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When £10m is not enough


In his first article for Keoghs, new Complex Injury London Partner, Phill Bratt, discusses why the level of cover for EL/PL insurance is often no longer adequate in high value cases.

A look back

When I started working in catastrophic personal injury in 2012 most composite insurance policies provided £5m of cover for employers’ liability (EL) and £2m for public liability (PL) for personal injuries arising out of accidents at work. £5m of EL cover was then, and still is, the minimum required by law. On a side note, how many people know that you can be fined £2,500 per day if you do not have the minimum EL cover in place?

When the discount rate was 2.5% (as it was until March 2017), £5m of EL cover would provide sufficient funds to cover most, but not all, of the most serious injuries that a person could claim for. However, the £2m PL limit was likely to be breached if a person suffered a traumatic brain injury, serious spinal injury or amputation injury.

A personal injury claim with the highest value during this period would have been worth in the region of £15m.

Discount rate change

In March 2017, much to the surprise of most people I know, the discount rate changed from 2.5% to -0.75%. This doubled the value of some of the most serious claims. So a claim worth £15m suddenly rose to £30m in some cases.

During this period the highest value claim I worked on was pleaded at £36m. Fortunately, it was caused by a road traffic accident, and as such there was no financial limit of indemnity. However, if the spinal injury the claimant suffered had been as a result of an accident at work, the existing £5m and £2m cover would have been wholly inadequate.

In August 2019, the discount rate changed again and became marginally better for insurers when it was set at -0.25%. This meant that a £30m claim was now worth £20m-£25m. Most EL/PL policies I have seen since have provided cover of £10m, at least for EL.

However, £10m still isn’t sufficient to cover the most serious of injuries. Often when I investigate an accident the company says that it was a perfect storm of things going wrong and it wasn’t predicable. That scenario is exactly what you need your insurance to cover.

If the policy limit is only £10m then I’m afraid it is unlikely to be sufficient to cover the worst case scenario, such as a person requiring full time care for the rest of their life.

Accidents are inevitable, even in the most health and safety conscious environments. If you do not have sufficient cover in place, all you can really do is mitigate as many risks as reasonably practicable and then hope that someone doesn’t suffer a really serious injury. However, is that really the best way to manage life changing risks?


As we head into renewal season, the question that insurers and brokers should be asking their customers is what happens in the worst case scenario? Will the company have to declare bankruptcy? Do their directors know they could be personally liable for any shortfall (a complex topic for another day)? What will happen to the person who has suffered a life changing injury?

The answers to those questions should inform what level of cover is required. I am not an underwriter, but in my experience dealing with the highest value personal injury claims, £20m of cover is far more likely to be sufficient for dealing with most serious injuries. I obviously cannot say for sure that it will always provide sufficient cover (in the last year I have been involved in three claims worth more than this), but, unless you have unlimited cover, there will always be a risk.

What I would like to avoid is having to keep telling clients after the worst case scenario has happened, that not only has someone’s life changed forever because of something they or one of their employees did, but that it might also be the end of their livelihood as well, given they are going to be responsible for the uninsured shortfall. Unfortunately I suspect I will keep having these conversations.

This is all the more important as the discount rate is due for review again in 2024 and no one can say with any certainty to what level it is likely to change, if at all. As always, our Complex Injury and Market Affairs teams are working closely with various stakeholders to ensure the insurance industry’s concerns are considered in full as the review approaches. If you would like to discuss the matters I’ve highlighted further in the meantime, don’t hesitate to get in touch.

Phill Bratt

Phill Bratt

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