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03 November 2020

Central Bank Report

PIAB delivery costs much cheaper

Central Bank report on Motor Insurance shows PIAB delivery cost is more than 15 times cheaper than litigation to settle claims

  • On average the report found that the legal costs associated with settling claims through litigation were 67% of the actual compensation amount, adding substantially to the overall cost of the claim, bringing the total average claim cost through litigation to over €40,000. This compares to legal costs under PIAB of less than 4% of the compensation amount, bringing the total average claim cost to less than €24,000. A difference of over €16,000 per claim.

  • The Report found there were marginal differences in the actual award values between claims settled via litigation and PIAB over the period 2015-2019, with awards under €100k averaging at €23,572, and €22,319 respectively

  • The time taken to resolve claims differed significantly with claims in 2019 under the litigation model taking on average 4.7 years to settle and claims settled with PIAB in 2.9 years

Tuesday, 3 November, 2020 – The Personal Injuries Assessment Board (PIAB) has welcomed the publication of the second National Claims Information Database report by the Central Bank of Ireland today. The Central Bank report covers the private motor insurance sector in 2019. 

The report gives valuable insight into personal injury awards across the sector and as this is the second report it allows us to start to see trends in relation to issues such as claims costs and premiums and the ways claims are resolved. From a PIAB perspective the report shows the significant difference in both time and cost that there is between using PIAB’s services and going down litigation pathways to resolve claims.

PIAB’s Chief Executive, Rosalind Carroll, commented:  “This important research by the Central Bank shows the significant cost difference between the different channels used to resolve injury claims. The legal costs involved in going to litigation on claims for up to €100,000 are shown in the report to be more than 15 times greater than through settling claims through PIAB.

The report also shows significant differences in the time taken to resolve claims where they cannot be agreed directly between claimants and respondents. For claims settled through our services in PIAB, the average time from date of accident to award was 2.9 years, whereas if settled via ligation it took 4.7 years. Time is something that really matters to all parties to a claim; it is important for the injured party in order to support them in recovering  and hopefully moving on from injuries, and it is important from the insured parties perspective as having a claim hanging over them can affect both their access to and pricing of insurance.”

 “One of the significant findings from the report again this year, is that the size of awards received through the litigation and PIAB models are broadly similar, yet litigation takes far longer, and adds considerable cost. However, disappointingly the percentage of cases settled though PIAB has decreased over the last number of years. We need to find ways to address this and ensure the services of PIAB are utilised more so that we can be of more value, to the benefit of injured parties, policy-holders and wider society,  who ultimately bear the burden of additional costs,” said the PIAB Chief Executive.

The cost of claims and insurance, including public and employer liability, is a very serious challenge for wide sections of Irish society as the cost and availability of insurance can seriously affect small and medium-sized businesses, as well as the community, childcare and sports sectors, and individual households. The impact of Covid will only make these costs even more challenging for everyone. The Report showed a decrease in premiums of 4% this year, and there is an opportunity to work together to do more.”