Average personal injury awards did go up in 2014, not claims

What will this mean for Ireland Inc?
What will this mean for Ireland Inc?

For over a year now the Irish insurance industry has been spinning dramatic price hikes in car insurance as being the result of claims – those awful people injured in car accidents who dared to claim against insurance are the fault, along of course with their lawyers.

It is quite obvious that there are multiple factors at play in the car insurance market. New regulatory rules, bad investments, bad management and years of overly-aggressive competition are clearly the major factors now biting the industry. But it is far easier to blame lawyers, demonise claimants and pretend whiplash is an imaginary injury.

But two things have taken the wind out of the insurance industry spin: the Injuries Board using actual research and statistics to counter the allegations and the dramatic intervention of the Competition and Consumer Protection Commission.

One spin in particular, though, will not die: the suggestion that there was a huge jump in court injury awards from 2013 – 2015. On RTÉ’s Nine News last night (5 October 2016, from 1:43) Kevin Thompson, CEO of Insurance Ireland, made the claim again:

We’ve also seen a 33% increase in the level of awards in the Circuit Court from 2013 – 2015.

This is amazing. Injury awards suddenly up by one third! But this claim, often made by insurance industry spokespeople, raises two obvious questions: (1) why did this happen in the Circuit Court?; and (2) what happened between 2013 and 2015?

The answer is simple. In 2013, the Courts and Civil Law (Miscellaneous Provisions) Act 2013 was introduced. It, among other things, raised the jurisdiction of the Circuit Court, so that court could deal with some higher-value claims. So yes, average awards went up.

The District and Circuit Courts have upper limits on the compensation they can award and until 2014, when the law took effect, the maximum the Circuit Court could award was €38,092.14. That odd figure is £30,000 in old money, hinting that the limit had not been changed in a very long time. In fact, since the late 1990s many argued for an increase in jurisdiction for the District and Circuit Courts to address inflation and the changing nature of litigation. In 2010 I wrote that such a change was long overdue and would help to reduce legal costs. The government had introduced a law in 2002 to allow them to change jurisdiction limits but failed to do so, partly due to insurance industry lobbying.

Increasing the jurisdiction of the lower courts allows them to hear a range of cases that they are more than capable of dealing with, at a lower cost. So, increasing court jurisdiction limits should reduce legal costs.

The increase in Circuit Court jurisdiction in 2014 raised maximum personal injury awards by that court by €21,907.86 – around 57%. This is a significant increase and one which has an immediate impact on statistics, particularly average awards. There is no reason that a Circuit Court judge would award more than a High Court judge in a particular case, so there should be no award inflation. But the average Circuit Court injuries award will naturally increase. Likewise, at High Court level, the average award increases because the lower value awards up to €60,000 are taken out.

So, it is not at all surprising that there was an increase in Circuit Court compensation levels from 2013 to 2015 – the jurisdiction level increased 57% but the average award only 33%. Average award levels limited to one court jurisdiction are of little use in considering the overall levels of compensation awarded or general claims activity.

What the insurance industry does not say, and cannot say, is that this 33% was a result of overall compensation inflation.

HSE abolishes new national fee for calculating loss of earnings


hsePersonal injuries compensation is usually assessed by the Injuries Board, though many claims end up in court afterward. Both the Injuries Board and the courts calculate compensation on the basis of general damages, a somewhat unscientific amount awarded for pain and suffering, and special damages, which are made up of specific expenses.

A common claim special damages claim in a personal injuries case is for loss of earnings. The injured party will get a certificate from their employer calculating what earnings were lost due to the injuries suffered and the certificate will be used as evidence to support their claim. Recently,  the HSE started charging its own employees €123 for providing a certificate of loss of earnings. This was surprising as while providing the certificate involves some work for the employer, they should have the information readily available and providing it seems part of the ordinary obligations of an employer to an employee.

