Insurers should do more to support the NHS
Trevor Sterling calls for a review into how major trauma treatment is funded following covid-19
During the first three months of lockdown car insurers made £1.3bn in savings. Significantly less traffic on the road led to fewer accidents and as a result the car insurance sector was one of the few industries to benefit from lockdown.
Insurance comparison company Safe, who calculated the £1.3bn saving, has also revealed that one insurance firm it spoke to will save as much as half the funds it expected to pay out for personal injury claims in 2020.
Compare these savings to the unprecedented level of spending the government has had to provide to the economy and the NHS to respond to the pandemic.
In response to the challenges of 2020, we have all witnessed many industries make sacrifices to support the UK and global recovery effort. For instance, in the retail sector, businesses including John Lewis and Primark have said they will refuse the government’s job retention bonus, saving taxpayers over £30m.
In the property sector, housebuilder Redrow has said that it will return all previous payments received under the furlough scheme – a significant gesture considering they furloughed 80 per cent of their staff and experienced a fall in their profits during this period. It is time for the UK’s insurance sector to make their contribution and give back to British society.
In the absence of a proactive offer from the insurance industry, I believe the government must now seriously consider reviewing how major trauma treatment is funded in the UK. The legal duty for the insurance industry to pay the healthcare costs of individuals involved in road traffic accidents dates back to the Road Traffic Act 1930.
More recently, the Health and Social Care Act 2003 refined the insurers’ obligation to allow for the recovery of NHS charges in all cases where people claim and receive injury compensation. This regulation, which came into force in 2007 as the Injury Cost Recovery (ICR) scheme, was designed so that the NHS should not have the burden of paying for the treatment of patients injured by an insured third party.
However, in the 17 years following the introduction of the Health and Social Care Act, the scheme has not been reviewed and no longer meets the objectives the law set out to achieve. The main flaw with the scheme is that the current cap on costs recovery is too low and has not kept pace with medical costs and inflation. Covid-19 has further highlighted a paradoxical arrangement that means the NHS loses funding, while the insurance industry profits.
The latest statistics available, from a 2010 National Audit Office report, estimated the cost of trauma treatment to be between £300m and £400m a year. From 2019-20, the last fully reported financial year, the NHS recouped £200m from the Injury Costs Recovery scheme. Factoring in how medical costs have risen above inflation since 2010, a saving of £200m to the NHS is a very conservative estimate.
As we move into a post-lockdown world where we will be living alongside covid-19, the funding is needed more than ever. Money that could be used to buy PPE, pay for frontline staff or support the building of new infrastructure, is unfairly lining the pockets of insurance providers. If insurers are compelled to properly fund major trauma treatment, it will be the best outcome for accident victims, our NHS and the covid-19 recovery effort. It is time for a review.
Trevor Sterling is a partner and head of major trauma at Moore Barlow moorebarlow.com