1. The Components of a Personal Injury Reserve

Question 1

It is likely that all personal liability claims, regardless of their complexity will include the following components:

Answer 1

1. General Damages
2. Special Damages
3. Repayable Compensation Recovery Unit (CRU) Damages
4. Claimant Costs
5. CH/LA Expenses

Question 2

What would the LA/CH have to consider under more serious and life changing consequences for the claimant?

Answer 2

1. Future loss of earnings
2. Loss of pension benefits
3. Long - term care and mobility
4. Long term medication
5. Treatment costs

Question 3

What are general damages?

Answer 3

• Physical pain suffered and injury to feelings (psychological)
• Hard to quantify

Question 4

What financial calculation are General Damages determined by?

Answer 4

They aren’t defined by any precise financial calculation and can therefore be difficult to quantify.

Question 5

Why should reserves not be held too high if this isn’t accurate?

Answer 5

If the Reserve is too high, funds will have been unnecessarily held in reserve, rather than invested to improve the insurance company profitability

Question 6

Why should reserves not be held too low if this isn’t accurate?

Answer 6

If the Reserve is too low, and
this is a more serious situation, there will be inadequate funds held in reserve against the particular claim and there will be a need to move funds from the Insurer’s investment portfolio affecting the business profitability calculations.

Question 7

How should you measure a personal injury liability claim?

Answer 7

Worst case scenario - determined on basis that PH is legally liable based on info provided. Do not add contributory negligence to reserve

Question 8

How to reserve under liability?

Answer 8

Determine the legal liability and then the cost extent of that liability

Question 9

What is JCG?

Answer 9

Judicial College Guidelines

Question 10

What do the Judicial College Guidelines provide?

Answer 10

• An alternative guide to General Damages.
• Provide guidance on the range of General Damages that are likely to be considered by court when assessing a particular injury.

Question 11

What are Special Damages?

Answer 11

Compensate for a provable financial loss. Eg medical expenses, loss of earnings, past expenditure (eg travel to hosp).

Question 12

What are Repayable CRU Benefits?

Answer 12

Part of the Department for Work and Pensions (DWP)

Question 12

What is CRU?

Answer 12

The Compensation Recovery Unit

Question 13

What are the source materials for quantifying GD?

Answer 13

• Court
• Case Law
• Quantum Reports
• JCD Guidelines

Question 14

By virtue of the Social & Security (Recovery of Benefits) Act 1997…

Answer 14

“no person shall make
a compensation payment without first applying to CRU for a Certificate of Recoverable
Benefits. The compensator will be liable to pay DWP an amount equal to the total amount
of the recoverable benefits”

Question 15

What must a CH/LA do when dealing with a personal injury liability claim?

Answer 15

• Register the claim with CRU
• A Certificate of Recoverable Benefits must be obtained before any claim settlement payments are made to
  the Claimant.

Question 16

What will the CRU certificate show?

Answer 16

Whether the Claimant has received any financial assistance from
the DWP as a consequence of the injury sustained in the accident. Examples are incapacity benefit, sickness benefit and income support.
- These are recoverable by the DWP

Question 17

What are claimants costs?

Answer 17

• In PI claim, claimants costs usually have lawyers - their fees.
• Consideration to be given when producing reserve

Question 18

The CRU Certificate will show whether the Claimant has received any financial assistance from
the DWP as a consequence of the injury sustained in the accident. Examples include:

Answer 18

1. Incapacity benefit
2. Sickness benefit
3. Income support
   These are reimbursable to the DWP.

Question 19

Can hospital treatments and ambulance service changes be reimbursed to the DWP under the CRU?

Answer 19

Yes, separate cert of NHS charges is required.