Proposals for Increasing Bereavement Damages

Regulatory Impact Assessment

March 2002

• Introduction and Summary
• Risk assessment
• Options
• Scale of the Issue
• Benefits
• Costs
• Small Businesses
• Compliance
• Summary
• Declaration
• Contact point

Introduction and Summary

1. Section 1A(5) of the Fatal Accidents Act 1976 gives the Lord Chancellor the power to change the level of bereavement damages in England and Wales by statutory instrument. Bereavement damages can be claimed by the deceased's spouse or, if the deceased was under 18 and had never been married, by his or her parents, where death is the result of another's wrongful act, neglect or default. The level of damages that is paid has been fixed at £7,500 since 1991. This assessment considers the impact of an increase to £10,000 for one claim per deceased and of keeping bereavement damages at their current level (£7,500).

2. The Law Commission made a number of recommendations for changes to the law on bereavement damages in Claims for Wrongful Death (Report No. 263). These recommendations include changes to the list of those who are eligible to receive bereavement damages, increasing bereavement damages to £10,000 per claim and increasing the number of claims that can be made in respect of each victim, subject to a maximum of three. This regulatory impact assessment covers the recommendation that can be made by way of secondary legislation, i.e. the increase to £10,000 for a single claim. The remaining recommendations are being considered separately.

3. The power to increase the level of bereavement damages in Northern Ireland is invested in the Lord Chancellor. At present, the level in Northern Ireland is the same as that in England and Wales. We have contacted the Northern Ireland court service who consider that any change in England and Wales should be mirrored in Northern Ireland.

Risk Assessment

4. The level of bereavement damages has not been kept in line with inflation. If no change was made to the level of bereavement damages then it is likely to lead to criticism that the damages awarded for non-financial losses that have been suffered as a result of the bereavement, specifically grief and sorrow and the loss of the deceased's care, guidance and society have been reduced in real terms.

Options

5. This assessment considers the option of increasing the level of bereavement damages by statutory instrument and of doing nothing pending acceptance of the Law Commission's recommendations.

   • Option 1:  To exercise the Lord Chancellor's power under section 1A(5) of the Fatal Accidents Act 1976 by increasing bereavement damages to £10,000 per claim.

   • Option 2: Do nothing.

6. Options to increase by more than inflation have not been taken forward as they could not be justified, given the nature of the award.

Scale of the Issue

7. We have assumed that bereavement damages are paid in respect of approximately 3,000 deaths per year. This is based on figures that have been provided by the Association of British Insurers (ABI) and the NHS Litigation Authority (NHSLA). The ABI have provided the figures that form the basis of the table on the next page whilst the NHSLA estimates 530 claims each year. They are broadly consistent with figures from the Department for Transport, Local Government and the Regions, which showed 3,138 road death accidents in 1999 and 228 workplace deaths from April to December 1999. Not all accidents are the result of negligence, which explains why our assumption is lower than the total number of deaths each year. We have assumed that the number of cases where Local Authorities pay bereavement damages paid is negligible, as most accident claims against Local Authorities are 'trips and slips' and thus not fatal.

8. Whilst it is not possible to determine the number of uninsured defendants who pay bereavement damages each year, we have assumed that the figure will be negligible.

9. The assumption makes no allowance for catastrophic loss of life from a major disaster: for example, the Piper Alpha disaster in 1988 involving 167 deaths and the Hillsborough Stadium disaster in 1989 which resulted in 96 deaths.

Benefits

10. An increase in the bereavement damages awarded will not change the identity of those who are eligible to claim or result in claims being brought that would not be brought at present. The effect of the proposed changes would be to increase payments for successful claimants by £2,500 per claim (currently one claim per deceased).

11. When the level of bereavement damages is considered it is necessary to bear their purpose in mind. This is to compensate for non-financial losses that have been suffered as a result of the bereavement, specifically grief and sorrow and the loss of the deceased's care, guidance and society. The awards are not intended as a reflection of the value of the deceased's life or as punishment for the defendant. The option for increasing the level of bereavement damages to £10,000 would ensure that the effects of inflation since the last increase in 1991 is taken into account.

12. Option two, which involves making no change at present, would result in no financial changes to claimants.

Costs

Industry and the Citizen

13. The costs of an increase will be met either directly by those organisations that are responsible for the death or by their insurers. It is not anticipated that the increase in bereavement damages will be of a sufficient scale to lead to additional expenditure being undertaken to protect against fatal accidents. We recognise that there is likely to be a transfer benefit from people in society paying insurance premiums to those claiming these damages.

14. For those with insurance, the impact of increasing the level to £10,000 depends on the effect on insurance premiums. The increase in insurance premiums and the annual cost that this equates to at current prices is estimated as follows: