The inflation factor: how rising care costs are reshaping injury claims

There are various factors which have contributed to the perfect storm for the care sector - most notably the Covid pandemic, Brexit, care/staffing issues, the cost of living crisis, and broader economic and geo-political instability. 

We looked at claims which settled within the last five years across our portfolio of large loss cases. We analysed our dataset and considered both past and future care paid. 

The summary for past care paid on cases across all injury types is set out below. The average past care paid rose from an average of £62,673 per case in 2020 to £113,780 in 2024 – an increase of 82%.

Delving deeper into the data, our insights revealed further notable findings. The claimant age group attracting the highest average past care increase was, perhaps understandably, infant cases. The average past care rose from £206,980 per case in 2020 to £471,667 in 2024 – an increase of 128%, although it must be noted there were a relatively small number of cases in this age cohort. Considering cases by injury type, Traumatic Brain Injury (TBI) cases (of all severities) saw past care paid increase from £72,606 in 2020 to £158,799 in 2024 – an increase of 119%.

Looking at future care on cases (across all injury types) a summary is set out in the table below. Future care paid rose from an average of £840,340 per case in 2020 to £1,387,954 in 2024 – an increase of 65%.

In a similar outcome to our analysis of past care, infant cases attracted the highest average future care increase. This rose from £956,592 per case in 2020 to £4,170,387 in 2024. TBI cases (of all severities) saw future care increase from £1,066,279 in 2020 to £2,336,040 in 2024. 

Interestingly, during the same period however, analysis of data for future case management costs did not demonstrate a similar increase when compared to future care. The average future case management costs per claim in fact stayed relatively stable and static across the period, which is in some ways surprising. It could be anticipated that the cost of case management would also rise, albeit not to the same extent as care. 

Whether or not these trends continue over the next year or two remains to be seen. An increase of 82% over the last five years for past care paid, and 65% for future care paid, demonstrates a significant increase, way above inflation and will undoubtedly reflect insurers’ own experiences. There are many influencing factors but we know that Brexit combined with immigration policy is further reducing the pool of care staff meaning a high job vacancy rate in the adult care sector. Even though we hear about the potential impact of improved aids and equipment and even AI, we are a way off there being a significant reduction in the need for people giving care. Our Care Technical Unit keeps a close eye on developments in this space generally. 

The broader inflation picture over more recent times has calmed when compared to the height of the costs of living crisis. However, in strategising in large loss cases, insurers will still need to consider the continuing rising claim cost inflation and want to control the cost of claims. Concluding at the earliest opportunity remains important, not least since the protection of Part 36 offers incorporating large care elements will be lost more quickly. 

Our valuable data insights will continue to help with reserving and keeping the issue of rising claim cost inflation under close consideration. In particular, our clients benefit from the assistance of PREDiCT – our market leading large loss claims analytics tool, which is aimed at helping to improve reserving accuracy, reduce claims lifecycles and reduce overall indemnity spend.