As you are probably aware, the insurance industry has had a shakeup with the introduction of the Ogden Report which dramatically affects how payments are made when there is a lifechanging accident. What people do not seem to realise is that this will also dramatically affect our beloved National Health System in a time when she is already creaking to cope with escalating compensation claims.
The Office for Budget Responsibility has stated “the government was now setting aside an extra £1.2bn a year to meet the expected costs to the public sector – and it would push up car insurance premiums by around 20%.The overall effect is to increase borrowing by £1.8bn this year and around £1bn each year thereafter.” The Association of British Insurers, which wants an overhaul of the system, described the costs as extraordinary.
Huw Evans, ABI director general, said the report confirms a massive £6bn hit to the NHS caused by the lord chancellor’s decision to cut the personal injury discount rate to -0.75%”. The rate was previously 2.5%. To put this in to perspective the national heath was awarded in the November budget £6.3 billion of extra NHS funding. So, if the above is to be believed then we have already spent this. This was money that we were told was vital to the survival of the NHS. The government has already shot itself in the foot as it is collecting far fewer taxes from insurers, as they are not making the profits that they previously did, and so we are not able to tax them at the same level.
NHS Resolution (formally the NHS Litigation Authority) estimated last year that the provision for future clinical negligence costs, relating to claims arising from incidents that have already occurred, stands at £56.1billion. I appreciate the motive behind the reforms was to assist those less fortunate than ourselves, after all how can we expect that someone with a severe brain injury to make sound investment decisions ( although, it would be naïve to assume that someone who has been successfully awarded many millions of pounds in compensation, has not had access to high quality legal and professional help and guidance throughout their journey ) but we simply cannot afford compensation for clinical negligence at this level.
We must address these reforms before more irreparable damage is done to our precious NHS.
Richard Evans
Richard Evans has worked in the insurance industry for over 35 years and is a Director here at Amicus
