The rate to be applied by the courts when setting multipliers for future loss now moves from 2.5% to -0.75% in England and Wales. The change will be with effect from 20 March, pending a further consultation on methodology.
The Lord Chancellor has now issued the statement setting a new statutory discount rate under the Damages act 1996 to be taken into account when calculating damages for future loss. The movement from 2.5% to -0.75% is a very significant one increasing substantially sums for future loss and impacting insurers’ claims costs and reserves. In some respects the decision should still be considered an “interim one” as a further consultation is now planned to commence before Easter. It follows that at this time it cannot be known for how long the new rate will continue to apply.
As an industry we need to talk about this and ensure that it is only an interim discount rate. A wide-ranging consultation will start in a matter of weeks and we must seize that opportunity to influence the underlying methodology and in particular the link to ILGS. If one steps back and thinks about the consequences of this interim rate then the outcomes cannot be right.
With the rate set at 2.5% England and Wales already provided significantly more compensation to the seriously injured claimant than the next most generous country in Europe. With the new rate at -0.75% the gap becomes an ugly chasm and might even increase the risk of forum shopping. This document sets out our thoughts on immediate steps and consequences, but the real challenge must be to ensure that responses to the imminent consultation make an irresistible case for breaking the ILGS link so that the calculation of awards properly reflects how they’ll be invested - doing anything else is a very expensive fantasy. As The Times’s Financial editor Patrick Hosking put it this morning, “no accident victim in their right mind would invest their entire lump sum in inflation-protected gilts.”
As mentioned in the headline this decision does not automatically apply in Scotland. We consider the position in Scotland below.
We set out a summary of some points made in this update:
- Although the rate is strikingly low, defendants should see it as an interim decision and take full advantage of the second consultation to persuade the Lord Chancellor that the rate change is wrong, over compensates and runs counter to the investment of damages in practice.
- As things stand the new rate will apply to all cases after the implementation date planned for 20 March 2017.
- In the meantime defendants should review offers. Identify those from claimants still available to accept and which now look attractive. Revise any defendant offers upon which you may wish to rely particularly if trial is shortly after 20th March.
- Approach the “maths” right: interpolation, life expectancy, split multipliers – the correct approach across all multipliers might make a difference with such large multipliers in play. Avoid rounding up at too many stages prior to the final figure.
- Contingency other than Mortality – target reduction factors – every 0.1 or 0.2 applied to a new larger multiplier make a bigger difference. Use the explanatory notes and case law to make sure factor fits the case – or identify situations where the evidence shows “M x M” not the right approach and avoid multipliers completely
- Roberts v Johnstone claims. The formula provides a sum to compensate for the loss of risk free investment on the money tied up in the property. Does a negative rate mean there is no loss? The position is unclear but the R v J basis is still the law and claimants may face a no loss argument as they have not foregone any risk free investment return. The point may also impact interim payment applications under “Eeles” principles. Pending our further publication on the R v J issue, these points may provide a basis for concessions by both parties to achieve a workable solution.
- PPO v lump sum dynamics may change. Claimant preferences may change. Claimants may wish to avoid settlement in Court to avoid future losses being paid as PPO and losing the ability to have large lump sums managed in an investment package that produces good returns. That might provide a lever over settlement. Conversely defendants may point to the very large lump sums on which claimants are likely to achieve much higher positive returns as providing for the claimant’s security without a PPO. Additionally defendant insurers may now compare – 0.75% unfavourably to their internal discount rate use for reserving PPOs.
- Savings on annual losses will be magnified given the higher multiplier – robust but reasonable head of loss strategies maximising arguments, as important as ever but the impact is now greater given the multiplier.
- Keep a watch on costs by claimants using the rate change to justify excessive additional work or the increased value setting a new context for proportionality. Does the substitution of a multiplier involve much additional work (particularly if software packages used); does the higher value necessarily affect the issue of proportionality?
The Lord Chancellor’s announcement
Yesterday the Lord Chancellor announced the result of the review of the discount rate. The result was a new statutory discount rate of minus 0.75%. A full statement of reasons has been placed in the Libraries of both Houses of Parliament and can be accessed here.
In a short statement the Lord Chancellor said the new rate was based on a three year average of real returns on Index Linked Gilts. The statutory instrument to effect the change was laid on the 27 February and expected to become effective on 20 March 2017.
