Compensation Tables for Personal Injury2 Feb 2021 | Rob Aylott
What are the Ogden Tables?
If you have been injured in an accident that was not your fault, you may be entitled to compensation. The Ogden Tables are a set of guidelines used by personal injury solicitors to calculate how much compensation a claimant should receive.
The Ogden Tables are a set of guidelines for calculating personal injury compensation. Solicitors, insurance companies and the courts use them to figure out how much compensation should be paid to people who have suffered injuries. The tables were first published in 2007 by the UK government and are updated every few years. The latest version (version 8) of the Ogden Tables was published in 2020.
Why do solicitors need the Ogden Tables?
Personal injury compensation exists to help put an injured person’s life back to where it was before the accident happened. As such, the compensation amount will differ from person to person. For example, a 26-year-old who can no longer work due to a serious injury can expect to receive a higher lump sum for loss of earnings than a 60-year-old who suffered the same injuries, since the younger person is so much further from retirement.
The value of money changes over time. When negotiating compensation, solicitors are careful to ensure that a lump sum payment agreed today will be enough to cover future costs, such as earnings the injured person will miss out on and the personal and medical care they may need for the rest of their life. The Ogden tables are an aid for solicitors to help them calculate the right lump-sum amount.
How do the Ogden tables work?
The Ogden Tables work by taking into account the following factors:
- The severity of the injury
- The age of the claimant
- Whether or not the claimant has suffered any financial losses as a result of the accident.
For each of these factors, there is a corresponding amount of compensation that the claimant may receive. For example, suppose the claimant is a 50-year-old woman with a normal life expectancy who will need care costs of £10,000 a year for the rest of her life. According to Ogden Table 2, which covers care costs for women with normal life expectancy, the claim would be worth £390,900.
Can I use the Ogden Tables to calculate my own compensation claim?
No, the Ogden Tables are only to be used by solicitors. If you try to calculate your own compensation claim using the Ogden Tables, you may not receive the full amount of compensation that you are entitled to. It is always best to speak to a personal injury solicitor who can help you calculate your claim.
Lump-sum vs periodical payments
The various heads of damages relating to future losses may be sought either as a one-off lump sum or by way of periodical payments which are annual payments of the head of loss paid until the Claimant dies or for other agreed fixed periods of time. For example, future private care costs will be paid at an initial agreed annual sum which is then increased by an inflationary index to take into account the increase in care costs generally.
There are advantages and disadvantages to both and it is important that proper advice is sought before committing to either of the options available. Every Claimant’s circumstances are different and usually, an Independent Financial Advisor’s report will be sought to advise on what will meet the Claimant’s needs.
The Court is obliged to consider periodical payments as a form of award for future financial loss. Various conditions must be met for the Court to order these.
What is the personal injury discount rate?
Lump-sum compensation payments are calculated by multiplying two numbers:
- Multiplicand – the annual loss the claimant is expected to suffer, at today’s rate
- Multiplier – a figure determined by applying the discount rate.
This means that when a personal injury claimant accepts a lump sum compensation payment, the final figure is adjusted for the “discount rate.” The discount rate reduces the amount of compensation that a claimant will receive. This is to reflect the fact that the lump sum will be spread over many years, and the claimant is likely to earn interest by investing the money before they spend it.
The personal injury discount rate is set by the UK government and is applied through the Ogden tables. The current discount rate is minus 0.25%.
Here’s an example. Suppose an injured person has to take a different job because of her injuries and her yearly salary decreases by £8,000. The multiplicand is £8,000.
The solicitor would then locate the appropriate multiplier in the Ogden tables. The tables cover scenarios for men and women at different current ages and different retirement ages, so it’s a matter of selecting the right multiplier from the list.
Multiplying the two numbers together should produce a lump sum amount which, if invested, will be equivalent to £8,000 per annum (in this example) until the claimant’s pension age.
Advantages of lump sums
The advantage of a lump sum for a Claimant is that the Claimant can spend the lump sum whatever he or she wishes and can pass it on to their Estate when they die. It gives a Claimant total flexibility with their damages.
The advantage of a lump sum for a Defendant is that once it is paid, the Defendant is free from any future responsibilities to the litigant. The insurer can “close their file” upon payment.
Multipliers and Multiplicands Law
When Courts are required to calculate damages for example for future loss of earnings, the calculation can only ever be based on hypothetical future conditions. The primary aim of any calculation is therefore to produce a monetary figure which represents the actual future loss. To a certain extent, this means crystal ball gazing regarding a Claimant’s future career.
Any future loss of earnings award should take into account any future promotions, pay raises, and bonuses and should be calculated up to the Claimant’s anticipated normal retirement age. A multiplicand is an annual figure for loss which is multiplied by the “multiplier “ which represents the number of years of future loss to be claimed. Losses can be claimed to various ages of a Claimant eg. To various retirement ages or for the expected duration of the Claimant’s life expectancy.
For years, multipliers in the UK were generally based on the multipliers used in comparable cases. This situation changed when the book, Actuarial Tables with Explanatory Notes for Use in Personal Injury and Fatal Accident Cases was published in 1984. The book of tables was compiled by a group of lawyers and actuaries who were working in victim compensation, a group which was headed by Sir Michael Ogden Q.C. The publication became known as The Ogden Tables and is currently used by actuaries and lawyers to calculate the lump sum which must be paid in compensation in the case of personal injury or death.
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