Psychiatric injury is one of many challenges that insurers face in the global personal injury market as inflation puts pressure on costs, according to Kennedys.
The global law firm recently issued a report based on examinations of the claims experiences of its lawyers in England and Wales, Scotland and Northern Ireland, as well as Australia, Chile, Denmark, Hong Kong, Ireland, Singapore, Spain, and the US.
The main causes of excessive inflation on personal injury claims were examined in the 11 jurisdictions and psychiatric injury claims were a recurring theme.
Richard West, global head of liability defence and partner for Kennedys, commented: “Of particular concern to insurers is the fact that claims relating to psychiatric injury are often associated with considerable awards for damages and high legal costs for investigating and defending them.
“There are also reputational risks for businesses found to be in breach of the relevant legislation.”
Focusing on England and Wales, the report listed amputation claims as another factor that contributes to excessive claim inflation.
Even in the absence of technological advancements in prosthetic devices, insurers are seeing price increases of between 5% and 8% per year for the same products. This trend is being caused by a combination of UK general economic pressures and a lack of industry competition.
Increases in legal fees are also contributing to claims inflation in England and Wales, while claimant tactics continue to evolve to avoid the strictures of the current fixed costs and budgeting regimes, according to the report.
Rising care costs are another major contributo