When I first came across the charge it I queried it with the HSE, who said it was a new standardised fee. I asked the Injuries Board if they would include such a fee in calculating special damages for a claim and they said they would not. So the injured party would either have to pay the fee themselves or risk not having an accurate loss of earnings claim.

Last week, the Injuries Board wrote to me to say that they were taking the issue up directly with the HSE.

In the meantime I had made a freedom of information request to the HSE about the introduction of the fee, with an interesting result. It appears that the HSE began to consider introducing this standardised fee in March 2013. They thought about it at a number of meetings in 2013/2014 and tax advice was taken which confirmed that vat would apply to the fee. They went ahead and introduced it.

There was a gap in documentation after 2014 until 21 September 2016 (two weeks ago), when the general manager of national payroll for the HSE sent an internal email as follows:

Following a review of the charge for Loss of Earnings calculations, it has now been agreed to abolish same effective immediately.

It does seem odd that a process was engaged in over two years to discuss and decide on the national standardised fee, but the review of it which lead to its abolition appears to have come out of nowhere and the only document about it is an email confirming the decision.

But nevertheless, the abolition of the fee is welcome (although, the email says that any existing charges which have been billed remain). Fees of this nature are unnecessary hidden costs in personal injuries claims. When the insurance industry complains about legal costs, it never breaks down the costs and it is worth drawing some attention to the State costs involved.

Insurer spin on compensation working, despite evidence

"Claim? But what about our international reputation!"
“Claim? But what about our international reputation!”

The insurance industry is taking advantage of the current interregnum to step up its media campaign against paying compensation to injured parties. This is a concerted campaign with almost daily media reports of the damage allegedly high compensation levels and legal costs are doing to the insurance industry, the economy and even Ireland’s foreign direct investment. It appears to be working, despite all evidence suggesting that other factors are causing premiums to increase.

Today is the turn of the Small Firms Association, who claim that compensation “culture” is now “out of control”. According to the SFA:

Since 2011 insurance costs have risen by 30 per cent, the association said, with a large part of the jump occurring within the past 12 months.

What you won’t find anywhere, however, is evidence to suggest that this huge hike in premiums has been caused by compensation, or how “compensation culture” is “out of control”. On the contrary, all indications are that the main reasons for insurance increases have nothing to do with compensation. Industry spin is having the desired effect, however, with even Minister for Jobs, Enterprise and Innovation appearing recently to come around to the industry point of view.

I recently requested documents from the Department of Jobs, Enterprise and Innovation on representations by the insurance industry and in the documents released were records relating to two industry meetings where the Minister was lobbied on insurance costs.

The first meeting was with executives from Axa and was requested through Fine Gael Councillor Anthony Lavin, who is also a customer care manager with Axa. It took place on 8 October 2015. A further meeting took place with Insurance Ireland, the industry body, and was arranged through PR consultants.

The Minister’s briefing materials included a National Competitiveness Council report on insurance costs. Recent newspaper articles have referred to this report and its reference to legal costs supposedly being “sticky”, but generally do not point out other important aspects of the report.

  • The industry frequently says motor claim awards are too high but “64% of PIAB [Injuires Board] awards for motor injury claims are for <€20,000 … the cost of processing a claim through the PIAB is at historically low levels”.
  • The review of the book of quantum “could result in higher costs, and ultimately higher premiums.”
  • Legal costs “proved extremely sticky” apart from “a brief period in 2013”. The evidence for these comments is not referred to.

Minutes of the meeting record that the Minister made a number of counter arguments to Axa on compensation concerns, for example that medical negligence cases skewed comparisons of compensation payments and that the level of awards by PIAB was “fairly consistent” from 2010-2014, with the majority of awards being under €20,000. He said it would be helpful if the industry provided more information on “untracked cases”. These are mostly cases that are settled between claimants and insurers with the result that the State agencies do not learn what the outcome is.