A copy of the statement is in appendix 1. The statement recognised the impact the decision would have, and this has been quickly followed up by the ABI which has cited the significant impact in claims costs and the impact on premiums. A further review was announced into the framework under which the rate is set to ensure it remains fit for purpose. This was an area covered in the earlier consultations. The scope of the original consultation was summarised in our earlier note 'Discount rate review – what next?' The promise is to start the consultation before Easter.
It will consider options:
“whether the rate should in future be set by an independent body; whether more frequent reviews would improve predictability and certainty for all parties; and whether the methodology - which in effect assumes that claimants would invest only in index-linked gilts - is appropriate for the future. Following the consultation, which will consider whether there is a better or fairer framework for claimants and defendants, the Government will bring forward any necessary legislation at an early stage.”
Summary of the Lord Chancellor’s reasons
- The principles in Wells v Wells (full, but no more, compensation and risk free investment) led her to base a decision on a portfolio of 100% Index Linked Gilts.
- She was not persuaded by arguments that ILGS was not the “realistic or appropriate” basis. ILGS was the best way to ensure availability of money. Use of mixed portfolios incorporated an element or risk.
- Effective management of an ILGS portfolio would allow funds to be matched to needs, and any risk here was outweighed by risks of alternative investment models.
- She should follow the one rate approach based on weighting towards long-dated stocks and excluding stocks with less than five years maturity.
- Taking into account a three year simple average gross real redemption as at December 2016 of – 0.83% her decision was to round to -0.75%.
The continued reference to Wells and the use of ILGS to achieve risk free investments for claimants rejects arguments that claimants do not use ILGS, would not be advised to use them and in fact ILGS are an unsatisfactory device in terms of meeting cash flow needs or being free of risk. Although the special “risk-free” investor status of a claimant, and the use of ILGS as a benchmark, are principles from the “Wells” decision, the later move from the Courts to the Lord Chancellor of the task of setting the discount rate, means that challenging those principles lies not through the Courts but against the reasonableness of the Lord Chancellor's decision.
As matters stand these arguments can now be raised, and should be, in the further consultation. Further public law action against the rate review decision will need to wait for the outcome of this consultation, the results of which will need to be implemented by further legislation.
This does leave an uncertainty over the permanence of the -0.75% rate which perhaps claimants will not want to acknowledge. Although any legislation to implement the outcome of the further consultation may not come into being until 2018 there is the possibility of a further rate change around that time. Perhaps it would not be unreasonable to seek agreement to settlement provisions allowing review in the event of the rate going up in the not too distant future (much as was done in reverse in some cases in anticipation of a rate reduction).
Minus 0.75% multipliers
Unfortunately the new rate does not directly match any of the columns in the Ogden Tables. Updated tables will be needed. In the meantime a table of multipliers has been made available by Rebmark Legal Solutions Ltd., developers of the Pi Calculator software. This link is to the tables, which are used for illustrations in this document.
We are currently trying to establish whether plans are in place for revised Ogden Tables to be produced prior to the 20 March. Strictly speaking the inclusion of a -0.75% column does not need the reconvening of the Ogden Working Party as it is purely a “mathematical” exercise with no changes to the explanatory notes.
It is essential that the tables are updated. The tables and the multipliers in them are accepted in evidence; they originate from the Government Actuary Department and are seldom queried In the absence of an authoritative source for the new multipliers they would need to be “proved” by evidence in each case, unless the parties were able to agree them. The cost of that should be avoided if possible. BLM is identifying when an updated version of the tables will be available and publish updates as the position becomes clearer.
Implementation and “trigger”
The decision will need to be implemented in accordance with the provisions of s. 1 of the Damages Act 1996 – the decision will need to be “prescribed by an order made by the Lord Chancellor”. The Damages Act sets out that the order “shall be made by statutory instrument subject to annulment in pursuance of a resolution of either House of Parliament”. In effect a fast track approach involving no vote or debate unless a formal objection is raised. The timescale given in the statement is implementation by 20 March. The SI making the change is now available here.
There is nothing which suggests that the order will provide for a different “trigger” to the 2001 order and all new and outstanding cases will be subject to any new rate from 20 March 2017 onwards.
The position in Scotland and Northern Ireland
The setting of the discount rate is a devolved issue so the change does not apply in Scotland and there will be no movement until the Scottish Government decides how to react. When the rate was last changed, back in 2001, they did follow but it took eight months.
