Insurers, lawyers, and actuaries have been keenly anticipating the publication of the new Ogden tables. These have been updated, in particular in relation to projected mortality rates. Terms of years spiralling into the future are filled with doubt and uncertainty. Understandably insurers and lawyers alike would be most unwilling to accept that established annual losses ("multiplicands") would continue for lengthy terms, without actuarial assistance in determining for how long they should run.

Ogden tables

The purpose of Ogden 7 (and indeed the purpose of the previous tables) is to assist with the calculation of lump sum damages for future losses in personal injury and fatal accident cases in the UK.

The tables provide figures in terms of years ("multipliers") to assist in calculating the appropriate period of loss. In essence, the multiplier is the figure by which a multiplicand is multiplied, in order to calculate the total damages for that element of the claim. It takes into account a number of factors, such as accelerated receipt and mortality rates. For loss of earnings claims it also now allows for factors such as formal qualifications and disability, and it was the introduction of these contingencies that distinguished Ogden 6 from its predecessors. They remain within Ogden 7.

Mortality rates

The most notable change within Ogden 7 is that it incorporates recent mortality rates, as produced by the Office for National Statistics.

Mortality is, of course, the predominant consideration when establishing a multiplier for a lifetime loss - with a claimant’s projected length of life being the starting point. With the population’s life expectancy increasing since the publication of Ogden 6, damages for annual losses have increased under Ogden 7. For example:

  • Under Ogden 6, a male aged 20 with a lifetime loss would have a multiplier of 31.63. Ogden 7 provides for a multiplier of 32.10 - an increase of 0.47. In monetary terms, if he had a lifetime loss of £10,000, he would receive £4,700 more by way of damages under Ogden 7 than he would under Ogden 6.

The impact is more prominent when dealing with older claimants:

  • Take for example a claimant aged 70 with a lifetime loss of £10,000. Under Ogden 6 he would have a multiplier of 12.30 and would receive £123,000 in damages. Under Ogden 7, he would have a multiplier of 13.44, an increase of 1.14, and would receive an award of £134,400 - an increase of £11,400 from that under Ogden 6.

Additional examples are given below.

Disability

It was hoped that Ogden 7 would bring clarity to the definition of "disabled" and guidance about the application of disabled discounts.

The definition of disabled has changed slightly. It no longer refers to "a progressive illness or an illness" but rather "an illness or a disability which has or is expected to last for over a year or is a progressive illness" (referencing the Equalities Act 2010). However, the revised definition has not provided much guidance for practitioners.

Tables B and D continue to apply if the claimant is disabled, with Tables A and C applying if he is not. The application of the discounts can dramatically affect multipliers, for example the term of years of discount reduces remarkably if a claimant becomes disabled.

The judiciary has historically taken a broad approach to the application of disabled discounts (Conner v Bradman [2007], Clarke v Maltby [2010]) and it is still uncertain as to how disabled a claimant should be before a full discount can be incorporated into an Ogden type calculation. It is expected that guidance and the inclusion of a clearer framework will be central amendments within Ogden 8.

Discount rate

On first glance the new tables are now bigger and broader than before. This is due to provision for a wider range of discount rates, for the first time including negative figures for the rate of return - from minus 2 percent to plus 3 percent.

The discount rate is set by the Lord Chancellor and has been fixed at 2.5 percent since 2001. However, claimants’ representatives have long been arguing that the rate is too high and APIL has brought judicial review proceedings in this regard.

In Helmot v Simon [2010] the Court of Appeal in Guernsey refused to adopt a discount rate of 2.5 percent, as it had no application in their jurisdiction. Instead the Court applied a discount rate of minus 1.5 percent to the Claimant’s largest future losses (care and loss of earnings) and a 0.5 percent discount rate for all non-earnings related future losses.

However, in Love v Dewsbury [2010] (a case where Kennedys acted for the insurers) the High Court rejected an application to adjourn the computation of damages for future losses pending review of the discount rate.

Justice minister Jonathan Djanogly confirmed earlier this year that the Lord Chancellor is in the process of reviewing the discount rate and has sought views from HM Treasury and the Government Actuary (as required by the Damages Act 1996). A consultation paper is expected, although no timescale has been given for this.

The future

Ogden 7 is considered very much an interim revision, with a number of issues yet to be considered by the Working Party and implemented into the tables. Whilst the tables have been updated, particularly insofar as projected mortality rates are concerned, Ogden 8 is expected to provide the greater overhaul.

Ogden 8 is expected not only to include updated mortality rates, due to be released at the end of 2011, and greater guidance on disability discounts, but perhaps also an increased number of tables to reflect different possible retirement ages. Such an amendment was not included within Ogden 7 as the Working Party considered that reasonable accuracy could be determined through interpolation ("splitting the multipliers") and further tables were not necessary.

Ogden 8 is expected to be available in Autumn 2012.

Additional examples

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