The Lloyd’s Market Association (LMA), representing the interests of insurance market participants at Lloyd’s, has revealed the International Bodily Injury Index, a resource that tracks personal injury awards globally.
This index is a strategic, three-year project led by the LMA’s International Liability business panel, designed to monitor social inflation by analysing personal injury awards and consulting with local legal experts in more than 80 jurisdictions worldwide, excluding the USA.
The index covers 26 European countries, 20 in Latin America and the Caribbean, 10 in Africa, and 22 in Asia, as well as providing state-level data for Australia and provincial data for Canada.
In partnership with DAC Beachcroft, a law firm with a broad network of associate firms, the LMA has developed the index to estimate the typical damages or compensation that would be awarded to a hypothetical claimant.
The resource examines a range of injury scenarios, including minor injuries, broken limbs, amputations below the knee, total loss of sight in both eyes, psychiatric injuries, moderate brain injuries, paralysis, and death.
Currently, the full content is accessible to LMA members, though non-members can request access by contacting the association. Key insights from the index reveal that in the UK, Northern Ireland records the highest average payouts for broken limbs (£25k), amputations (£1.07m), loss of sight (£1.75m), psychiatric injury (£1.2m), and head injuries (£2.5m).
Scotland also leads for minor injury claims (£6k), as well as for the largest awards for paralysis (£13.6m) and death (£1.15m). These elevated payouts are attributed to the recently implemented Personal Injury Discount Rate (PIDR) of +0.5%, which increases lump sum compensation, resulting in some of the highest awards globally.
Within the Eurozone, Italy stands out with the highest payouts for minor injuries (€9.3k), amputation (€801k), psychiatric injury (€709k), and death (€1.35m). Other countries like France and Ireland also report significant figures for specific injury types, while Serbia and Slovakia show the lowest payouts across the board.
In Canada and Australia, the awards vary significantly from one region to another. In Canada, British Columbia and the Maritime provinces generally report higher payouts, but these are still lower compared to Australia. In Australia, the highest award for amputation is A$4.3m in Victoria (approximately £2.2m), compared to CA$2.35m (£1.3m) for the same injury in the Maritime provinces.
The Australian Capital Territory leads with the highest payouts across various injury scenarios, and South Australia offers the highest compensation for minor injuries. The higher payouts in Australia can largely be attributed to the increasing number of cases heard by a jury, which influences compensation levels.
Chris Mather, Senior Executive, Technical Underwriting at the LMA, commented: “Some of these data points are remarkable in terms of their variation even within a single country. We believe this index will be a valuable resource for our members to track severities, compensation claims and jurisdictional variances, international comparisons and benchmarking, and as the index develops over the years, it will provide insight into the extent to which the level of awards is increasing at or above inflation rates.”
Alastair Herbert, Head of International Liability at Probitas 1492, and leader of the LMA’s International Bodily Injury Index working group, said: “This index has been something I have been wanting to construct for many years. It has only now become possible by a collaborative market effort spearheaded by the LMA.
“Underwriting is the blend of art and science, and this index will provide a greater degree of certainty to greatly assist our day-to-day decision making. It demonstrates the enormous differences between the jurisdictions which allows us to underwrite the most volatile perils we insure more accurately; as a result, our pricing becomes more aligned with the exposure in that country making us more competitive.
“By making this a multi-year project, it also talks to our exposure to social inflation which, quite rightly, is one of the key hot topics in the liability world.”
