The last time a review took place was in 2001.
The real news this week should be that for the last few years with stagnant interest rates, many injured people who have brought claims have, in fact, been undercompensated. Those who have life changing injuries, their family and friends caring for them will know how costly equipment and the cost of care is. These expenses have risen way above the return that injured people have seen on their compensation over those years.
The Lord Chancellor announced to increase the funding for future losses by changing the way the figure is calculated in a long put off review. Those who now suffer life changing injuries, through no fault of their own, should for the time being receive compensation that more accurately reflects the amount they will need to spend in the future. The principle of full compensation has been long established in our law.
It may, however, be short lived. Immediately after the announcement insurers took to the airwaves through the Association of British Insurers to complain that insurance premiums would need to rise to pay for the increased compensation. However, only a very small proportion of injured claimants will benefit from this change, as it is only those with life changing injuries that will be affected. The vast majority of claimants do not fall into that category.
The insurance industry is about to benefit from changes reducing compensation for the smaller value road traffic accident claims and this will restrict compensation to be paid in the vast majority of cases and also these changes mean legal costs will not need to be paid in the majority of road traffic accident claims.
It has been said that lawyers will benefit from this change. That is not the case. Future losses are protected in law from lawyers' success fees and there cannot be a deduction. The change is purely for the benefit of those with severe injuries.
The insurance industry is already lobbying for a change to reduce the amount paid and the government has promised a consultation in the short term. For the time being, however, it is welcomed news that the Lord Chancellor has finally made the right decision.