Tánaiste expects 'recognisble reduction' but not 50% cut in insurance premiums

Tanaiste Leo Varadkar said he expects insurance premiums to be reduced quite soon on foot of the Personal Injuries Assessment Board report’s findings.

Pressure is mounting on insurance companies to speedily reduce premiums after the Cabinet was told the average award has fallen by 50%.

Ministers were given the details of a report from the Personal Injuries Assessment Board by Tánaiste Leo Varadkar during the Cabinet meeting at Dublin Castle on this morning.

Mr Varadkar has said he expects insurance premiums to be reduced quite soon on foot of the report’s findings. However, he warned that a 50% reduction in payouts does not necessarily mean a 50% drop in premiums, as many other factors contribute to those. He did say there will be "a recognisable reduction" in the cost of those premiums.

The information presented to Cabinet is contained in the first implementation report of the Action Plan for Insurance Reform. This plan is seeking to make the insurance industry more competitive and consumer-friendly.

The report showed that new Personal Injuries Guidelines are having a downward impact on awards granted by the courts, with the average award decreasing by approximately 50%.

As a result, 78% of PIAB awards are now €15,000 or less compared to 30% in 2020.

Speaking after Cabinet, Mr Varadkar said that he anticipates seeing the cost of premiums being reduced quite soon, meaning over the next six months.

He said further reforms of the PIAB will help to reduce legal costs and more competition will also help to reduce premiums.

Mr Varadkar also said the Action Plan for Insurance Reform aims to make insurance more available for people and to reduce the cost of insurance for motorists, homeowners, businesses, community, and sporting groups.

Cabinet heard that 34 of 66 actions have been implemented and 20 more will be completed in the coming six months.

The establishment of a new office to promote competition in the industry and the introduction of a new law on perjury to help crack down on fraudulent and exaggerated claims are among the measures awaiting to be introduced.

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Mr Varadkar said plans are in place to introduce new powers for the Competition and Consumer Commission, examine the report from the Central Bank on dual pricing, and change the law on occupiers' liability.

Earlier, Peter Boland from the Alliance for Insurance Reform told RTÉ Radio that while he welcomes the report, the real test is what happens next. 

He said the recovery of Irish society will not happen at the pace at which it should happen unless we get insurance sorted. Ireland is "completely out of line" with the rest of Europe in terms of insurance costs, Mr Boland said.

Mr Varadkar said it is early days, but there are signs that personal injury awards are falling. “This is as a direct result of the new Personal Injuries Guidelines. We expect this dramatic drop to be reflected in premiums over the next year and we will be following this up with insurance companies,” he said.