The periodical problem

The increase in the number of periodical payment orders being awarded to personal injury claimants is presenting general insurers with new risk management challenges, more akin to those faced by life insurers. Clive Davidson finds that a consistent approach to managing these liabilities has yet to emerge

Since 2005, UK courts have had the power to award a portion of the settlement of large personal injury claims as a series of index-linked annual payments throughout the lifetime of the claimant, rather than the traditional, single lump sum.

Although take-up was slow initially, the number of periodical payment orders (PPOs) has increased during the past four years. As these liabilities become more material on insurers’ balance sheets, they present a number of challenges for companies.

For a start