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Future Losses: Is This Really Just Crystal Ball Gazing?

"How can my future losses because of my injured back be calculated?", said a client to me recently as we were discussing not only the injury she sustained and the likely level of damages she might receive for this but also the expenses she was beginning to incur as a result of the accident and the wages she was losing and likely to lose in being off sick.

I explained to her that in the majority of accidents, any monetary loss and by this I mean loss of earnings that have occurred as the result of the accident, expenses incurred in having to buy painkillers, in having to travel to the GP surgery or hospital or attend for physiotherapy, normally come to an end relatively soon after the accident.

There is usually a correlation that once symptoms have begun to settle reasonably well, the expenses begin to come to an end and those expenses can be easily quantified by looking at wage slips, working out what the loss of wages are, adding up the expenses for the painkillers that have been purchased and working out what the mileage is to and from home to local hospitals where physiotherapy has been provided.

The calculations are somewhat more complex where symptoms continue, where those symptoms have a detrimental effect upon someone’s livelihood.

If the situation continues in the future since there is no likelihood of any improvement in symptoms, a situation is reached whereby calculations have to be prepared for any losses that are going to arise in the future.

One client recently said to me that surely this involves an element of ‘crystal ball gazing’ and I have to agree that it generally does.

It does so however with the benefit of the Judges having considered this point on numerous occasions over the years in various different cases. It does so in addition with the benefit of mathematical calculations that have been prepared by actuaries telling us how long we are likely to live and over what period we are entitled to bring a claim for the future.

There is of course no guarantee that the actuaries are right. The only fair method however, and the method which it is hoped will be accepted by other parties in a claim and by the Court, is to accept what the actuaries have to say and make appropriate allowances as required.

In simple terms therefore it is very much a case of working out how much is lost each year. In terms of expenses such as the purchase of painkillers, travel expenses for treatment is concerned, this can be done relatively easily by calculating how much the average expenses are per month, apply this over a year and this then gives the yearly figure.

The same can be applied in relation to loss of earnings where the monthly or yearly earnings lost can be calculated and applying then any other expenses incurred such as nursing care which in long term injuries applies where care is provided by members of the family or by one or more specific carers if the injury is significant. The loss can be claimed or an allowance made for an hourly rate which applies in situations where care is provided by members of the family.

Add all this together and you have your annual loss or the amount that you wish to claim for.

The magic, if it can be called such, then applies as far as the future is concerned. Simply put again, apply what is known as a multiplier – namely by looking at the actuarial tables, you work out over how many years you are entitled to claim and this is your multiplier which you then apply to your net annual loss and this gives you a lump sum which is meant to reflect the losses that you are going to incur in the future.

There is no guarantee as I have said above, that such losses will not change, that the expenses with regards to treatment would not increase or indeed that the amount that you have to pay for your petrol will not increase substantially in 5 years time so that the petrol rate which you apply this stage is far too low.

Therein lies the difficulty of ‘crystal ball gazing’....Tristan Hallam is a partner in Personal Injury in the London office of Russell Jones & Walker. If you or a member of your family has suffered an accident or injury call our expert personal injury solicitors on 0800 916 9046, fill in our short online claim form or email and one of our specialist personal injury team will review your compensation claim for free.