article
Is it time to overhaul the PI award regime ?
24 March 2009
Over the past few years law firm Browne Jacobson has been
undertaking a regular analysis of the Judicial Studies Board’s
(JSB) bi-annual publication of guidelines on personal injury (PI)
compensation payouts. James Arrowsmith, PI expert at the firm
believes it may be time to take a fundamental review of the tables
and their practical use to insurers.
An analysis of the 9th edition of the JSB Guidelines and a
comparison to the previous edition guidelines shows some
interesting phenomena. In short, the practical use and real value
added by the tables is diminishing.
There are several specific concerns surrounding the JSB
Guidelines that require serious consideration if they are to
continue to perform their objectives of bringing clarity and
consistency to personal injury awards - the avowed intent of the
Guidelines as expressed by Lord Donaldson in the foreword to the
first edition in 1992.
First, of the 302 categories of injury award contained with the
guide only 35 relate to awards of under £5,000 and five categories
to £1,000 or less. Given that well over 90 per cent of personal
injury claims are for less than £5000, the guidelines provide
minimal assistance in this significant category of cases.
Certainly, while guidance on compensation for most major,
chronic and serious injuries is in abundance in the latest JSB
publication, clarity on the vast majority of injuries – typically
cases of whiplash injury and “slips and trips” – is conspicuous by
its near absence, and, where present, by the very broad and non
specific approach taken. In our experience it is among the smaller
category of case where certainty and consistency is most needed to
inhibit the spiralling frictional costs which quickly become
disproportionate.
Secondly, there appears to be an inconsistency in the way that
some awards have been revised. Generally, one would expect the
awards to rise in line with inflation as a starting point and then
there be a further revision in some awards for special
circumstances. The rate of inflation and RPI between the dates of
publication of the 8th and 9th editions was in round terms 10 per
cent, and generally speaking most awards are in line with that,
with some variation as awards are rounded up or down for
neatness.
However, some awards fall curiously out of that 10 per cent
range. For instance “uncomplicated hernia” has risen by over 22 per
cent at the higher end to 9.29 per cent at the lower end of the
bracket – an average increase of over 15 per cent, whereas
“cheekbone fracture” has risen by an average of only 7.87 per cent
(high 7.84 per cent; low 7.89 per cent). There is no obvious
explanation as to why these fall outside the usual parameters. If
these guidelines have been based on actual awards where the judges
in those cases have felt that because of special circumstances they
were entitled to depart from the guidelines then, by definition,
those special cases should not now be factored into the equation
when assessing the revised norm
The JSB Guidelines are not intended to be a ‘ready reckoner’ or
provide a tariff of awards, though maybe with smaller cases, that
sort of approach might be helpful to bring certainty and
consistency with quicker resolution of cases at less cost.
While the bi-annual PI tables were never intended to be a
panacea covering every eventuality, there are still clearly areas
where the guidelines could be improved.
Clearly, there is a lot of hard work that goes into the
development of each edition of the tables. But, could not much of
the work in compiling the guidelines be saved by returning to the
previous methodology of merely applying an inflation factor (in
this case to a previous edition of the Guidelines rather than
“comparables”)? Maybe those categories of awards where the JSB
feels that inflation is not enough (or too much) should be provided
by way of exception reports with explanation?
Even if it is felt that this approach is a bridge too far, or a
retrograde step, should we not be entitled to an explanation of the
reasons why some awards fall out of the inflationary norm?
Certainly, in their current form, the inconsistency of applied
inflation on some categories of injuries (but not others) is
baffling to most users of the guide.
Greater guidance should be given in smaller cases which are
largely ignored by the current JSB publication and which will in
future editions become an increasingly endangered species – at
great cost to our system of civil justice.
Finally, should insurers concern themselves more with the
Guidelines? After all, they are in most cases the paying party, and
awards that carry a greater increase than inflation will impact on
their finances (and our premiums).