A new Ibec report has warned that "excessive" personal injury payouts are contributing to a "litigation culture" that will only serve to cause the cost of insurance to soar for businesses.

The business and employers group has published a new report calling for a reduction in the level of compensation awarded in Ireland.

The report found that insurance companies are often afraid to challenge compensation claims due to the cost of legal fees.

Compensation levels for a number of minor injuries are typically double those in the UK. While the Personal Injuries Assessment Board – now InjuriesBoard.ie – was established 12 years ago to speed up the process for claims, Dr Neil Walker, Ibec's Head of Infrastructure, has argued that the system is not working. In 40% of cases, the board is just a "stepping stone" to the courts and bigger payouts. Speaking to Newstalk Breakfast, Walker said:

"The claimants and their solicitors both have an interest because generally you're going to get substantially more in court, depending on which judge is sitting that day.

"The guidelines that the Injuries Board use are actually 12 years old, so you think [of] 12 years of inflation...

"The UK guidelines are only one year old. And yet we looked at a range of half a dozen different types of minor injury – the least you would expect in Ireland is more than the most you would expect in the UK.

"So there's something not right."

Walker said that the difference lies in the fact that, while the Irish guidance was set up by independent consultants, whenever the UK guidance is updating, a senior member of the judiciary has to explicitly endorse it.

"I think that's what's needed this time," he said of the Irish situation.

"The 12-year-old guidelines are going to be revised this year.

"There's an expectation that the level of guideline for minor injuries will go up. We would question whether that's actually appropriate given the comparison with the UK."

Walker also pointed to the "extraordinary increases" in payouts for minor whiplash and, subsequently, motor insurance and warned that that kind of pressure was going to be put on employer and public liability.

"The fear is that it's going to start spiralling."

The Ibec report includes a number of recommendations for solving the problem.

It wants greater transparency from insurers on personal injury settlements, solicitors to adopt a voluntary code of practice to stop court proceedings being dragged out unnecessarily and for the Injuries Board to work on its image as an impartial service.