Given that Axa and the industry are seeking a number of reforms that would require them to be given more statistical information by PIAB and the Courts Service, it is peculiar that the industry continues to be remarkably reticent on providing details on untracked cases. The note of this meeting states that Axa agreed to “work with Insurance Ireland with a view to supplying” this type of data.

Axa appeared to focus on what were effectively four case studies of recent court cases where the awards exceeded what the insurers had valued the cases at. Axa were not, in fact, the insurer in any of these cases. A limited number of court awards are not, of course, representative of most claims and indeed the note of the meeting between the Minister and Insurance Ireland on 6 November 2015 stats that about 20% of claims go to PIAB, of which about 40% are rejected and settled and “[a] small number of cases are finalised by the Courts.”


Axa, along with many other parties, has made submissions to DJEI on the operation and implementation of the PIAB legislation, which has been ongoing for some time. A significant suggestion is that the limitation period for personal injury claims be reduced to one year (at the moment the limitation period is two years). This proposal was already considered when the legislation was introduce to establish PIAB and the government decided against a one year limitation period.

It was felt at the time that such a short limitation period would exclude many valid claims or that it would drive people into dealing with lawyers and claims at a time when they might still be receiving treatment or in recovery. A one year limitation period would be extraordinarily restrictive, its only aim and affect being to reduce the liabilities of insurance companies by excluding valid, genuine claims.

A further surprising proposal is to allow PIAB to award “some form of Legal fees to lawyers that will allow for a higher acceptance rate of awards.” The insurance industry’s objective in having PIAB established was to drive a wedge between injured parties and solicitors, who might provide claimants with independent, expert advice. This was to be achieved by the law providing that no legal fees would be awarded by PIAB (except in limited situations, and even then in very small amounts). The industry repeatedly claims that, despite PIAB being intended to be a “lawyer free zone”, over 90% of claimants are represented by solicitors (again no evidence is publicly available to support this claim). Axa’s proposal appears to accept that the right of people to seek professional representation is still exercised in most cases, despite the cost implication at present.

The above documents and some others are available here on Scribd. They suggest that government departments and the National Competitive Council do not necessarily share the views of the industry and are aware of other factors affecting the insurance industry.

However, since the Minister’s meetings with the industry late last year, during which he did not appear to accept what was being said on compensation and PIAB at face value, he has since sought “judicial buy-in” for the as-yet incomplete revisions to the book of quantum and makes the same points on insurance costs put forward by industry representatives.

The bulk of media reporting and commentary on insurance premium hikes remains focused on and obsessed with compensation, with little being said or asked about Solvency II, RSA, FBD and other industry-specific issues.

New podcast: Adventures in Information

artworkYou might be interested in a new podcast I’m making called Adventures in Information.

On the surface it’s about freedom of information, but also data protection, politics and, primarily, anything interesting that has been found out using freedom of information.

I’ll be talking to a diverse range of people involved in (or enthusiastic about) FOI, from journalists to solicitors and advocates/agitators.

Tune in! You’ll find all the information you need on the podcast website, including links to the podcast page on iTunes and the RSS feed to subscribe using other apps. You can also play the episodes directly there.

Episode 1 is now available – I talk to Simon McGarr about the Department of Education’s primary online database and how all is not as it may seem.

Insurers still spinning against the facts on personal injury claims

swear-to-spin-the-truth_resizeRarely a week goes by without more insurance industry spin on personal injury claims, particularly whiplash claims. The industry now takes any opportunity to blame personal injury claims for their woes, even in the face of facts which indicate other causes.

Inevitably, the Irish insurance industry is seeking reforms similar to those announced late last year in the UK, including a ban on claims for “minor” whiplash injuries.

AIG, a massive multinational insurer that was in recent years more often in the news for needing an initial $85 billion bailout from the American government, wants a ban to be considered here. Their general manager for Ireland, Declan O’Rourke, told the Irish Times:

Ireland should follow the UK’s lead in considering a ban on whiplash, to flush out fraudulent claims. The UK is considering a position whereby whiplash victims would have their medical expenses and loss of earnings compensated by insurers in a move that it believes could save the sector £1 billion a year and reduce premium costs.

