Joint Committee on Statutory Instruments Eighteenth Report


APPENDIX 1

Memorandum from the Department of Health

Road Traffic (Nhs Charges) Amendment Regulations 2001 (S.I. 2001/4030)

1. At its meeting on 21 January the Joint Committee requested a memorandum on the following point:

In relation to the case where the traffic casualty received NHS treatment at a hospital in respect of his injury and was admitted to hospital, regulation 2(b) increases the maximum amount which may be specified in a certificate of NHS charges from £10,000 to £30,000. Explain the reason for this sharp increase.

2. The Road Traffic (NHS Charges) Act 1999 provides for a centrally administered scheme for the collection of costs recoverable for treating victims of road traffic accidents who have received NHS treatment in a health service hospital and receive a compensation payment in accordance with the provisions of that Act. A cap on such recoverable costs is imposed by Regulations and it is this cap which is the subject of the increase in regulation 2(b).

3. When the cap of £ 10,000 was introduced in 1999, based on financial data from 1997, the Department advised the insurance industry that this would be reviewed in the light of operational experience. At that time it was recognised that caps applicable under predecessor schemes left a significant proportion of costs incurred within the NHS unrecoverable.

4. Financial predictions for the scheme, which was introduced on 5 April 1999, suggested that it would raise between £123 million and £165 million per annum in Great Britain. The Association of British Insurers calculated that its members would need to raise the average cost of a compulsory motor vehicle policy between 2% and 3% as a result. In its first year the scheme raised around £30 million, in its second year just under £76 million and this year the Department expects to raise around £96 million. The insurers have not so far therefore been required to pay the anticipated sums and the Department considers that one reason for this may be that the cap in any one case is too low.

5. The initial cap of £10,000 represented about 22 days of hospital in-patient treatment at 1999 costs. The new cap of £30,000 represents about 60 days of hospital in-patient treatment at 2002 costs. The Department is aware that relevant patients who stay in hospital following a road traffic accident for at least 60 days have an average length of total stay of 128 days. