Insurers which are dealing with multiple personal injury claims are facing the prospect of a downgrade from credit rating agencies. This is largely due to Periodical Payment Orders (PPOs), which are an alternative to lump sum settlements in personal injury cases. Under a PPO a claimant will still receive a lump sum, but a smaller one, which is then periodically topped up to cover costs such as medical expenses and to compensate claimants for loss of earnings.
PPOs were introduced by the Courts Act 2003 which gave courts the power to grant claimants settlements to cover them for the rest of their lives. Two years after their introduction less than five claims were settled using PPOs whereas by the end of 2010 almost 20 claims were settled in this way. This increased trend has been driven by low interest rates amongst other factors. Continue reading
