Donal O’Donovan – Independent.ie
The total legal bill for settling motor insurance claims rose to €112m in 2018, according to the Central Bank.
The pace of growth in legal costs was twice as rapid as the increase in the number of cases being taken and contrasts with a sharp fall in other costs associated with taking such cases – including doctors’ bills.
The high cost of motor insurance has sparked an at times bitter debate about who is at fault.
The rising profits among insurance companies has been seized on by some solicitors, while insurers blame fraudulent and exaggerated claims as well as high levels of injury payouts and legal and other costs.
The latest data shows combined legal costs associated with motor insurance injury claims litigated through the courts rose from €92m in 2015 to more than €112m in 2018, a 22pc increase.
That’s according to the latest detailed data provided by the Central Bank in an annex to its earlier National Claims report published back in December.
The number of cases being litigated before the courts increased by 11pc in the same period, and other costs associated with taking a legal action – including medical costs – plunged by 70pc.
The rise in legal bills is particularly stark given the similar outcomes for claimants in injuries cases taken under the lower cost Personal Injuries Assessment Board (PIAB).
The data detailing rising legal costs between 2015 and 2018 is in contrast to case-by-case experience of declining legal costs for comparable cases, according to solicitor Stuart Gilhooly, a personal injury specialist and former president of the Law Society.
It may reflect the fact a greater of number of cases are proceeding all the way to full trial at the High Court. He said it was his “absolute certainty” that legal costs are falling for similar cases compared to what they had been in the past.
The Central Bank data shows that the total costs – including legal bills and compensation – of injuries claims on motor insurance was €345m in 2018 for the 4,714 cases taken via the courts compared to a total cost of €158m for the 9,425 cases settled outside of the courts.
In the cohort of cases where the total cost of settlement was less than €100,000, average compensation paid to an injured person was €22,660 in cases taken through PIAB, and €24,208 in cases taken through the courts in 2018.
However, the average legal cost of the PIAB cases was €885, compared to €15,139 on average for cases taken through the courts.
That means the total average costs of a PIAB case was €24,684 versus legal costs of €40,380 for cases that went to court – even though the average compensation was roughly the same.
The data also shows that most litigated claims take far longer to settle than those that go through PIAB – doubtless a factor driving higher costs.
It takes an average of more than four years for a case to conclude if it is litigated. Those settled by PIAB take half this time.
Average settlements for all litigated cases are much higher, at €45,000, with legal costs averaging €23,000 in these cases, the Central Bank data obtained from motor insurers shows.
Legal costs in cases settled directly with insurers, which typically involve much smaller compensation, were much lower than litigated cases but significantly higher than for cases taken via PIAB.
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