With the Irish Government's public consultation on personal injury discount rate (PIDR) closing at the end of August, risk and insurance law firm BLM has urged policymakers to urgently review its 'outdated' compensation model, calling on the coalition Government to act fast to accelerate insurance reform.
BLM recognises that Ireland is something of an outlier in British and Irish common law jurisdictions in not having a statutory rate. However, the firm believes this consultation provides an opportunity for Ireland to avoid the adverse effects of the trough of low PIDRs which England experienced in 2017-19, before it made changes similar to those which the current consultation suggests. Additionally, a change in policy within this area might assist in mitigating insurance costs and, in doing so, potentially be beneficial as the Irish economy seeks to recover from the social and economic impacts of COVID-19 on small businesses, charities, community groups, sports and cultural organisations across the country.
The UK and Ireland law firm is aware of the pressures to reduce the PIDR in Ireland, under its present outdated basis, from 1.5% & 1%. Nevertheless, BLM believes that the legislative alternative within the Justice Department’s consultation will offer a much more sustainable and politically accountable system for rate-setting in the medium to longer term.
Sinead Connolly, BLM Partner and Joint Head of Office for Dublin, explains:
“The coalition government has set out an ambitious programme of insurance reform, focused in the main on tackling insurance costs for businesses and consumers and on addressing high claim payouts in personal injury cases. Acting quickly on this consultation and bringing an end to the outdated legal fiction of calculating injury damages using a very risk averse investment model should be an important element of the reforms that the government is bringing forward.”
Olivia Treston, BLM Partner at Joint Head of Office for Dublin comments:
“The reality is that Ireland is now something of an outlier on this: England & Wales, Scotland, the Isle of Man, the Channel Islands and Gibraltar have all introduced legislation to end this costly legal fiction and we expect that Northern Ireland will do likewise later this year. Ireland needs to take action and follow suit.”