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Looking Ahead: Catastrophic Injury

29 March 2021
The impact of COVID-19 on health and social care is likely to have long term consequences for catastrophic injury claims handling.

We'll hold our hands up: 12 months ago we did not predict the turmoil and devastation which 2020 would wreak upon the country and the world.

So much can happen in a relatively short period of time and the first and foremost thing to say is that looking forward we hope that the world will be a much safer place for anyone affected by COVID-19.

The pandemic has affected every aspect of our lives. It is amazing to see how the insurance industry has coped under such challenging circumstances and, if we can be forgiven for a little self-congratulation, we think we have adapted to the demands of the "new normal" as well as any in the legal world. However, even as we entered 2021 starting to believe that there was light at the end of an extremely dark tunnel, not only did that tunnel seemingly lengthen on us but we also all recognised that we hadn't begun to scratch the surface when it comes to the long term effects of the pandemic.

As evidenced by their rightful position in the vaccination queue, carers are officially in danger. To suggest that such a cohort should be remunerated at less than £10 per hour is indicative of a country with skewed priorities and cannot be sustained. The inevitable increase in carer salaries will have an obvious and immediate impact on the cost of claims, something which is already happening.

The provisional data published by the ONS at the end of last year indicated an annual increase of 5.47%. That is an increase of more than 2% above the average increase (3.2%) for the last 10 years. The impact is significant in a year when the full effect of the pandemic would not have been fully felt or fully reflected within the ONS data.

Our own database, gathered over the last 3 years, suggests that agency care rates are fuelling the majority of the rise, no doubt driven at least in part by consolidation in the ownership of care and case management companies.

What claimant behaviours will this drive? We predict a greater interest in periodical payment awards. Why would claimants be willing to accept the risk of annual increases of > 5% unless they are being significantly overcompensated for a lump sum award?

Last year we correctly predicted the impact of Swift upon accommodation claims but, as a decision, does it create just as much uncertainty as it solves?

What is a short life? How will accommodation claims involving claimants with a limited (in terms of duration) need for accommodation be dealt with?

Sadly, it feels as if there is considerable scope for Swift to be little more than an initial skirmish in a long-running legal battle. DWF's catastrophic injury team are not in the business of arguing for the sake of arguing: we are in the business of solutions and we are already talking to our insurance clients about creative and real solutions to the problem.

More and more, 2021 needs to be the year of creative solutions. 2020 has taught us that we do not all need to be sitting in a city office five days a week. We have adopted technology and ways of working that we would have thought impossible only 12 months ago. We have found that there are new ways to work: we probably haven't found the balance yet, but as per the quote first attributed to Plato: "necessity is the mother of invention".

The world has been turned on its head and in every walk of life people have had to adapt to doing things differently. Virtual healthcare and telemedicine have seen unprecedented rates of adoption. It is clear that on the other side of this current crisis there will be huge backlogs in NHS treatment with consequent delays in the progression of claims (as if the delay endemic in the court system wasn't bad enough). However, there are positives too: there will inevitably be a move to more and more private healthcare solutions in 2021 where technology and creativity will be at the fore; these should be reflected in reductions in claims for therapy and rehabilitation costs, not least where travel currently forms a disproportionate element of the claims.

One thing is for sure, there is going to be no short-term end to these "interesting times" but we will continue to provide our clients with practical advice, offer them creative solutions and partner with them to ensure we ride the challenges together and effectively.

Read our full report 'Looking Ahead in the Insurance Sector'.

Further Reading