The Sixth Edition of the Ogden Tables was published on 3 May 2007. In calculating multipliers, defendants and their insurers will now need to obtain evidence detailing the claimant’s disability and ‘educational attainment’.
The main changes are:
- an increase in multipliers for pecuniary loss and loss of pension
- revised calculations for contingencies other than death to include level of ‘educational attainment’
Multipliers for pecuniary loss and loss of pension
There had been fears that the multiplier figures could increase by more than 10%. Whilst the figures now use a forward projection based on the National Population Projections 2004, rather than retrospective historical interpretation, there has in fact been very little change in the multipliers for loss of earnings. Multipliers for pecuniary loss for life have increases of between 0% and 4%. Review of the tables indicates the figures have had most effect on loss of pension multipliers for younger claimants.
The new multipliers also take into account research findings that people spend more time than expected out of work and also allow, where relevant, for time taken out to care for children and other dependants.
The most striking difference is the new method of calculating contingencies other than for mortality. The normal practice to apply reductions depending on type of employment and geographical situation are no longer recommended. The new starting point, once gender has been taken into account, is to consider the following:
- whether the claimant was employed or unemployed at the time of the accident
- whether the person is disabled or not (both before and after the accident)
- the level of ‘educational attainment’.
The first consideration is self explanatory. The second aspect involving disability requires more thought. The definition of “disabled” is as follows:
“A person is classified as being disabled if all (our emphasis) three of the following conditions in relation to the ill-health or disability are met:
- has either a progressive illness or an illness which has lasted or is expected to last for over a year,
- satisfies the Disability Discrimination Act definition that the impact of the disability substantially limits the person’s ability to carry out normal day to day activities and
their condition affects either the kind or the amount of paid work they can do.”
The notes to the Ogden Tables go on to provide examples of how a disability or health problem may affect day to day activities including mobility, ability to lift everyday objects, physical co-ordination, reduced memory or ability to concentrate and perception of risk of physical danger. Whilst this would not appear to be an exhaustive list it is interesting to note that the last example of perception of risk of physical danger does not include “(significant) fear of heights or underestimating risk of dangerous hobbies”. A fear of heights can be a psychological element in a claim involving a fall from height and this may cause difficulties when defendants seek to exclude such a disability when it arises as a result of an accident.
The third contingency is perhaps the most radical departure from the previous rules in that it requires assessment of the level of educational attainment. The reason for this introduction is as a result of the research used by the Ogden committee which showed that once educational attainment was assessed, the previous factors of occupation and geographical position had a much reduced effect. The three levels are (i) degree level (ii) GCSE and up to A level, and (iii) limited or no academic qualifications. Further clarification is given that those who work as a professional such as an accountant, nurse or lawyer without a degree, should be deemed to have one.
The Government Actuary considers this will allow a more mathematical approach to loss of earning claims, in particular where there is a known or estimated value for a claimant’s residual earning capacity. The explanatory notes consider that some loss of earning claims will be reduced as a result of these figures. However, we consider that some claims may increase substantially once the multiplier for annual residual earning capacity is altered for postaccident disablement and educational attainment.
Previously the same multiplier could be used for both future loss of earnings and residual earning capacity for many cases, however, the multiplier for residual earnings can now be reduced considerably once the claimant satisfies the definition of disabled. The net effect is that the residual earning capacity credit given by the claimant against their future loss of earnings claim is reduced and the net sum payable by a defendant is likely to be higher.
Whilst such an approach is unlikely to affect claims where the claimant suffered a severe disability as a result of the accident and thus is unlikely to ever work again, there is now a further variable for less serious claims which require assessment of the degree of disability. It would appear that once a claimant can be described as disabled then the whole contingency will apply.
The new multipliers take into account the research findings that people spend more time than expected out of work and also allow, where relevant, for time taken out to care for children and other dependants. The explanatory notes indicate that such an approach may avoid the need for a Smith v Manchester Corporation award. However, from past experience we are aware that such awards are still claimed where there is a risk of the claimant losing the post-accident job.
Many insurers are still likely to approach reserves for claims with residual earning capacities allowing full loss in any event with a reduction to reflect possible earnings. However, the scope for very little residual earnings if the claimant is disabled would appear to have been increased. It remains to be seen how claimants will advance their cases by using the new approach. In the past claimants have often claimed full amounts and left any arguments for reduction to defendants. Despite possible arguments that claims are inflated, this is likely to remain the same.
Therefore it is of utmost importance that defendants collate the necessary medical evidence to deal with issues of disability as well as information as to the claimants educational attainment. A good understanding of how the new multipliers are calculated is needed to reduce claims for full loss. Whilst some claimant’s solicitors will take some time to adapt it is important the defendants are fully aware of the implication of the new approach for reduction of multipliers. The worked examples in the explanatory notes give a helpful factual matrix and are well worth reading to give an understanding of how the new approach may affect future claims.