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Podcast | The escalating cost of future care

08 April 2021
Future care, Insurance Podcast | Small Banner

In the second episode of the Slice of PI podcast series, the cost of care podcast is a basic introduction to the DWF database, with a preview of some of the initial trends which we are starting to see and a discussion of how those trends may impact the future cost of care.

This is a must-listen for anyone who instinctively thinks that increases in the cost of care are outstripping inflation and is concerned about what the future may hold.

Traditionally the costs of care for claimants seriously injured in insured accidents have seen ASHE-related increases of around 3% per annum but the fear is that with the looming crisis in social care and COVID-19, the increases will now rise at a significantly greater rate meaning insurers will need to amend their reserve strategies for the cost of care. Simon White, Principal consultant in Data Analytics and Partner Ian Slater, discuss all this and more in the latest escalating cost of future care podcast.   

Podcast Exemplar Graphs (click to expand)

The Rising Cost of Care in Major Injury Claims

The data indicates that the claimed cost of day care has risen at a steady rate between 2013 and 2018. Since late 2018/early 2019, the data indicates that the claimed cost of day care has accelerated sharply and this can be seen as the red line (line of best fit – actual claimed rates) deviates from the black broken line (line of best fit between 2013 and 2018).

Insurance Podcast: Cost of Care

The Cost of Care in Major Injury Claims – Agency Versus Direct Recruitment

When we break down the claimed cost of day care into its constituent Agency and Direct Recruitment components, the orange line of best fit for Direct Recruitment claimed rates indicates a steady increase over time, consistent with the 2013-2018 general claimed rates. The red line of best fit for Agency claimed rates shows a similar pattern to the general claimed rates between 2013 and 2020 and it is therefore likely that the recent acceleration in claimed rates has most of its cause in the agency market.

Insurance Podcast: Cost of Care - Agency Versus Direct Recruitment

The Cost of Care in Major Injury Claims – Regional Variations

In this chart, we have assigned the claimant's postcode into a broader region in line with the UK Government's postcode classifications. Over time, we see the claimed day rate for care increasing most sharply in the North West and East of England although the claimed rates in the London area far outstrip the other regions of the country.

Insurance Podcast: Cost of Care - Regional variations

If you require any further information, please contact Ian Slater or Simon White.

Further Reading