We know that claimant firms in Scotland have been monitoring the situation closely. It is extremely unlikely that they will be recommending to their clients that they agree settlement on the basis of the current discount rate in ongoing cases and there are likely to be fresh attempts to put proofs off until there is clarity from the Scottish Government.
The fact that the courts in Scotland do not have the option of making Periodical Payment Orders compounds the issue as the increased multipliers will be applied in all significant future loss claims, although the Scottish Government may well be under pressure to review the position in this regard following yesterday’s announcement. There will be a Bill on Expenses and Funding in Scotland by the summer. It is possible that the debate on PPOs may be raised in discussions on that Bill assuming the Scottish Government has reacted to this week’s announcement by then.
BLM will continue to monitor the position in Scotland with regard to the discount rate and also the implementation of PPOs and provide further updates to you.
The position in Northern Ireland as regards the rate is the same in Scotland, ie that local devolved Ministers have the power to set the rate. Thus - in theory at least - the Lord Chancellor’s -0.75% rate will not apply in Northern Ireland from 20 March. Given the current elections to the Assembly, and the risk of direct rule if no Assembly Government is formed, it is far from easy to predict when any decision might be taken in Northern Ireland. [Note that NI courts, unlike those in Scotland, have the same powers to make PPOs as their counterparts in England & Wales]
Impact on claims costs
Most insurers will have been holding provisions against a change in rate in any event so will have already had to make a decision over how to reflect the possible change, but are unlikely to have been using a rate as low as the – 0.75% now set.
The following table shows the impact of the change for a Male at various ages and for every £100k of future life time losses:
Appendix 2 is a graph showing illustrating the scale of the changes in multiplier values for male and female lifetime losses by claimant age.
Policy and retention limits
The very significant increases in settlement sums may impact limits of liability in public liability policies for businesses and even household liability covers – it may even cause some to go above Employers Liability limits. It is also very likely that much of the excess cost will take cases above reinsurance retentions if not already there, and that will inevitably cause impacts on reinsurance pricing where reinsurers already are concerned at PPO liabilities.
Discount for early receipt – Table 27
The advent of negative rates challenges the notion of a “discount” rate where a future period of time results not in a reduction but an increase in the loss. In Helmot v Simon Lord Hope in the Privy Council stage mentioned how inapt it was to continue to refer to “discount” in an exercise that had that outcome. No one is suggesting changing the terminology but this “negative discounting” is most stark in the context of reduction factors for deferment found in Table 27 of the Ogden Tables.
Where a loss does not commence until some time in the future practice has been to further discount the loss to allow for the period of investment of the damages paid now until the loss commences. Now we are in negative rate territory a period of deferment now requires an increase in the multiplier or loss.
As the table above shows, under the new rate a loss which will not arise until 20 years’ time will now have to be increased by 1.16 to allow for the deferment – under the 2.5% rate that loss would have been discounted further by 0.6. It seems odd that to give a claimant money for a loss that does not start for 20 years needs more money than one starting now but that is the consequence of a negative discount.
Part 36 offers and JSMs
Our previous note suggested reviewing cases to identify settlement opportunities prior to the outcome of the review becoming known. Obviously claimants and defendants will now be able to consider any offers based on the new rate which will apply if the case remains outstanding after 20 March.
Claimant Part 36 offers may have been received but rejected or not responded to, but still be open for acceptance. If not withdrawn and the amount is now favourable in the light of the change, urgent steps should be taken to issue acceptances.
It follows too, that any defendant offers which would now be inadequate need to be reviewed. If an increase is needed it could be made by revising the existing offer. It may be possible to argue when the Court considers costs, that the defendant’s valuation has remained the same all along and the only thing that changed was the statutory discount rate which applied to the defendant’s valuation a different assumption as to discount that was required to allow for early receipt.
The original Part 36 should not be withdrawn, but it should be emphasised that this revised/new offer has only been made because of that statutory change. Whilst we cannot say that the argument will succeed it has some substance to it, may be influential to some extent, and will be more strongly advanced on the back of a revised Part 36 offer.
Of course, Part 36 offers do not state a multiplier, and it may be that an offer may remain appropriate if it reflects the different views on heads of loss. Certainly the “margin” may alter, so it is very much a case of offers being reviewed in the light of the change to consider if still appropriate.
It is very likely that JSMs between now and the 20 March will either be re-scheduled or approached on the basis of recognising early implementation of the new rate. In our experience various approaches were taken by claimants between the announcement of an intention to set out the outcome of the review by 31 January and it is possible some settlements will now be reviewed against the size of the rate changes. That may cause additional caution on the part of claimants now approaching settlement meetings.
