An end to multi-million pound compensation payouts?

Large-scale lump sum compensation payments for accidents and medical negligence claims are set to end. Associate and personal injury lawyer Jonathan White explains more.

Up until now payments have ranged from a few thousand pounds for minor injuries, to multi-million pound payments for very serious claims. Traditionally a lump sum settlement marked the end of a case.

But those involving significant injuries are virtually impossible to accurately value. When a child suffers a serious brain injury, establishing their life expectancy and long-term care needs is hard - and any lump sum will either over-compensate or under-compensate them.

Courts considering large claims for compensation now have powers to opt for periodical payments.

Future losses make up the bulk of compensation payments. In serious cases, an injured claimant often has significant care needs, which can now be paid by the defendant through regular periodical payments, often for the rest of the claimant�s life. It means the claimant has the certainty of regular payments while the defendant has a guarantee they will not be over-paying.

A Periodical Payments' Order is guaranteed by the Financial Services Compensation Scheme and linked to the Retail Prices Index to provide a tax-free income.

But they are inflexible and the claimant may not benefit from the closure that a lump sum brings. Insurers are also unable to close their books until the claimant dies. Courts can impose periodical payments - even if a lump sum settlement is favoured. There are also significant ongoing legal battles relating to the price indexing of long term care costs and the potential to off-set care provided by local authorities.

Periodical payments will cut the number of seven-figure compensation payments, but they will safeguard long-term security for severely injured accident victims.

For more information on personal injury or if you would like advice, please contact Jonathan White on jonathan.white@harveyingram.com or call 0116 257 6145.