Mr O’Rourke does not go into detail about why a whole category of claim should be banned to weed out the supposed problem of fraudulent claims, but the insurance industry often suggests that all whiplash claims are effectively fraudulent. This is in spite of long-standing medical evidence and opinion. A call for a ban on whiplash claim won’t go far in Ireland, where it would likely be unconstitutional, but other reforms will be demanded. Indeed, it appears AIG has a wishlist of things it would like an Irish government to do, quite a turn-around for a company that had to go cap in hand to the Federal Reserve in 2008 to avoid oblivion. More recently, its Irish operations benefitted from assistance from the Irish taxpayer. One might be inclined to wonder whether any losses or difficulties at AIG could have causes beyond the cost of claims.

Yesterday, Fiona Muldoon of FBD was a guest on Morning Ireland, taking another opportunity to bemoan the cost of claims and the legal system despite FBD’s results telling a different story. FBD has quite reasonably been described as “beleaguered” and has suffered from a range of difficulties which have nothing to do with personal injury claims.

The Times (Ireland edition) covered FBD’s latest results with the headline “Insurance sector too competitive, FBD says” [paywalled]. While the real problem for the industry is in the headline, the article nevertheless begins:

Over-inflated whiplash claims and too much competition between insurers were among the many factors to blame for FBD’s loss-making performance this year, its chief executive said.

The cost of allegedly “over-inflated” whiplash claims is a crutch that the industry repeatedly leans on when in difficulty, while the truth for FBD is that:

Most of last year’s losses stemmed from measures to bolster its capital reserves and €11 million in restructuring costs.

The article also points out that FBD experienced a 9% fall in premium volumes last year – ie. they lost customers. Ms Muldoon continues:

A number of factors had made the Irish insurance sector unprofitable between 2012 and 2014, including too much competition driving down premiums, Ms Muldoon said. “The market in Ireland is very fractured, which meant that companies were competing aggressively against each other and in hindsight they were not charging enough.”

So. Insurance companies have had financial difficulties because they have had to bolster reserves, lost customers and have not charged enough for years. But ask any spokesperson for the insurers about their problems and it’s not long before the cost of claims is front and centre.

This is a remarkable feature of articles on the insurance industry in Ireland over the past year: reports on financial results cover these internal difficulties and challenges faced by the industry which are obviously having a negative impact on premiums. Figures are available to explain the impact on insurers but not, it seems, to explain their complaints about the cost of claims and the legal system.

The reality is that the industry does not have any statistics or figures about personal injury claims that it is willing to make public. Even the Injuries Board, effectively a creature of the industry, has criticised the failure to support allegations about claims, as well as their failure to explain where there premium income is going. The number of personal injury court claims fell in 2014 and the Injuries Board has highlighted that there is a €1 billion difference between the premium income of Irish insurers and published awards.

It’s time for insurers to accept that, this time around, their losses are down to themselves and not due to paying out on claims (which is, of course, what they exist to do).

Court reporting and absolute privilege from defamation claims

Late last year, Attorney General Maire Whelan called for a review of Irish defamation law in so far as it affects court reporters.

[Court reporters] should not have to fear a “simple oversight, omission or error” in reporting court proceedings exposes them to risks of litigation, or claims in damages, with consequent risks to their livelihood. There should be at least a debate, and consideration, of enshrining into Irish law a provision that no report of court proceedings should be actionable in defamation unless there is proof of “malice”, Ms Whelan said.

A recent defamation claim against the Irish Examiner relating to reports published on that newspaper’s website raised precisely this issue (Philpott v. Irish Examiner Limited [2016] IEHC 62). The judgment by Mr Justice Max Barrett delivered last week adds some interesting commentary to the topic.

Section 33 of the Defamation Act 2009 allows for an application to be made to a court prohibiting the publication or further publication of a statement if it is defamatory and there would be no defence available justifying its publication. The relevant defence here is of court reporting which, if done properly, is absolutely privileged.

