IUA Circular 091/11

Periodical Payment Orders (PPO) Study

Date: 14 November 2011
Interest Groups: Chief Executives and Contacts of Ordinary Members, Property & Casualty Technical Committee, Casualty Treaty Group, Professional Lines Underwriting Group, Liability Underwriters’ Group, Non-Marine Claims Group, Aviation and Marine Underwriting and Claims Groups, Rehabilitation Working Party
Subject: IUA, in association with the Association of British Insurers, have published a comprehensive study looking at periodical payment orders


This report has been prepared as a follow up to the IUA's last Bodily Injury Awards Study which was published in October 2007. At that time, it was felt that it was too early to comment on the current periodical payments regime which had only been in force for 2½ years since its implementation on 1 April 2005. However, the number has now reached a level which permits more constructive comment.

The main aim of this report is to inform practitioners in the personal injury field about the circumstances in which periodical payments have since been agreed or awarded and how they have been given effect in insurance claims. The report contains an extensive analysis of the legal framework around PPOs as well as outlining the views of Claimant solicitors, QCs, IFAs and compensators regarding PPOs.

The report includes analysis of 300 PPO claims (including claims administered by the Motor Insurers’ Bureau) and the authors of the report also sought input from the NHS Litigation Authority which, to date, administers 930 PPO claims).

The main findings of the report show that numbers of PPOs have been increasing in recent years. However, the ongoing consultation by the Lord Chancellor on a potential change to the discount rate (which affects the relative value of lump sum claim payments compared to a PPO) may have artificially held down the numbers of PPOs agreed in the first three quarters of 2011. The report identifies that PPOs present insurers with significant administration, reserving and reinsurance challenges. However, the report concludes that, since PPOs currently remain the most accurate method of quantifying damages for a Claimant’s future recurring financial loss, they will continue to be a feature of the personal injury field.

The full report can be downloaded via the link on the right of this page.

If you have any queries regarding this update, please contact Patrick Davison.