Guideline Updates
Claims Frequency
Claims Severity & Extended Fixed Cost Regime
Other data from the Ministry of Justice’s Claims Portals, which regulates low value bodily injury claims valued below £25,000 reveals that, whilst claims frequency has largely stabilised over the past 12 months, severity has continued to rise across all three principal casualty lines, i.e. motor (RTA), employers’ liability (EL) and public liability (PL) (2).
That is perhaps unsurprising given that the Judicial College Guidelines (17th ed.) – used to assess personal injury damages and recently published in March 2024 – were uprated by 22% to account for inflation since the last edition was published two years prior.
Additionally, the Guidelines now recommend that an ongoing inflationary adjustment is applied from August 2023 (when the data was last updated) to the date of any award or settlement, rather than between editions only (3). Somewhat curiously, the Guidelines continue to apply the Retail Price Index (RPI), rather than the Consumer Price Index (CPI) for example, despite the former losing its status as a national statistic in 2013, meaning the Office for National Statistics openly discourages its use.
Note that, despite Consumer Price Index (CPI) inflation peaking at 11.1% in October 2022 (4) , the upper limit for so-called volume claims has not increased for over a decade. The absence of any increase in these limits means that claims inflation will push the most valuable claims out of scope because they now exceed £25,000. They may also be allocated to a new Intermediate Track where they arise from an injury occurring on or after 1 October 2023 (when fixed recoverable costs (FRC) were extended for disputes valued up to £100K).
The new, broader, regime incentivises claimants and their lawyers to amplify the levels of damages to maximise costs recovery. Whilst an inescapable consequence of determining the level of fixed recoverable costs by reference to a share of damages – which uprates the recoverable costs for claims valued below £25K by c. 20% – compensators might potentially reduce the level of costs otherwise payable by narrowing the matters in dispute to reduce the complexity bands into which new claims are assigned.
Bodily Injury
At the more expensive end of the bodily injury spectrum, the Personal Injury Discount Rate (PIDR) review commenced in all four UK jurisdictions in July 2024. Speculation across the market was that the PIDR was expected to move in a positive direction. In Scotland and Northern Ireland, the PIDR in each jurisdiction was set at +0.5% from 27 September, largely reflecting improved market conditions within which claimants have been investing their damages. In England & Wales, however, the new rate remains awaited and may not be known until January 2025.
Personal Injury Discount Rate
Care & case management
Rising costs
(5) The Office for National Statistics (ONS) consumer price inflation (CPI) bulletin, released 16 October2024, ONS website, statistical bulletin, Consumer price inflation, UK: October 2024
Claims Frequency
[CEROS OBJECT]Claims Frequency
Other data from the Ministry of Justice’s Claims Portals, which regulates low value bodily injury claims valued below £25,000 reveals that, whilst claims frequency has largely stabilised over the past 12 months, severity has continued to rise across all three principal casualty lines, i.e. motor, employers’ liability and public liability (2).
Claims Frequency
Note that, despite Consumer Price Index (CPI) inflation peaking at 11.1% in October 2022 (4) , the upper limit for so-called volume claims has not increased for over a decade. The absence of any increase in these limits means that claims inflation will push the most valuable claims out of scope because they now exceed £25,000. They may also be allocated to a new Intermediate Track where they arise from an injury occurring on or after 1 October 2023 (when fixed recoverable costs (FRC) were extended for disputes valued up to £100K).
The new, broader, regime incentivises claimants and their lawyers to amplify the levels of damages to maximise costs recovery. Whilst an inescapable consequence of determining the level of fixed recoverable costs by reference to a share of damages – which uprates the recoverable costs for claims valued below £25K by c. 20% – compensators might potentially reduce the level of costs otherwise payable by narrowing the matters in dispute to reduce the complexity bands into which new claims are assigned.
Claims Frequency
That is perhaps unsurprising given that the Judicial College Guidelines (17th ed.) – used to assess personal injury damages and recently published in March 2024 – were uprated by 22% to account for inflation since the last edition was published two years prior.
Additionally, the Guidelines now recommend that an ongoing inflationary adjustment is applied from August 2023 (when the data was last updated) to the date of any award or settlement, rather than between editions only (3). Somewhat curiously, the Guidelines continue to apply the Retail Price Index (RPI), rather than the Consumer Price Index (CPI) for example, despite the former losing its status as a national statistic in 2013, meaning the Office for National Statistics openly discourages its use.
Read our latest insight here >
CPI Inflation
At the more expensive end of the bodily injury spectrum, the Personal Injury Discount Rate (PIDR) review commenced in all four UK jurisdictions in July 2024. Speculation across the market was that the PIDR was expected to move in a positive direction. In Scotland and Northern Ireland, the PIDR in each jurisdiction was set at +0.5% from 27 September, largely reflecting improved market conditions within which claimants have been investing their damages. In England & Wales, however, the new rate remains awaited and may not be known until January 2025.
Visit our PIDR hub here >
Read the latest updates in our PIDR Hub here >
Read our latest insight here >.
Read our recent insight on Extending Fixed Recoverable Costs (“FRC”) for civil disputes below £100K here >
Read our recent insight on the Judicial College Guidelines, 17th edition here >