Ireland’s “Compo Culture” – An attractive forum for Personal Injury Claims

Ireland is fast becoming one of the most attractive forums for personal injury claims due to the country’s high compensation pay-outs and liberal standards of proof. Compensation awards for personal injury claims in Ireland continue to soar with many awards out of kilter with other jurisdictions. For example the average whiplash award in Ireland is reputedly three time greater than in the UK.

An increase of the award limits in the courts from €6,300 to €15,000 in the District Courts and €38,000 to €75,000 in the circuit courts explains in part the increase in higher awards and consequently higher costs awards. There was a 48% increase in the average Circuit Court Award from €11,941 in 2013 to €17,722 in 2016.[1]

With the prospect of higher awards, it appears less scrupulous individuals are cashing in on this Irish compo culture. The Motor Insurers’ Bureau of Ireland (MIBI), a body set up to compensate victims of road crashes caused by uninsured and unidentified drivers recently warned that international fraudsters are staging crashes to take advantage of the Irish compo culture. In alarming statistics the MIBI has reported that one out of eight claims handled by the MIBI is considered suspicious. Staged collisions, gross exaggeration of injuries and falsification of crashes are some of the methods utilised to exploit the system. Whilst the exploits of Uncle Albert a.k.a. “The Ferret” (Albert Gladstone Trotter) and Grandad in Only Fools and Horse of Uncle Albert falling down at least fifteen cellars and bringing a claim whenever they were short of money made for entertaining television viewing, the reality is not so amusing - this dishonesty hits the pockets of all through increased insurance premiums.

Recent market research conducted by Amárach, commissioned by Insurance Ireland, found that 50% of those surveyed believed there were few downsides to making a false or exaggerated claim. It is estimated that fraudulent activity costs the general insurance industry €200 million per year.

Ireland is the only common law jurisdiction where perjury is not a statutory offence. Currently perjury in Ireland is a common law offence attracting severe penalties of up to 10 years in prison or €100,000 in fines. It has however notoriously difficult to prosecute people intentionally lying and the number of prosecutions appear to be relatively few.

A recent submission was made by the business representative group ISME to the Department of Justice in Ireland to urgently introduce a statutory offence of perjury so as to avoid ever increasing insurance premium costs resulting from false and exaggerated personal injury claims. The proposals includes bolstering the legal status of insurance claims forms so that lying on such forms would amount to perjury and ultimately could result in a fine or jail sentence. The Department of Justice in Ireland is now looking at measures to strengthen the laws in Ireland to clamp down on people fraudulently pursuing personal injury claims.

Primarily due to a resurgence of fake accident claims, and the knock-on effect of cost of insurance, Irish Businesses have also revived the Alliance of Insurance Reform over a decade and a half after it successfully brought huge changes, including the setting up of the Injuries Board and the introduction of laws to make it an offence to lie in court in personal injuries cases. Section 26 of the Civil Liability Act 2004 provides for a fraudulent claim to be dismissed outright but is this provision fit for purpose and is it being utilised? Section 29 provides for a criminal prosecution for providing false information during personal injury proceedings. Notably however the first prosecution under this provision was only nine years after the provision came into effect.

In addition to the fraudulent and exaggerated claims, statistics shown that it is not only the rising costs of the actual awards that is of concern but also the time it is taking to settle claims. The Department of Finance’s Motor Insurance Key Information Report published on 21 July 2017 found that the percentage of claims settling prior to and during the PIAB process fell from 56% in 2013 to 52% in 2016. To try and encourage the Injuries Board model, on 30 June 2017 the General Scheme of the Personal injuries Assessment Board (Amendment) Bill 2017 was published. The aim of the bill is to introduce measures to ensure more claims are settled without recourse to litigation, thereby reducing legal costs. The measures proposed address issues such as non-attendance at medicals, failure to provide details of special damage or loss of earnings. The bill also proposes that the Book of Quantum is reviewed every three years and for the Injuries Board to obtain data to compile the book.The general scheme proposed as now been sent to the Office of Parliamentary Counsel for drafting and to the Joint Oireachtas Committee on Jobs, Enterprise and Innovation.

Improvements to the Injuries Board however cannot however of itself improve the compo-culture. The number of personal injury claims before the Courts increased last year by 15% (with an 18% increase in the High Court). Overall 21,898 personal injury suits were filed in 2016 compared to 19,992 in 2015. The biggest award made in 2016 was for €9 million. There is a clear propensity for Claimants to not accept assessments by the Injuries Board and take the matter to court due to a perception that higher awards can be won. Consistency between assessments by the Injuries Board and the courts is critical to dispel the perception of the Claimant they will do better in court.

In addition a key purpose of the Civil Liability Act 2004 was to introduce measures to encourage early settlement of claims but despite provisions to try and achieve early settlement, settlement at the court steps is very much still the norm.

It is not however all bad news. One of the most significant changes to the handling of personal injury claims in 2016 was the introduction of the much awaited updated Book of Quantum, published in October 2016. A far more comprehensive guide that its 2004 predecessor, the guide is based upon a review over 5,000 personal injury cases in Ireland over 2013 and 2014 in order to assess the average awards for each injury type.There is more detailed information provided on bodily injury types which should hopefully lead to more consistent awards.

Commenting on the revised Book of Quantum, President of the High Court Mr. Justice Peter Kelly stated:

"The new Book of Quantum will provide important data to all of those making awards or agreeing settlements in personal injury cases. The fact that the publication has been updated, covers more injuries and greater detail, is very positive. While all cases are considered individually, judges will find the revised Books of Quantum very useful in informing decision making in relation to the value of damages."

Encouragingly in July of this year two personal injury claims brought by the same claimant were dismissed in the Dublin Circuit Court and costs were awarded to the insurer, the first case being dismissed on the grounds that the claimants version of events for the accident were not accepted by the judge and the second case was dismissed on the grounds the claimant failed to disclose to both his doctors and the Injuries Board that he was claiming for a third personal injury accident. There are similar examples of claims being dismissed where the story presented by the claimant stretches the realms of credibility or the evidence presented by the Claimant is unsubstantiated or proven to be false.

For the “unfortunate, accident-prone individual” bringing his ninth personal injury claim late last year the Limerick Circuit Court judge, whilst making an award nonetheless recognised the Claimant as had been well compensated in the past. Media coverage of these types of decisions is increasingly helping to counter the compo culture.

The Court of Appeal has also made its mark with a tougher line being taken with claimants and the evidence presented to support their claims. Previously a defendant wanting to challenge an award of the High Court had to apply to the Supreme Court. The backlog of up to four years in the Supreme Court made appealing far from attractive. With an average waiting time of 10 months the Court of Appeal has relieved the appeal back-log and it has made a number of significant judgments overturning awards.

[1] Courts Service Annual Report 2016