Roberts v Johnstone – Accommodation claims
There are two aspects to consider – the direct one relating to the cost of alternative accommodation and the indirect one on interim payment applications.
The cost of alternative accommodation
The new negative rate is going to throw into sharp relief the principles underpinning the decision by the Court of Appeal in Roberts v Johnstone and applied since, and recently endorsed by the Court of Appeal, in calculating loss where alternative property is purchased.
The rate used in this calculation was pegged to the discount rate following Wells v Wells (per Lord Lloyd when commenting on and restoring the first instance R v J rate “secondly it will be kept up to date by the Lord Chancellor when exercising his powers under s.1 Damages Act”). It has been recognised that a reducing discount rate would also reduce the amount recoverable under the R v J formula. The same investment return benchmark – the return on risk free investments – flows through both the discount rate and the R v J loss of investment income.
What of a negative rate? On strict R v J principles if risk free rates of return are negative it means that the claimant has not lost any risk free investment income through his capital being tied up in property. Hence, following those principles there is no loss. The claimant retains an appreciating asset in the shape of the property, but in the meantime the capital tied up in it would not have produced any return in risk free investments.
It is very likely that the R v J approach will once again fall under some scrutiny now that we have negative discount rates. We have already seen pronouncements that “R v J is dead”! Possibly claimants will not recognise the link between the statutory rate and the annual percentage under R v J, a link established in Wells, and simply continue to calculate at 2.5%. That is counter-intuitive in the light of the rate change. Previous attempts to find alternatives to R v J have been unsuccessful, but a renewed impetus may now arise.
Impact on interim payments
The R V J position has another context : the impact to interim payments under the “Eeles” approach. As said in the previous note, whereas capitalised accommodation costs are usually included in “Eeles” stage 1 calculations, a reduced or Nil R v J amount reduces the available sum, conservatively assessed, against which an interim payment can be safely awarded. True, the other future loss heads may be higher given the reduced discount rate, but those heads are only brought into account if the claimant is able to satisfy the “need” requirement, and the confidence threshold as to eventual capitalisation of other heads.
At an interim payment stage a claimant is unlikely to be able to persuade the court that damages entirely on a lump sum basis must be the outcome even now the rate has reduced to -0.75%. That would still mean potentially fettering the trial judges ability to award PPOs which runs contrary to the “Eeles” decision. So the claimant still has to face the Eeles’ tests and may struggle on phase 1 in some cases. Of course the reality may be that the Courts tend to look at the situation backwards and make decisions under “Eeles” so as to achieve a certain outcome. However, the relevance of the above point may be during the parties discussion on how to take a case forward with mutual concessions sidestepping the effect of the impacted R v J element of the phase 1 “pot”.
The discount rate change raises quite a number of issues with regard to R v J approach. We will be following up this note with a separate paper setting out our thoughts on how these claims could be approached, particular in the context of a collaborative approach to resolution.
Contingencies other than Mortality – Reduction Factors (RF)
A change in the rate to -0.75% does not impact the reduction factors. However, it will increase the multiplier to which the reduction factor applies, with the resulting adjusted multiplier applying to the annual loss. That means that the need to adjust the factor to fit the claimant takes on more importance.
For example – in the table below we show for two scenarios the loss of earnings multipliers at 2.5% and the new rate and the reduction in the multiplier.
As can be seen the effect of achieving a reduction factor change applied to an annual loss will be worth more as a greater reduction in the multiplier is achieved - may be not huge sums but all vital points to achieve where claims are of such higher magnitudes.
The application of the guidance in the explanatory notes of the Ogden tables, and in the case – most notably the Court of Appeal in Billet v MOD, but numerous others, should now be deployed to adjust both the pre and post-accident adjustment factor where appropriate to do so. So a way to mitigate the effect of the increased multiplier may be found in a more determined argument around the RF to be applied to it based on the facts and evidence of a particular case.
Life expectancy – impairment
A similar point can be made in relation to life expectancy. An impairment – either pre-existing or accident related – will go to reduce the period to which the multiplier applies. Even in cases subject to PPO in respect of some heads of loss, the issue of life expectancy and the associated multiplier will apply to other heads. The impairment may even be to such an extent that the defendant wishes to settled on a PPO basis.
