Insurance companies have been warned not to undermine the new personal injuries guidelines by settling claims for higher amounts.
Minister of State at the Department of Finance Seán Fleming told insurers to abide by the compensation guidelines and pass on the savings to consumers. The guidelines came into force in April after being approved by a vote of the Judicial Council.
Under the plan, minor whiplash injuries, which account for the bulk of claims, have been cut by up to 50pc.
However, there is a question mark over whether insurers will actually implement the new lower guideline award levels in cases they settle themselves.
Around half of claims are settled directly by insurers, with the rest settled by the Personal Injuries Assessment Board (PIAB), or through the courts.
Mr Fleming told an Insurance Ireland fraud conference: “It is vital insurers do not undermine guidelines by settling claims at higher amounts for the sake of speed or ease.”
It comes after a Central Bank report showed motor insurance companies made huge profits during the first year of the pandemic.
A spokesperson for Insurance Ireland insisted its members were committed to adhering to the new personal injuries guidelines.
They added that insurance companies accepted 90pc of settlement decisions made by the PIAB since the new guidelines came in. But depending on the kind of claim, less than half were accepted by claimants.
“This combination leads to a lot of uncertainty to the detriment of the insurer and all insured businesses and individuals,” the body said.