Insurers claim spike in PIAB award rejections limit premium cuts

Insurance executives have told the Oireachtas finance committee that while Personal Injury Assessment Board (PIAB) awards have fallen dramatically as a result of new judicial guidelines, motorists are not receiving the full benefit because of a spike in rejections in the State body’s calculations. 

PIAB reported in October that the value of awards assessed by it dropped by an average of 40 per cent in the first five-month period after the guidelines were introduced in April. 

However, the rejection rate of its awards had risen to almost 60 per cent from a traditional level of 50 per cent – leading to a greater percentage of people going the litigation route. 

Premiums

The chief executives of FBD Group and RSA Insurance Ireland told the committee that they had reduced their motor rates by an average of 10 per cent this year, while the head of AIG Ireland said his company had lowered rates by 5.1 per cent. 

Average car premiums had fallen by 16 per cent between late 2017 and the end of 2020, following a 62 per cent surge over the previous five years as the industry scrambled to recover from a period of massive losses. 

“Although average awards made by PIAB have fallen significantly since April, it is worth noting that there has been an increase in the rejection rate. This means more cases going to court and greater uncertainty around the ultimate cost of claims,” said AIG Ireland general manager Aidan Connaughton. 

“It is our view that where an injury is not catastrophic and if the PIAB award is not accepted within three months, there should be binding arbitration either to agree that the award was fair or make a different award. This would reduce the burden on the courts and eliminate unnecessary delays and legal fees which inflate costs.”

RSA Ireland chief executive Kevin Thornton said that his company is also monitoring how the PIAB awards rejection rate is playing out as it continues to weigh its rates. 

Frustration

However, committee members Peader Tóibin, leader of Aontú, and Fianna Fáil TD Jim O’Callaghan, expressed frustration during the hearing at the low rate of premium reductions by the industry since the guidelines were adopted in April. 

The high rate of PIAB award rejections comes as a series of cases challenging the constitutionality of laws underpinning the judge-approved guidelines have been launched in recent months. 

The applicants’ claims include that the application of the guidelines breaches the separation of powers between the legislature and the judiciary and their constitutional rights to bodily integrity, property and equality. 

It is also claimed the relevant laws are incompatible with the fair trial right provisions of the European Convention on Human Rights.

Because almost all judges participated in the Judicial Council’s 83/63 vote on the guidelines last March, the challenges are expected to be heard by a judge or judges from the small number of recently appointed High Court judges not involved in the vote.

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