Identifying and establishing a firm position on pre-existing and post-accident impact life expectancy will reduce the multiplier and given that the “notional” age is affected, any reduction in that will have a larger proportionate effect on the increased multiplier.
It follows that it is important to ensure the right approach to the Tables is taken dependent on how the experts have expressed a view on life expectancy. Using Table 1 and 2 will produce a lower multiplier than Table 28, but the choice of either approach has to be made based upon the way life expectancy impairment has been assessed and calculated.
The approach to calculating multipliers
Prior to the advent of the actuarial approach underpinning the Ogden tables, the thought of employing numbers at two decimal places for anything to with the uncertainty of future loss would have seen irrational to some. However, this approach is now firmly embedded in our approach alongside techniques of interpolation, splitting multipliers to provide a starting point from which adjustments should then be made to allow for any claimant specific characteristics not catered for by the tables.
This does mean that accurate use of the tables is essential – there can be a tendency to round up or down for figures that conveniently fit the tables. Across an entire claim with multiple heads this activity can lead to over generous awards. Similarly guesstimating splits of multipliers – not adopting the approach in the Ogden tables – can lead to an incorrect allocation of the multiplier for a period within the overall loss.
A very good example is the calculation of the cost of future prosthetics packages. A number of approaches can be adopted based on the overall cost of a “cycle” of provision to calculating each years cost (whether providing a new prosthetic or just maintenance or sleeve/socket provision), either of which can deliver different outcomes.
So, the increase in multipliers is a time for ensuring approaches to calculating the multiplier produce the most accurate and beneficial result.
Projected Life expectancy underpinning the tables
The current and 7th edition of the Ogden tables are based on 2008 projected life expectancy data (as are the -0.75 multipliers linked earlier). Since then data has been updated in 2010, 2012, 2014 and later in 2017 the Office of National Statistics (ONS) 2016 data will be released.
It may be that an update of the tables to include -0.75% multipliers will provide the opportunity to also update for projected life expectancy data. Much will depend on government resources and with the changes being slight with modest impacts on multipliers the priority should be an extra column.
That said, each update has shown increased life expectancy. However there are some views that the 2016 data will show a plateauing of increases and possibly a reduction. This also follows on the 2014 data showing that projected increases in 2012 and 2013 were overestimated as mortality for those years turned out to be higher than expected. To some extent this mirrors reports of reducing life expectancy in the United States due to lifestyle issues, the same issues that have been mentioned in the reports from the ONS group which considers factors from which projected life expectancies are derived. The 2016 data will be available later during 2017
Although we have seen some claimants seeking to argue for data after 2008 to be used for life expectancy, there has not been any sustained effort to argue for updated multipliers and most views are that any change in the multipliers for post 2008 data is too small or “de minimis”. This should be the argument adopted if there is an attempt to further enhance multiplier increases based on the rate by also arguing a generous approach should be taken to the final multiplier based on changes in life expectancy.
Attractiveness of Periodical Payment Orders
Where does this leave PPOs?
It is interesting that the part of the consultation touching on encouraging the take up of PPOs has not received any mention (nor is it said to be part of the follow up activity only looking at the method for setting the discount rate). The massive change in the discount rate must run counter to the Government’s previous wishes that PPOs should become the norm for future loss; a view expressed at the time the PPO regime came in and also repeated, though perhaps not so strongly, in the review consultation papers.
With their protection against investment, inflation and mortality risk, it was always surprising that the level of take up of PPOs in high value cases remained low (and some reports suggest is in fact dropping). Recent reports said 6% of cases > £1m damages are settling on a lump sum basis, which in itself doubted the inadequacy of the 2.5% lump sum assessment suggesting that was still seen as a good outcome for claimants.
Nevertheless the size of lump sum awards now must inevitably encourage claimants towards the finality and flexibility of a lump sum plus the level of returns possible using low to moderate risk investment vehicles (other than ILGS, which are not used anyway!). The larger lump sum may lead to more favourable comparison against a PPO in financial advice to claimants, when a case is before a Court particularly on those cases requiring approval. Whether Court’s approving awards will be persuaded that the higher sum brings about a level of certainty in the investment and management against the claimant needs again we will have to wait and see. The removal of the triple risks of investment/inflation/mortality removed by a PPO may still hold sway, even if the risks can be reduced with a larger sum.
