The National Competitiveness Council (NCC) has said key actions must be taken to reduce costs in the Irish liability insurance market, including bringing personal injury award levels in line with other jurisdictions.
The council also said that steps must be taken to ensure consistency in award levels and reduce settlement costs, if prices are to come down.
“To tackle the high cost of insurance, it is crucial to know what is driving costs upwards, and all signs point towards personal injury settlement costs,” said the council’s chair, Dr Frances Ruane.
“This includes the award levels, and the costs of settling disputes.”
Publishing its latest bulletin on insurance costs, the NCC said it believes now is the right time to re-examine the issue of high insurance costs.
It also said the importance of competitive insurance costs for Irish enterprises, particularly small and medium sized firms, needs to be re-emphasised.
The council said insurance markets move through repeating cycles, with periods where cover is readily available at reasonable prices and others where costs are high and coverage limited.
It said the evidence currently available indicates that the personal and employers’ liability insurance markets here are in the so-called ‘hard market’ phase of high prices and low availability and have been since 2012.
The competitiveness watchdog said key actions, such as bringing personal injury award levels in line with other jurisdictions, ensuring award levels are consistent and reducing settlement costs are now needed in order to lower costs and increase availability.
The Judicial Council is currently considering new draft guidelines that could recalibrate the current high level of awards granted in the courts for minor personal injuries.
The NCC said it hopes that adoption of the guidelines will “fully address this issue and insurance costs will gradually start to fall”.
But it also stated that if this fails to reduce costs, then further action like the Oireachtas setting award guideline levels may have to be considered.
“Ultimately, for insurance costs to come down, personal injury settlement levels need to be aligned with those in similar countries, and they need to be consistent,” Dr Ruane said.
The council also said that measures to enhance and reform the role of the Personal Injuries Assessment Board are required and competition in the market needs to be promoted.
It is not the first occasion that the council has examined the issue of insurance costs, because it said there is compelling evidence that the high price of employers’ liability and public liability insurance undermines the competitiveness of Irish businesses, especially small and medium sized firms.