In this case the plaintiff had been CEO of a healthcare organisation in Cork and, apparently due to his view of shortcomings in the operation of the organisation, his employment ceased. He instituted employment law proceedings which were eventually settled. However, he objected to two reports carried in the Irish Examiner (article 1; article 2) relating to his employment law proceedings and sought an order under section 33 prohibiting the further publication of two relevant articles on the Irish Examiner website. This required him to satisfy the court of both requirements of section 33, mentioned above.

Barrett J noted that the barristers in the case could not identify any previous Irish case-law that examined the nature of the test to be applied under section 33 but concluded:

[I]t seems to the court that the tapestry of law woven by the Oireachtas does not invariably or even generally require additional embroidery by the courts. The Act of 2009 posits simply that there are three criteria which must be satisfied before an order can issue under s.33, [namely]:

(1) is the statement complained of defamatory?

(2) does the defendant have a defence to the claim of defamation?

(3) is that defence reasonably likely to succeed?

Barrett J quoted both articles objected to in full. In relation to the first one, the key “error” complained of was that something asserted by one party in the proceedings was reported as fact (ie. an allegation was represented in the article as fact). However, Barrett J held that erroneous statement did not injure the plaintiff’s reputation. He referred to other elements of the report complained of and “struggle[d] to see that there is much divergence of real substance” between the article and the relevant elements of the Circuit Court judgment that it was reporting on.

In fact, Barrett J felt that the manner in which the complaints regarding the first article was put forward amounted to a “dissection” which “represents a highly unnatural manner of reading.” He posed the issue as follows:

What are the key learnings that someone viewing the … article would likely glean? First, that there was an employment-related dispute between Mr Philpott and his onetime employers. Second, that Mr Philpott had been dismissed, ostensibly because of some sort of difficulties between him and other staff. Third, that Mr Philpott had made various allegations about how Marymount was run – and, perhaps implicitly, that this might have been the real reason for his dismissal. Fourth, that a Circuit Court judge had gone through Mr Philpott’s allegations in some detail and did not find them credible, though he did not doubt that they were sincerely made. In short, the reader would have garnered the truth of matters, as this Court did on its first reading of the article. Anyone who elected to run a fine tooth-comb over every element of the article would have ended up with the same understanding.

In relation to the second article, Barrett J was “mystified” by the plaintiff’s concerns.

The whole thrust of the article is that peace has broken out between the parties, that all has been resolved, that Marymount wishes Mr Philpott well, that a line has been drawn under past events and that everybody is now moving on.

He went on to make some important points about court reporting.

Court reports are not just of interest to the public; they meet a great public interest. In a liberal democracy that prizes individual freedoms, all branches of government are rightly subject to the scrutiny of an ever-watchful public. Reporters perform an essential role in ensuring that members of the public learn of what is being done in their courts and why … This is so important a task that – except insofar as is necessary to ensure that the right of every citizen to her or his good name is protected and capable of vindication – the media must go relatively unconstrained in their efforts. Our individual freedoms are more fully assured in the collective freedom of journalists to discharge the role so eloquently identified for them by the late President Kennedy, in a speech to the American Newspaper Publishers Association back in 1961, being “not primarily to amuse and entertain, not to emphasise the trivial and the sentimental, not to simply ‘give the public what it wants’ – but to inform, to arouse, to reflect, to state our dangers and our opportunities, to indicate our crises and our choices, to lead, mould, educate and sometimes even anger public opinion”, and, it might be added, not just to report, but to comment.

There had also been some objection by the plaintiff that certain aspects of the his Circuit Court case were not reported at all. Barrett J said:

To the extent that it is suggested that a court reporter needs to be present for any, let alone every, aspect of court proceedings on which s/he reports, this proposition is entirely rejected by this Court.

