Change to injury payouts planned

The government yesterday introduced proposals to change the basis for compensating victims of personal injury.

The government yesterday introduced proposals to change the basis for compensating victims of personal injury.

Under the current system, hundreds of claimants who make unexpected recoveries are over-compensated by the courts, while a "damages windfall" can be passed on to relatives if the claimant dies before the money has run out. There is no obligation for successful claimants or their families to repay compensation if the circumstances change.

In a consultation paper published yesterday, the Lord Chancellor, Lord Irvine of Lairg, outlined the possible alternatives to lump sum compensation. The Government suggests a structured settlement where the claimant receives an income through instalments which would take account of either a premature recovery or an unexpected deterioration in the claimant's condition. This would also prevent people frittering awaydamages on an extravagant lifestyle or poor investment.

The Government warns: "Should the claimant die much sooner than the life expectancy incorporated in the settlement, the balance of his damages might become a windfall to his beneficiaries."

The paper says a "reckless" claimant could through "extravagant spending dissipate the damages awards quickly, and then fall back on to the benefits system for support". But it adds: "A claimant who survives significantly beyond the anticipated life expectancy, may be forced to spend his last years relying on benefits."

The Lord Chancellor's decision to explore the way damages are structured comes ahead of next week's Court of Appeal judgment which is expected to substantially increase damages to victims.

Allan Martin, chairman of the Institute of Actuaries' professional damages group said: "Lump sums compensate on the basis of a certain life expectancy. The problem is that people do not die on time."