A controversial proposed 16.7% increase in personal injury awards will not go ahead.
It is understood Justice Minister Jim O’Callaghan – whose brief the guidelines fall under – will inform the Cabinet Sub-Committee on Insurance Reform this afternoon that he will not bring a resolution seeking their approval by the Oireachtas.
As a result, there will be no necessity to vote the proposed increase down, since the legislation only triggers the guidelines if there is a vote of approval.
This essentially means the increase, which was proposed by the Judicial Council, will not happen.
The personal injuries guidelines are used by both the courts and Injuries Resolution Board (IRB) to determine compensation levels for personal-injury claims.
The near 17% proposed increase would have seen a significant jump in the value of such awards.
Both insurers and consumer groups had warned that if the increase were approved it would have led to a rise in insurance premiums for consumers and businesses.
While yesterday the National Competitiveness and Productivity Council also advised the Government to reconsider the increase.
Minister O’Callaghan will still bring a Memorandum to Cabinet next week on the proposed increase, but – as he is not expected to bring a resolution seeking their approval – they won’t come into effect.
However, the minister is expected to convey his concerns regarding the impact not increasing the guidelines could have on the IRB.
It is understood he believes there is a risk the judiciary could start making increased awards outside of the guidelines, because the Injuries Board will not be permitted to increase its awards, as it is obliged to use the guidelines that are in place.
His concern is that this combination could drive claimants back to the courts, with a consequent increase in legal costs that would make the claims process more expensive.
This comes as the IRB said €76 million was saved in “avoided costs” by it last year, due to claims not proceeding to litigation.
Its 2024 Annual Report also says that insurers and respondents in 70% of claims submitted to the IRB consented to it resolving them.
The State body was establised in 2004 to help improve the process of resolving personal injuries claims, and to offer an alternative to what it calls “unnecessary litigation”.
A win for insurance reform – Insurance Ireland
Insurance Ireland said the decision by Government is “a win for the insurance reform agenda, and ultimately, consumers”.
Moyagh Murdock of Insurance Ireland said: “Today’s decision is a strong endorsement of the Government’s commitment to meaningful insurance reform. It protects the progress made in recent years and ensures that consumers continue to benefit from a more stable and affordable insurance environment.
“A 16.7% increase in awards would have undermined this progress, driving up costs and potentially deterring new market entrants.
“We must remember that the Personal Injury Guidelines were introduced to address the historically high cost of claims in Ireland compared to our European neighbours.
“They were designed to make insurance more accessible and affordable for individuals, families, and businesses alike.”
She added that: “Looking ahead, we would propose that the process for reviewing these Guidelines includes benchmarking and empirical evidence. A transparent, inclusive mechanism that allows for stakeholder engagement and benchmarking against EU and UK standards will be essential to maintaining a fair and sustainable claims environment.”
Govt decision to benefit policyholders
The Alliance for Insurance Reform has welcomed the decision.
In a statement it said: “Last year the Judicial Council performed an independent assessment of the personal injuries guidelines and made recommendations to the Minister for Justice in accordance with the relevant legislation in January 2025.
“However, the decision as to whether these recommendations are accepted is a matter for the legislature, which must be cognisant of a myriad of other policy considerations; including rising premiums, existing award levels that are significantly higher than in other jurisdictions and the potentially adverse impact upward reviews every three years will have on the effective functioning of the Injuries Resolution Board.
“We hope a satisfactory revised process will be introduced to ensure the system of administering personal injury awards can deliver fair settlements to claimants and affordable insurance for policyholders.
“The Government has made this decision not for the benefit of insurance companies but for policyholders. In terms of liability insurance for businesses, sports, community and voluntary groups we have seen substantial decreases in the volume of claims and the size of awards.
“It is unconscionable that insurers have chosen not to pass on savings to customers, choosing instead to prioritise profits over their policyholders. All appropriate pressure must be brought to bear on them by our elected representatives and we look forward to seeing how the next action plan for insurance reform will address this key issue.”
Insurance reform must be ‘key priority’
Retail Excellence Ireland also welcomed the Government’s decision.
The retail industry representative body said if the proposed increase had gone ahead, it would have represented “a regressive step.”
The REI said it would have led to “even bigger premiums for businesses and customers, at a time when the cost of doing business is soaring.”
Retail Excellence Ireland said: “Wide-scale insurance reform must be a key priority, as the current model is posing significant problems for businesses.”
“It is promising to note that the latest Programme for Government has committed to the implementation of a new Action Plan for Insurance Reform which would have enormous financial ramifications for businesses across Ireland.”
The Licensed Vintners Association, which represents Dublin publicans, has described the move not to press ahead with the increase as “a sensible decision” given the ongoing cost pressures relating to insurance.
In a post on social media, the LVA expressed its thanks “to all the businesses, and especially our members, who have engaged with Government and public reps on this issue”.
