A Government minister has said there are “geographical” clusters around the country where a culture of claiming compensation is more prevalent than in other areas.

However, Minister of State Michael D’Arcy, who is overseeing reforms of the insurance industry, said the main challenge he faces is the emergence of “honest people” making exaggerated claims which are driving up premiums.

Speaking to the Sunday Independent, the Wexford TD said: “There is a certain culture and there are some areas worse than others [and] some geographical areas where there is a compo claim culture.

“But it’s everywhere now, that is the issue. The best of people are exaggerating claims; you know, honest people.”

The minister said he only has “anecdotal” evidence which suggests there are certain areas of the country where  there is a higher level of compensation claims than others. 

Mr D’Arcy said he wants a complete clampdown on fraudsters staging car accidents to make claims against  insurance companies.

However, he said the main focus of his reforms will be on  reducing the number of lower-level exaggerated claims.

“For every staged fraud there are multiples of claims where somebody is actually injured through no fault of their own but they are exaggerating their claim, and for every one of those there are multiples of people getting high awards,” he said.

Central to the minister’s insurance reforms is recalibrating the Book of Quantum, which provides guidelines for judges making awards in compensation cases.

Mr D’Arcy said his main gripe with the judiciary is the number of judges ignoring the  amounts set out in the Book of Quantum.

“It’s incredible that judges are ignoring the guidelines,” he said.

“On so many occasions the guidelines are ignored and then there is uncertainty, and the insurance companies have to reserve more because of the uncertainty and that pushes up premiums.”

A small but significant change to the rules governing the book will be changing legislation to say judges “shall” rather than “may” have regard to the compensations guidelines when making awards.

The book itself will also be reviewed and new rates will be set.

The minister hopes if he reduces the awards for less serious cases it will make the market less lucrative for solicitors who specialise in personal injury compensation claims.

On average, 40pc of any award is paid to a claimant’s legal team.

“The real damage is being done by the lower-threshold claims, so if you reduce the amount down, a lot the lawyers are not going to be chasing those,” he said.

Payouts for personal injuries in Ireland are on average 4.4 times higher than in the UK, according to analysis carried out by the Government’s Personal Injuries Commission.

Whiplash accounted for a massive 80pc of all motoring-related personal injury claims taken in Ireland.

The average payout in Ireland for a whiplash injury is €15,000 per case, compared with €5,000 in the UK and €3,000 in France and Spain.

The total annual amounts the High Court has awarded in personal injury cases has increased from almost €22m in 2007 to €147m in 2016.

Similarly, Circuit Court payments increased from €13.5m in 2007 to €17.4m in 2016.

There has also been a significant increase in the number of people taking a personal injury case during this period.

However, the average High Court personal injury  award has increased from €165,000 in 2007 to €377,000 in 2016.

Guidelines of payouts in the UK are also significantly smaller than for the equivalent injury in Ireland.

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