NHS Charges Recovery Scheme
4 Apr 2007
Implications for EL & PL insurersA new scheme which took effect on 29 January this year is likely to have a big impact on the costs of employer’s and public liability insurance as the NHS can now recover costs of treating injured people who have successfully claimed personal injury compensation.
It is estimated that ambulance and hospital treatment services for injured people cost the NHS an estimated £200 - £250 million a year. Under the new system, called the Injury Costs Recovery Scheme, these costs can now be claimed back from the compensator – in many cases this will be the insurer. The biggest impact is likely to be on employer’s liability insurance where it is estimated that premiums may need to rise by 5 – 8% to allow for these expenses.
The scheme works on the same basis as the Road Traffic (NHS charges) Act 1999 which allows the NHS to make claims against insurers in road accident cases. This scheme has enabled the NHS to recoup in the region of £115 million.
The NHS Injury Costs Recovery Scheme applies to all cases where payment of personal injury compensation is made, regardless of whether it was made by an insurance company, and also applied to foreign compensators, accidents abroad, etc. (as long as NHS treatment is provided in England, Scotland or Wales). The scheme does not apply to the treatment of diseases unless it can be established that the disease occurred as a result of an injury.
The scheme introduces a fixed-rate tariff covering ambulance journeys, hospital treatment, admission or follow-up appointments. It is estimated that, for a low value claim where hospital treatment and/or the ambulance service is required, costs are likely to average £505 (although a two day stay in hospital could produce a charge of £1,240). Serious injury claims could result in significant costs though the amount recoverable is capped at £37,100 for each claimant currently. The tariff is subject to annual review and therefore likely to increase.
There can be no doubt providers of employer’s and public liability insurance will need to review the effect of these costs on their loss ratios and adjust the rates they charge accordingly.