Q&As

Have there been any recent developments in the assessment of periodical payments and specifically what has been the approach to indexation of these types of award?

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Produced in partnership with Peter Edwards of Devereux Chambers
Published on LexisPSL on 24/04/2018

The following PI & Clinical Negligence Q&A produced in partnership with Peter Edwards of Devereux Chambers provides comprehensive and up to date legal information covering:

  • Have there been any recent developments in the assessment of periodical payments and specifically what has been the approach to indexation of these types of award?

This is an area in which developments tend to be by way of trends rather than progressive court authorities since Periodical Payment Order (PPO) cases rarely proceed to a contested trial.

The current trend is distinctly away from the use of PPOs, the numbers falling dramatically since a peak in 2012. The main reasons for this are as follows:

  1. the reduction in the discount rate from 2.5% to -0.75%. This has made lump sum settlements far more favourable for claimants. For example, for a 20-year old catastrophically injured claimant requiring a care regime costing £100,000 a year, the lump sum award would be around £3.2 million at a 2.5% discount rate. The award rises to almost £9 million at a -0.75% discount rate. The increase in lump sum awards clearly makes that option far more attractive and provides ample funds for investment, securing a rate that is better than -0.75% in real terms. It is increasingly common for the Financial Advice Report to be recommending lump sum settlements as opposed to PPOs. A high quality Financial Advice Report is essential in all large claims in which there is a PPO/lump sum debate

  2. there is an increasing problem with the levels of indem

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