The analysis, which examined more than 550 Periodic Payment Orders (PPOs) and over 8,000 large claims, reveals that the number of PPOs granted by UK courts in 2015 was similar to that of 2014, but substantially lower than the 2011 peak. The data show that in 2016 monetary terms, an average 15% of an insurer’s motor claims above £1 million will reach a PPO settlement.
The study reveals that the average time taken to settle a PPO claim was six years, culminating in an average lump sum award of £2.1 million, and an average annual award of £90,000. The mean life expectancy of the injured party at the point of the PPO settlement was shown to be 42 years.
In terms of their impact on reinsurers, PPO claims are expected to take an average seven years to reach a reinsurance programme attaching at £1 million; for a £5 million retention, the recovery time increased to 21 years, according to the study.
The findings also reveal that insurers are becoming more adept at predicting the quantum of large claims – which can often take years to settle with recent years showing little movement from initial estimate to ultimate.
Luke Proctor, actuary at Aon Benfield said: “In recent years, the market level of case reserving for large losses has become faster and more accurate. This is something we are also seeing on an individual client level.”
Meanwhile, the study confirms that large loss inflation for 2015 is expected to be around 5-7%, similar to prior years.
Richard Evans, Head of UK Motor at Aon Benfield, said: “As we head into the January 1 reinsurance renewals process, the timing of this study is key, and should help inform our clients’ reinsurance purchasing strategies. The level of PPOs seen in the market in 2015 should help to allay reinsurers’ concerns around this type of settlement. We saw dramatic rate increases in 2011-2013 due to the introduction of PPOs.”
One year after winning an award at the National Family Business Awards, independent and family-run Ashbourne Insurance returned to the event as …
18 Jul 2018
It has been widely reported in recent weeks that car insurance prices are falling; some industry commentators would say as much as …
18 Jul 2018
With summer fast approaching and those family days planned, now is a good time to check your tyres.
A simple task that takes …
28 Jun 2018