The standard approach in the calculation of damages for a personal injury claimant uses Ogden Tables as prescribed by the Lord Chancellor under the provisions of Section A1 of the Damages Act 1996 (as amended by the Civil Liability Act 2018). These tables have been compiled with the input of the Government Actuary – the latest edition (7th) of the Ogden Tables uses a rate of investment return of minus 0.25% to calculate damages. This negative rate assumes that future inflation has “overtaken” future interest rates.
This approach is applicable where damages are to provide for future living and care costs but it is not directly of use in the determination of accommodation losses e.g. in the situation where property needs to be provided for the disability needs of a claimant for their lifetime. The problem arises because a negative rate is used – that implies that the claimant will be able to be accommodated for nothing because they will benefit from property inflation, which is clearly not a sensible outcome.
Where capital is required to purchase or develop (or adapt) a property that will provide the necessary lifetime accommodation for the claimant there is either a direct cost or a loss-of-opportunity cost to whoever provides that capital. We have developed an actuarial approach, based on market data, which determines the cost of providing that capital for the period for which it is required, taking into account the risks to the capital provider, and we hope that the approach will assist lawyers and the courts when the costs of providing accommodation have to be determined.
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