Reporters do not have a free hand to report on cases they have not attended: principles have already been developed by the courts outlining that a report must be fair and accurate to benefit from a defence to a defamation claim. A fair and accurate report on a written judgment from a court could not give rise to a claim for damages, for example, even though the reporter might not have attended any of the hearings.

Ultimately, Barrett J held that neither of the articles were defamatory, that the Irish Examiner would have a full defence to any claim of defamation on the basis of absolute privilege and that such a defence would be likely to succeed at trial. Therefore, all of the plaintiff’s claims were dismissed.

The case is an interesting, up-to-date statement of the law on court reporting in Ireland and obviously some of the comments made in the judgment chime with the Attorney General’s views. It may be that the judgment would hold back the tide of defamation claims against publishers somewhat and might alleviate the need for further legislation on the topic (subject to any appeal, of course).

Employers can’t spy on employees

Copyright nolifebeforecoffee (Flickr)Court judgments, often complex and difficult to translate into a soundbite (or, these days, clickbait), are frequently misreported. This is particularly the case with European court judgments, whether from the ECJ, where Advocate General opinions are usually reported as “rulings”, or the European Court of Human Rights, where the consequences of decisions are frequently misstated. And that’s before you even get to the difference between the ECJ and the ECHR, another source of confusion.

This week the ECHR gave judgment on a case involving a Romanian engineer (Barbulescu v. Romania) who was disciplined for using Yahoo! Messenger during work hours. A key point here is that the Y! Messenger account was set up by the employee on the instruction of the employer for work purposes. It was not a personal account. The employee argued that the employer had breached his right to privacy, but the ECHR decided that the actions of the employer were limited and proportionate.

Most headlines and some reports represented the decision as meaning that employers can now spy freely on employee communications. This is quite a dangerous misinterpretation or oversimplification of the decision.

Elaine Edwards has a very helpful article explaining the law and the judgment on the Irish Times.

In passing down the ruling, the judges stated that unregulated spying on employees would not be acceptable, and called on a set of polices to be drawn up by employers that would clearly state what information they could collect and how.

The judgment is not a surprise to employment lawyers. These cases are focused on whether the employee has a reasonable expectation of privacy in their communications. Whether a reasonable expectation arises largely depends on whether or not policies are in place governing the use of communication services or whether warnings have been given to employees that communications may be monitored. Even if covert surveillance might be used, and such surveillance is sometimes necessary, a policy should be in place so that employees are aware that they might be subjected to covert surveillance at some point. The Employment Appeals Tribunal (now the Workplace Relations Commission) has previously said:

Setting traps and ambushes for an employee is inappropriate behaviour for an employer.

One interesting point, noted in the UK Human Rights Blog, is that the warning given to Barbulescu that his employer might monitor his communications was of a general nature. Such a warning by an employer in the Irish context might not be sufficient.

Steve Peers notes:

Barbulescu definitely does not give employers carte blanche to put their employees under surveillance. There remain – as there were before this judgment – cases where such surveillance is justified, and cases where it is not … national courts, perhaps excited by the new Regulation, might insist that higher standards apply in national law. For the time being, though, employers should be aware that there is still a fine line between acceptable and unacceptable monitoring of their employees.

He alludes to an important point: the judgment does not displace Irish employment or data protection law. The Data Protection Commissioner published guidance on workplace monitoring years ago which notes the importance of balancing the legitimate interests of the employer against the privacy rights of the employee. It requires that monitoring, whether by CCTV or access to electronic communications, be done in a transparent manner. An interesting recommendation, often forgotten by organisations, is that “[e]mployers should consider whether they would obtain the same results with traditional measures of supervision”.

David Whincup put it well on the Squire Patton Bogs employment law blog:

[The] headline in the Mail : “Bosses free to spy on emails” should actually have read : “Bosses free to check that you are using their equipment to do what you are paid to do”. But where would be the news in that?

Mashable’s headline came close and was able to highlight the qualification in the judgment with the addition of three simple words.