The different amounts paid for costs of care result not only from the different structures found in each method of compensation, but from the different way each country organises its health and social security systems.
Among all the countries subject to the current analysis, only Spain has a legal system by which this claim type is defined in statutes. As already mentioned, how material damage is determined is one of the most important aspects of the reformed Baremo.
One important change introduced by the new Baremo concerns the anticipated expenses for future healthcare, which the insurer needs to pay directly to the public health service. The injured party will be directly compensated for the costs of prostheses and orthoses, care at home or for outpatient care, technical devices or products that enable personal independence, changes required for the home and the resulting costs for mobility (e.g. modification of a car) and other necessities.
The amount is the result of multiplying the cost of the care services (1.3 times the legal minimum wage) with the value for the relevant injured party based on the following factors: the right of the injured party to get help and care from a third party; duration; age; risk of death; and the discount interest rate.
Compensation for loss of earnings is calculated on the basis of the victim’s net income. The model is similar to the one described above: the victim’s net income serves as a basis or statistical figures in the case of minors and victims who are responsible for the household. This value is multiplied by a coefficient that is the result of the following factors: the entitlement of the victim to public allowances for home care; duration; age; risk of death; and the discount interest rate.
Examining the other five compensation systems and the weight of the economic component in the overall estimation, the Italian anomaly is immediately obvious, with 23% representing the share of nursing care in the overall estimation, while the same level of damages in the other countries ranges between 47% (Germany) and 76% (the English system). In Poland, although the share of the nursing care component represents 62% of the total, it must be reported that the overall estimation is much lower than in the other countries.
Italy and Poland are distinguishable by a significantly lower amount referred to the pecuniary component of damages. The principal difference lies in the fact that future nursing services in Germany, France and in England – depending on the needs of the injured party and the benefits of the healthcare system – are rendered by public and private entities. Hence, there is potential for imposing the entire burden on the tortfeasor in the context of civil law liability.
In England claimants retain the right to access state-funded health and care services, but it is not a requirement that they are reliant upon them. Even where it would generate a double recovery, claimants are still entitled to claim the costs of their care and other medical input in full (dependent on the liability agreement) from a compensator, and then fall back on state-funded care and support should they decide to do so. There are exceptions, and in many cases claimants will rely upon state-funded care, particularly in critical illness cases, but in the main many catastrophic injury claim reserves will reflect a full private care and therapeutic regime.
With specific reference to the English system Graph 7 shows a massive increase in the amount related to nursing care costs: compared to the 2013 analysis, where the nursing care costs equaled approximately EUR 6 million, the amounts have more than doubled in 2022 when, as can be seen, the nursing care costs are approximately EUR 14 million.
There are several complex factors behind the higher costs of care. One is previous litigated decisions: precedent has determined appropriate hourly rates for nursing care and clinical care, as well as things such as an expectation of holiday pay for employed care regimes.
UK pensions legislation has made direct employment of carers more expensive, and case management of care regimes has also become something of a “cottage industry” while being advocated by the courts. Additional pressure on therapies for claimants, therapeutic facilities such as hydrotherapy pools, and extensive equipment/aids and appliances lists for powered wheelchairs, exoskeleton devices and sophisticated beds have all become the norm, while an associated reduction in care packages has not been supported by the courts. In spite of a wealth of assistive technology, double‑up, or even triple‑up care regimes are increasingly common.
In Italy, a levy of 10.5% is deducted at source on each third-party motor insurance premium in favour of the national health service (in 2020 the deducted share amounted to approximately EUR 1.3 billion). As a result, the same national health service provides most of the assistance services required by seriously injured people in collaboration with regional organisations and often by contributing to or entering into agreements with private businesses. For this reason, damages for the costs of future care in Italy are often subject to negotiation and settled with a lump sum.
In addition to the above there are other differences among the national systems regarding calculation methods for the costs of future care and the way such costs are paid. In France, there are proper agreements, often reproductions of the same tariff tables prepared by the courts, that illustrate in detail the breakdown of how expenses should be calculated, providing information such as the minimum number of days and hours to ensure adequate care, the cost per hour and the indexing rate for costs as well as any discount rates to be applied in case of expected capitalisation.
With particular reference to the latter situation, care costs are usually paid in the form of an annuity in the three systems where these costs are highest. Rigorous mathematical and actuarial criteria are employed to calculate the annuity, and these make it necessary for players in the insurance sector to allocate very high reserves in order to meet future payments.
In this connection, periodical payment orders (PPOs) – a form of annuity-based adjustment – are significant in England and Wales, where they became increasingly common until 2017, since when the incidence of PPO use has fallen dramatically when the Discount Rate was reduced to ‑0.75%.19
PPOs are compensation awards in personal injury claims which, in addition to providing a lump sum for damages for pain and suffering and for past financial loss, provide regular index-linked payments for some or all of the future financial loss. There are risks in terms of longevity, inflation and interest rate fluctuations. These risks are transferred by the injured person to the person liable for the damages and thus to the insurance (and reinsurance) sector.
The final key element to note is the manner in which assistance is assessed and managed in some of these countries. In the UK, France and Germany, in particular, the needs of injured people are verified and evaluated by medical and other experts who consider every aspect of possible intervention with the aim of ensuring the greatest possible rehabilitation in physical terms as well as social and occupational reintegration.
In contrast, in Italy this broad and very proactive approach to dealing with an accident that results in serious injury is still very limited. Here it can often prove very difficult and complex to manage such cases, giving rise to frequent debates that fail to thoroughly investigate the level of damage in social, professional and interpersonal terms. As a result, the need for adequate management is not evaluated carefully with respect to what guarantees can be made on this front by the national health service and the local authorities usually involved.
In Italy, injured people receive a great deal of support from the family unit in terms of assistance, and this support is partially compensated for in the form of non-economic damages paid to the injured party and to his/her most immediate family members. While in Italy this type of compensation refers to non-pecuniary damages, in France and Germany, by contrast, the compensation described above for the cost of future care is calculated and paid in almost the same way as the pecuniary component, even if assistance is provided by one or more family members of the injured person.
This comparative study illuminates some important points that must be considered. In the case of fatal injuries – apart from the special case of Italy with its non-economic damages that cannot be compared with any other European system – the injured party’s income and hence the economic component of damages claim is the factor that drives up the amount of compensation awarded.
In the case of serious injuries, however, it is the cost of medical care and rehabilitation as well as current and future supervised care that have a very significant impact upon the amount of the overall compensation. In this scenario the peculiarities of each national healthcare and social security system play a key role that must always be taken into consideration when comparing the amount awarded by each legal system.
As a result, over the years there has been increasing attention paid by each system on the pecuniary component of the damage, steadily growing year on year since our first analysis in 2013.
In conclusion, despite the will to harmonise demonstrated by the EU, several large differences among the analysed countries are still in place, mainly resulting from standard practices, legislative provisions and case law. Even in a decade since our first analysis in 2013, no relevant changes toward harmonisation can be reported.
As we stand today it is still very difficult to imagine having a uniform or similar compensation practice for all European systems. In any case, isolated comparisons of individual claim items and distinct aspects of the various adjustment systems often do not provide an adequate understanding of the interconnections and can thereby cause considerable confusion.