Calculating the amount of compensation someone should receive if they suffer an injury that leads to a disability is a complex business. There are many factors that have an impact on the amount someone is awarded. These include their age at the time of the injury, the type of disability sustained, and how this will affect their ability to work in future.
For 20 years, the Ogden tables have been used by UK courts to help make this decision. Professor Steve Haberman was involved in the formulation of the first edition of the Ogden tables, which formalised the process of calculating compensation.
However, when they were originally created there was much less labour force data available to help make the calculations.
Our research used new labour force data to improve these assessments.
What did we explore and how?
The original Ogden tables relied on limited data to assess the lifetime impact of a disability caused by an accident.
Our research identified key factors that should be taken into account, using the data provided in the UK labour force survey. These included:
- Employment state at the time of the accident
- Educational background
- Prior disability.
In particular, the research revealed that the disability someone suffered, as well as their level of education, had the biggest impact on their future earning potential.
Using sophisticated statistical and actuarial modelling methods, the researchers identified a new and more accurate way to approach the calculations for compensation.
Benefits and influence of this research
The newer, more accurate way to calculating compensation for those with disabilities following an accident has made the system fairer. In general terms, this means it has increased the amount people with a disability receive.
The legal and actuarial professions have adapted to this new methodology.
Once the research was completed, it was presented to the Ogden Working Party. This body decided to apply the new method for calculations to the sixth edition of the Ogden tables. It was also retained in the seventh edition, which is currently the version in use.
While this research played an important role in making compensation awards fairer, it was not the only change made to the Ogden tables. Amendments to the interest rate calculations were also introduced at the same time.