Future Losses

The calculation of future losses in personal injury claims is always highly speculative.  Assumptions have to be made as to life expectancy, probable career paths, inflation and the future value of money.  To make life easier actuaries produce statistical tables (called Ogden Tables) to be applied.  While the tables make our lives easier, the tables are complicated and many in the industry do not understand or appreciate their significance in the calculation of damages.

The most significant change to the tables in recent years is that since May 2007 the tables have taken into account contingencies other than mortality.  The tables are therefore designed to be more specific to the circumstances of the injured party.

One of the simplest aspects of the tables is a future value of money calculation.  In simple terms, you will be able to buy less for £1 in a year than you can now.  If you invest the money it will be worth more in a year's time, but whether the increase keeps up with or outstrips inflation then needs to be taken into account. The Lord Chancellor sets the anticipated rate of return on investments and this has been set at 2.5% since 25 June 2001.

The tables can be used for future loss of earnings claims, pension claims, losses for fixed periods and losses deferred for fixed periods.  The most recent version of the tables allows for adjustment of loss of earnings claims to take into account any pre-existing disabilities and the education and employment status of the injured party at the time of the accident. 

The tables work on a "multiplier" and "multiplicand".  The multiplicand is the annual loss at today's rates.  The tables provide a multiplier based on the age of the injured party at the time of the calculation, not at the time of the accident.

The tables provide a general approach based on life expectancy assumptions.  Those assumptions can always be displaced by case specific evidence, such as a family history of early death.

We are here to help 24 hours a day 365 days a year.  Either e-mail us anytime, call (01296) 662770 (Nick) or (01525) 373322 (Richard) during the normal working day or (07973) 424178 in an emergency.