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What have those dealing with the administration of PPOs seen on the ground and what is in store for the future?

This spring, with the relaxation of COVID-19 restrictions, brings what some dare to hope is the end of the worst of the pandemic. Last autumn saw the publication of the latest data from the Office for National Statistics relating to the Annual Survey of Hours and Earnings (“ASHE”) of care workers, which prompted the commencement of the annual recalculation of Periodical Payment Orders (“PPOs”). 

Practitioners will have noticed that rates continue to rise but with a deceleration in the increase of wages. The 2021 mean average hourly rate increase for carers was 3% with an increase in the medium of 2.3%. By way of contrast, the 2020 data saw an increase of almost 5.5% in earnings (mean) from the previous year, meaning that this years’ payments have not risen as steeply as in previous years

The reduction reflects that the rise in National Living Wage in April 2021 was only 2.18% compared to much higher increases of 6.22% in April 2020 and 4.85% in April 2019. With the majority of periodical payments linked to the 80th percentile, the net result is that annual payments that were due in December 2021 only increased by 2.23% compared with 5.31% the year before. The annual rise in care costs was the lowest since 2015, which may come as a surprise as more significant rises in agency rates across the same period have been seen. This is due to a shortage of carers as a result of the twofold impact of Brexit, causing a shortage of workers, and COVID-19 restrictions.

The pandemic has also caused practical difficulties, the main issue relating to securing suitable proof of life to meet the requirements of the PPO. Most Orders contain a requirement for this to be provided by a GP or other medical practitioner/the Deputy, who has ‘seen’ the claimant within the last month. As is well known, during the height of the COVID pandemic, routine appointments were unavailable due to frontline NHS staff being drafted into hospital trusts. Despite the recent easing of restrictions, face-to-face medical appointments in parts of the UK are still difficult to access, with telephone appointments being preferred.

Proof of life is a crucial part of the process, without which the obligation to make the annual payment does not arise. Compensators are striving to balance the need to be satisfied as to proof of life with reasonableness, appreciating the present difficult circumstances for claimants. As a result, compensators have been asked to consider acceptance of proof of life obtained by other means, such as from the claimant’s solicitor, but in our experience this will often be deemed insufficient and a clinician’s confirmation will be required. Whilst there is no detriment to the insurer by reason of the non-provision of proof of life, in reality insurers are often keen to keep the process moving and they are frequently proactive in seeking proof of life.

On a practical level, whilst compensators should consider requests for alternative means of proof of life, whether from an alternative clinician (such as a physiotherapist), or by alternative means, e.g.by video conference call, each request should be considered on a case-by-case basis with reference to the PPO and the particular factual circumstances. Compensators may be willing to accept an alternative proof of life in one case which they would not be willing to accept in another and not all insurers adopt the same approach. However, what is clear in all cases is that the process of seeking to obtain proof of life should be commenced at the earliest possible opportunity to allow sufficient time for discussions to take place as to what may or may not be acceptable, which should avoid or at least minimise any delays in payment.

The future

On any analysis of the projection for the pandemic, we are likely to see new variants of COVID-19 continuing to emerge, leading to a potential surge in infections coinciding with the PPO recalculations this year and possibly also in future years. Insurers should continue to take a flexible approach to proof of life and continue to monitor the impact of Brexit and the pandemic on care rates.

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