €15,000.

In the circuit court, the upper limit will go from €38,000 to €60,000 for personal injury claims, and €75,000 for other claims.

According to Ciarán Phelan, the body’s CEO, the Seanad passed the legislation without considering the implications of insurance costs.

“We are urging the Government to look closely at the repercussions for the insurance industry, and ultimately the consumer, if these changes are to be introduced,” he said.

“To date the Government have followed through on their aim of reducing costs for consumers by investment in road safety and by setting up the personal injury boards — both these have been progressive steps but this new legislation is regressive and smacks of the 80s where the court awards and legal costs impacted on the cost of car insurance particularly for young drivers who were basically uninsurable at that point in time.

“Up until now only a small percentage of cases went as far as the High Court because this is a very costly option. So because the compensation capabilities of the district and circuit courts were limited many cases were settled outside of court. These changes — if passed — will see thousands more cases reach the courts this year… which obviously will increase the legal costs for insurers which will in turn be passed onto consumers. There will be no getting around this”.

The IBA supports the Injuries Board’s view that a preferable solution would be to await the implementation of the Legal Services Regulation Bill 2011 which is due for Oireachtas debate later this month.

“When litigation cost control measures are proven to be successful then, and only then, is it appropriate to review workloads of personal injury in the various courts,” said Mr Phelan.

“To approach matters in the reverse order invites the possibility that litigation levels overall will double which would swamp all of the courts and cause severe staffing difficulties for insurers’ claims departments.”

Publishing the bill, Alan Shatter, the justice minister, argued the changes would lead to a reduction in legal costs, with fewer High Court cases and, consequently, fewer Supreme Court appeals.


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