For those claimant firms offering “one stop shops” including one or all of Deputyship, Trust and Trusteeship and invest management into their service, management of the larger sum is attractive, though note has to be taken of the concerns expressed in the recent case of OH v Craven” about any undue influence arising from “in house” services tied to the litigation solicitor. It could contribute to seeing claimants arguing on approval for a lump sum, or for claimants with capacity a preference for settling outside of trial so that the Court is not involved in the “form of award” debate. In some cases this may be a common cause with defendants. Of course, defendants may still see benefits of PPOs in severely compromised life expectancy cases or may have an established policy of settling on PPOs. Perhaps a return to contested cases on the basis of a defendant arguing for a PPO against a claimant seeking to have the lump sum? Alternatively, defendants obtaining their own IFA advice to argue a lump sum is now appropriate and a PPO should not be the form of award. Compensators will want to look at the effects of the rate change and review both lump sum and PPO strategy.
Head of loss cost containment
This may be stating the obvious but the setting of the discount rate involves assumptions about future nett or real investment returns against a model of a special type of investor, and that drives the multiplier to apply to a separate finding of the annual loss. So as much a driver of claims costs is the valuation of the underlying damages.
However, with the new much higher multiplier the benefit of any reduction in the multiplicand is magnified to the extent of the difference between the old and new multipliers. This means that one of the ways of combatting the impact of the rate change is to make sure that everything that is done on a case – from indemnity, liability, rehabilitation, quantum investigation and assessment, is as tight as it can be so that the multiplicand part of the “M x M” equation is contained at the optimum level as it will be multiplied by a higher multiplier. The value of an additional 5% on liability apportionment speaks for itself when we confront multipliers topping 100!
Of course all this has to be sensibly balanced between (1) the impact of the rate reduction (for some claimant ages, life expectancies, annual losses the change is not that great and may be “absorbed within the range of valuations for head of loss) and (2) the need to settle overall on an amount that it globally acceptable – so it is the balancing act of getting the right loss amount but sensibly in the context of a new range of multipliers.
Impact on Third Party costs
Inevitably there may need to be re-work of schedules and counter schedules to re-present claims at the new rate. However careful watch needs to be kept on time allocated to this as substituting one multiplier for another is a simple mathematical exercise and with the damages software packages frequently in use, very quickly achieved.
Moreover, the level of a discount rate even if it produces much higher damages figure should not by itself require additional work nor make proportionate or reasonable what might have been otherwise for a lower valued case with the previous multiplier. Only time will tell whether the increased values are used as a means to move the baseline for proportionality by reference to claim amount. Defendants need to watch for attempts to do so. Particularly if the extension of fixed costs creates an incentive to generate higher revenue on higher value cases.
Appendix 1– Lord Chancellors statement 27 February
27 February 2017
Ministry of Justice
Change of the personal injury discount rate
Statement from the Lord Chancellor and Secretary of State for Justice:
Under the Damages Act 1996, I, as Lord Chancellor, have the power to set a discount rate which courts must consider when awarding compensation for future financial losses in the form of a lump sum in personal injury cases.
The current legal framework makes clear that claimants must be treated as risk averse investors, reflecting the fact that they may be financially dependent on this lump sum, often for long periods or the duration of their life.
The discount rate was last set in 2001, when the then-Lord Chancellor, Lord Irvine of Lairg, set the rate at 2.5%. This was based on a three year average of real yields on Index Linked Gilts. Since 2001, the real yields on Index Linked Gilts has fallen, so I have decided to take action.
Having completed the process of statutory consultation, I am satisfied that the rate should be based on a three year average of real returns on Index Linked Gilts. Therefore I am setting it at minus 0.75%. A full statement of reasons, explaining how I have decided upon this rate, will be placed in the Libraries of both Houses of Parliament. The Statutory Instrument to effect this change will be laid today, and will become effective on 20 March 2017.
There will clearly be significant implications across the public and private sector. The Government has committed to ensuring that the NHS Litigation Authority has appropriate funding to cover changes to hospitals' clinical negligence costs. The Department of Health will also work closely with General Practitioners (GPs) and Medical Defence Organisations to ensure that appropriate funding is available to meet additional costs to GPs, recognising the crucial role they play in the delivery of NHS care.
The Government will review the framework under which I have set the rate today to ensure that it remains fit for purpose in the future. I will bring forward a consultation before Easter that will consider options for reform including:
I recognise the impacts this decision will have on the insurance industry. My Rt. Hon. Friend the Chancellor will meet with insurance industry representatives to discuss the situation.
Appendix 2 – illustration of scale of change in multipliers between male and female life time losses