Annual Insurance Review 2024: General liability

In this chapter of our Annual Insurance Review 2024, we look at the main developments in 2023 and expected issues in 2024 for General liability.

Key developments in 2023

The biggest change in General liability this year is the changes made to the Fixed recoverable costs regime. After several delays, the extension to fixed recoverable costs (FRC) was implemented on 1 October 2023 and will affect nearly all civil claims up to £100,000 in value.

The intention to streamline civil litigation may well be laudable but this one-size fits all approach has inevitably led to compromises and may result in unintended consequences and behaviours.

Unlike other civil claims, the new regime will only apply to personal injury cases where the cause of actions accrues on or after 1 October 2023 (or where the letter of claim is sent after this date for disease claims).

The Fast Track remain largely unchanged. However, the new regime introduces an Intermediate Track for claims up to £100,000 in value. The Court retains its discretion to allocate cases the Multi-Track should it consider this to be appropriate.

Another significant change to FRC is the introduction of complexity bands which cases will be assigned to following allocation. There are 4 different bands in both the Fast Track and Intermediate Track and the higher the complexity band, the greater the amount of FRC.  The complexity bands for the Fast Track and Intermediate Track are entirely different so 2 similar cases with values of £15,000 and £30,000 will not be assigned to the same bands in the differing tracks even if the matters in dispute are very similar.

On the Fast Track the bands are more tailored to the type of claim, whereas on the Intermediate Track the banding is to be determined on the number of issues in dispute and complexity.

Many of the uncertainties in the rules seem destined for satellite litigation and appeal level judgments are likely to be required before there is clarity for litigators. Given that we still see such litigation over the current FRC regime, this is likely to be an issue for at least the rest of the decade.

What to look out for in 2024

The main change in 2024 will likely be the discount rate changes. The interest rate is due to be reviewed by July 2024.  However, it has yet to be determined what the rate will be. Recently The Isle of Man have increased their discount rate from – 0.25% to +1.00 per annum and personal injury lawyers in England and Wales are now waiting to see whether the Lord Chancellor will follow suit.

If the interest rate looks likely to increase Defendant Lawyers should keep in mind that Claimant Solicitors may look to settle before the new interest rates are implemented. For offers currently on the table, Defendant's offers are likely to be overstated, meaning Defendant lawyers will need to be mindful of this change as they may wish to withdraw offers before the new discount rate applies.

There will also be a review on whether a dual rate would be more appropriate. Currently the set rate of -0.25% is used across all heads of loss for all future losses, regardless of the length of time of the loss. It will now be considered whether to have dual or multiple rates. Other jurisdictions offer a dual rate for long term and short-term future losses, the short-term loss varies from jurisdiction but is generally between 5-15 years. Another option is to have rates set for different heads of loss in the award, such as for the cost of future care or for future loss of earnings.

It is currently unclear whether the dual rate will be implemented in July 2024 as the current single rate means less complexity for the court, but there are arguments that a dual approach would be more appropriate and fairer for Claimants. 

Written by Beth Lewis.