It found that between 2020 and the first half of 2023 there was an 8pc decrease in compensation awards but an 18pc increase in legal costs when claims were litigated.
“Legal costs are most significant for claims settled through litigation and have shown an upward trend in recent years, reaching 40pc of total costs – or 68pc of the compensation award – in the first half of 2023,” according to the data release from the Central Bank.
“This compares with the direct channel where legal costs were 17pc of total cost and the PIAB, where legal costs were 3pc of total costs.”
PIAB has now been renamed as the Injuries Resolution Board.
The report looks at the average injury settlement costs for employers’ and public liability insurance since 2015, whether they were taken through the courts, PIAB or settled directly.
Between 2015 and 2019, the average compensation payment was €51,466, while the average legal costs in each case were €28,821. In the first half of 2023, the compensation payments were more or less the same, but the average legal cost was €35,038.
Between the second half of 2022 and the first half of 2023, there was a 17pc increase in the number of claims settled through litigation.
This is despite the fact that going through the courts takes longer. While the average time to settle a claim directly is 2.2 years, it takes 2.3 years for people who go through PIAB and 5.7 years for those who litigate.
Personal Injuries Guidelines were introduced in 2021 and have had a “significant impact” on average cost of claims settled directly.
However, the report says they have not yet had an impact on the cost of claims settled via litigation, because of the long gap between accidents being reported and claims being settled.
It is a similar picture in motor claims, where the report shows that the cost of the average premium rose to €561 in the first half of last year, up from €554, due to a higher number of claims.
When claims go through the courts, legal fees make up half the total cost. For litigated motor claims that settled for less than €100,000 in the first half of 2023, legal costs represented 46pc of the total.
The Law Society has been approached for comment.
