Should Ireland Follow the UK in Instigating Whiplash Reforms?

Here in Ireland, the average PIAB award for a whiplash case is €18,581 in general damages (pain and suffering), plus €1,456 in special damages (medical expenses, loss of earnings, and other costs), making whiplash compensation payments around 4.4 times higher than the average of our neighbours over in the UK.

Whiplash compensation is a controversial subject in Ireland, where the allure of what are perceived as large pay-outs has led to allegations of a “compensation culture” that has caused insurance premiums to rocket upwards. It is interesting to note however, that these allegations have tended to come from the insurance industry who have so far been unable to produce any evidence of such a culture or its impact on premiums.

Irish Prime Minister, Taoiseach, Leo Varadkar, is considering new proposals based on allegations that some claimants exaggerate the pain and suffering involved in their injury. Again, such allegations have tended to come from the insurance industry and business interests without hard evidence to support these claims. There has certainly been a rise in insurance premiums particularly by reference to the UK market. Whether this is driven by the behaviour of some claimants or by insurance industry profit taking is unclear. The only party with the facts to confirm or deny these claims is the insurance industry and, so far, they have not disclosed it.

Whatever the merits of the claims being made by those seeking to reduce whiplash claims, they are certainly proving influential at the highest levels in government in Ireland: “We all know that about 90% of people, once they receive payment, no longer need to attend treatment for their whiplash, it seems that the cure for whiplash is compensation payment in Ireland and not any medical treatment”, says Varadkar.

One of the main difficulties with whiplash claims is that they are incredibly difficult to disprove. So, if two vehicles collide but with only very minimal damage to both, insurers will often settle out of court for a lower fee of, say, €10,000, rather than risk losing in court and paying six times that amount.

The cost of insurance in Ireland is 48% higher than at its lowest point over a decade ago and significantly higher than in the UK. What is not clear is what is driving this increase and differential. The insurance industry claim that it is due to much higher reinsurance spending rather than higher claim costs has been the biggest single factor affecting firms’ bottom lines in recent years. An alternative explanation is the possibility of excessive profit taking by insurers in the small and relatively captive Irish market. The case remains to be proven either way.

The cost of insurance in Ireland is 48% higher than at its lowest point over a decade ago and significantly higher than in the UK.

Should Ireland Follow Suit With the UK?

The Ministry of Justice in the UK has been leading reforms to The Civil Liability Act 2018. The legislative changes include:

1. a legal definition of what constitutes a whiplash injury,
2. a tariff of fixed compensation for whiplash injuries of up to two years,
3. a ban on offering to or settling whiplash claims without medical evidence.

Another significant change will be the introduction of a ‘small claims track’ limit to £5,000. This will mean that, if a claimant hires a legal representative to make a personal injury claim below £5,000, their legal fees will not be recoverable from the compensating insurer.

A Cost of Insurance Working Group on the Cost of Motor Insurance in Ireland reported in 2017 and its recommendations included the establishment of a Personal Injuries Commission to consider the questions of levels of compensation in Ireland.

Ireland is a Republic with a written constitution that guarantees separation of powers between the government executive and the courts and, in addition, guarantees the fundamental rights of its citizens. Therefore, while the government can legislate in this area, it is one that is likely to be fraught with constitutional difficulty and if a route can be found that successfully avoids this it is likely to be chosen.

Ireland also has a pre-litigation non-contentious system of personal injuries assessment administered by the Personal Injuries Assessment Board which publishes a Book of Quantum suggesting baselines and ranges for personal injury compensation.

The in which it carried out an extensive international review of alternative systems of compensation for personal injuries.

The Irish Government subsequently passed the Judicial Council Act, 2019 which enables the judiciary to establish committees to review matters such a personal injury claims and set guidelines for the judiciary etc.

The Government cannot impose on the judiciary what it might do in this area, but by providing the mechanisms it has enabled judge lead reform in the first instance. Irish Chief Justice, Mr Justice Frank Clarke, established The Personal Injuries Guidance Committee of the Judicial Council in late 2019 and it is now considering suitable levels of general damages to supersede those in the Book of Quantum. The Personal Injuries Guidance Committee is Chaired by Supreme Court judge Ms Justice Mary Irvine and is comprised of judges from all level in the Irish judiciary. Ms Justice Irvine’s statement that “modest injuries should attract moderate damages” is often quoted. The Committee is completely independent in the exercise of the its statutory function and its findings are currently awaited.