Independent report leaves Alliance for Insurance Reform disappointed
Legal costs contribute directly to the premiums of businesses, says Sheridan
The long-awaited independent report on options to control litigation costs has finally been published by the Department of Justice. Those who were seeking “more radical” recommendations to help address enduringly high and escalating legal fees might well feel disappointed.
The Indecon report’s preferred option is for non-binding guidelines with “significantly enhanced transparency measures”.
The Alliance is concerned that non-binding guidelines will simply not be robust enough to lead to any meaningful change in current practise. The positive impact intended by the proposed “transparency measures” may well have merit but they do not fill the Alliance with confidence that any meaningful curtailment in excessive legal fees will happen. Concerns also exist about how long it would take to deliver these measures.
Notwithstanding the report’s important finding of “major gaps” in information regarding legal fees, the
National Claims Information Database (NCID) is able to provide significant data about current legal fees in the context of personal injury cases. The recently published NCID report on motor premiums by the Central Bank found that the average award for litigated cases where claims were under €100,000 was €22,856 in 2022, with legal expenses adding €17,872 to the average total cost. The average for a PIAB settlement was €15,500, and the average related legal costs adding €755 (5%). It also noted that 77% of claims are dealt with in the litigation channel.
As Alliance Board member and owner of Kidspace play centres in Rathfarnham and Rathcoole, Tracy Sheridan, said: “Such costs contribute directly to the premiums of businesses, sports and cultural organisations as well as charities and voluntary groups right across the country, particularly in the area of public liability cover.”
A few years ago, former president of the High Court Justice Peter Kelly chaired a sub-group on litigation costs as part of a much larger piece of work he undertook on the Administration of Civil Justice. Justice Kelly was part of the minority group that called for greater action to be taken to address spiraling legal costs. In his letter to the Minister, he advised that, “More radical measures than the introduction of guidelines will be needed to achieve the desired results.”
Sheridan echoed this view again: “Non-binding guidelines are a non-starter if we really are serious about addressing legal costs. It is an access to justice issue as well as a crippling expense for businesses and others in terms of their insurance premiums. Last month I read Minister MacNeill say, “what we are really going after this year is the cost of litigation” and I hope she, the Minister for Justice and others in government will deliver on this promise.”
The Alliance for Insurance Reform brings together 46 civic and business organisations from across Ireland, representing over 55,000 members, in highlighting the negative impact of persistently high premiums and calling for real reforms that will quickly reduce liability and motor insurance premiums to affordable levels and keep them that way
