The Irish insurance sector is bracing for a potential reversal of long-fought reforms, as the Government considers whether to approve a 17% increase in personal injury compensation levels - a move that insurers and business groups warn could trigger renewed volatility in claims costs.
Justice Minister Jim O’Callaghan has confirmed that no final decision has yet been made on the recommendation by the Judicial Council to revise upward the personal injuries guidelines. However, he indicated that any change must be balanced against the need to preserve the integrity of the broader insurance reform programme introduced over recent years.
The Government is expected to deliberate on the proposal in Cabinet next week. Mr O’Callaghan has signalled a cautious approach, noting that he is consulting with colleagues and reviewing recent data from the Central Bank and the Injuries Resolution Board (IRB), which collectively suggest an uptick in claims-related costs and premiums.
The Central Bank’s most recent Claims Database report recorded an 8% annual increase in motor insurance premiums as of May 2025, driven by rising claims frequency and mounting repair costs. The data coincide with a slight increase in the number of motor-liability claims filed with the IRB last year—up 4% from 2023. In contrast, employer-liability claims fell by 5%, and public-liability volumes remained static.
While the IRB has reported signs of stabilisation in personal injury trends - claim volumes remain 35% below pre-pandemic levels - the value of claims is beginning to creep upward. The median compensation award issued by the Board rose to €13,000 in 2024, a 12% increase on the previous year, albeit still 29% lower than the 2020 figure prior to the implementation of revised guidelines.
Notably, the proportion of awards under €15,000 has nearly doubled from 30% in 2020 to 59% in late 2024. Yet concerns remain that a reversion to higher award levels could see this trend unravel.
Insurers and small business representatives argue that accepting the Judicial Council’s recommendation would not only undo recent progress but also reinforce longstanding structural cost pressures in the market. The Irish Small and Medium Enterprise Association (ISME) has labelled the proposal “unjustifiable,” warning that it would disproportionately burden employers, retailers, and voluntary organisations already contending with high cover costs.
At the core of the industry’s concern is the fear that higher compensation benchmarks would erode the benefits of the 2021 Personal Injuries Guidelines, which were introduced to bring greater consistency and predictability to awards and reduce the volume of litigation.
The IRB reports that the number of cases resolved below €50,000 increased and acceptance rates for its assessments have held steady at around 50%.
Nonetheless, the IRB has acknowledged evolving injury profiles, particularly a rise in psychological injury claims. Such cases accounted for 14% of all awards in the second half of 2024, up from just 5% in 2021, although the growth rate now appears to be levelling off.
The insurance sector is urging the Government to maintain a data-driven, reform-conscious stance. Analysts note that while modest increases in award values may reflect economic factors such as inflation and healthcare costs, any blanket uplift risks reigniting behaviours that contributed to Ireland’s historically high claim rates. Ireland processes a significantly higher number of personal injury claims per capita than comparable jurisdictions such as England and Wales.
The industry will watch closely as Cabinet considers the measure. Minister O’Callaghan has stated that the decision will be taken collectively, factoring in economic data, legal trends, and policy objectives. For now, insurers remain wary of the consequences for pricing, reserving, and the sustainability of the claims environment.
