A clinical negligence claim is being defended, and a Part 36 offer was made a year ago in an effort to resolve the claim, and to protect the insured defendant and their indemnity insurer on costs. If that Part 36 offer was partly calculated using the compensation brackets in the 14th Edition of the JC Guidelines, then now what? Is that offer still going to provide adequate costs protection? Are medical indemnity insurers' (or EL/PL insurers') indemnity reserves still adequate across the whole book?
The Judicial College Guidelines on personal injury compensation are not binding law, but are often the starting point for lawyers and courts when valuing general damages for personal injury (including clinical negligence) claims. As such, the compensation brackets in the JC Guidelines have a real influence on strategic decisions such as what level of Part 36 offer to make, whether to accept a claimant's Part 36 offer, as well as the amount of the indemnity reserve that insurers should set.
The 15th Edition was published recently. There are no major changes to the overall structure of the guidelines. There are some adjustments made to existing chapters and brackets. More importantly, been an increase of an average of 7% in the suggested range of damages to reflect inflation since the last edition.
So what are the implications for medical indemnity insurers (or EL/PL insurers)? In our view, those with a book of Clinical Negligence (or other Personal Injury) risks might need to consider their indemnity reserves across the board to ensure that they are still adequate. The increases to the JC Guidelines will likely have at least some effect on the estimated quantum of general damages in most ongoing claims. For individual claims, the difference of a few thousand (or even a few hundred) pounds in the general damages figure could easily make the difference between a Part 36 offer being protective on costs, and the Claimant beating it and being entitled to large additional amounts of adverse costs. Also, on average across a whole book the cumulative effect could be that more individual claims will be found to have been somewhat under-reserved. Even where the increases are only a few thousand (or even a few hundred) pounds at most in each individual claim, this could make a significant difference to insurers, over a whole book of such risks.
Panel defence solicitors instructed by insurers should also take the opportunity to check whether advice given before the 15th edition was published still holds good .Those lawyers should consider revisiting any Part 36 offers made on behalf of the insured defendant, to check whether they will provide adequate costs protection. Similarly, if a claimant has made a Part 36 offer, it would be prudent to reconsider whether the revised guideline compensation amounts in the 15th edition makes a difference to whether it would be advantageous to accept the offer. At the same time, if the changes in the 15th edition make a difference to whether a recommended indemnity reserve or settlement authority is still adequate, then updated advice should be provided to the insurer client right away.
For more information please contact Rebecca Reynolds, Associate +44 20 7645 9529