Are we living longer? Where does this leave Claimants?
Anna Neil considers the most recent life expectancy figures released by the Office for National Statistics
The Office for National Statistics (the ONS) published data in December which suggested that we are living far longer than ever before, with no sign of our increased age “tailing off”.
The official life expectancy is 79 years for a healthy baby boy and 83 years for a healthy baby girl. Yet ONS figures show that, in fact, men are on average reaching 85 years of age and women, 89 years of age. This means that official life expectancy figures may be out by as much as six years.
This could have an affect on Claimants with personal injury and medical negligence claims who will suffer future financial loss and expenditure as a result of their injury. A good example of this sort of loss is the cost of future care. If a Claimant lives longer than expected, they may receive insufficient compensation to pay for the cost of care for the rest of their life. This is because, when assessing how much money a Claimant needs to receive now to pay for expenditure in the future, the Court will multiply the annual cost by an actuarial figure (known as the multiplicand) in order to arrive at an overall lump sum figure. The multiplicand is based on the official life expectancy figures and is an adjusted figure to take in to consideration general life risks and the fact that a Claimant is receiving their money in one go which can be invested and earn interest. If the basic official life expectancy figure is too low then the multiplicand will inevitably be too low, increasing the risk that Claimants will have insufficient money to meet their needs for their whole life. If a Claimant lives six years longer than expected then there could be a six year gap to plug.
The cost of future care has for many years been contentious and it is already felt that Claimants are being left short due to the way in which the future expenditure is calculated. The soaring cost of care is inadequately reflected and the expectation of interest which can be earned on a lump sum figure is unrealistic in the current economy. Add to this a basic underestimate of life expectancy and Claimants with the greatest needs may be left substantially under-compensated.
This all adds to the importance of considering annual periodical payments for the future cost of care rather than a lump sum. Such payments will continue for life, regardless of whether a Claimant outlives normal life expectancy.
If you have any questions or concerns about your damages claim or if you wish to bring a claim, please contact us to discuss your claim further.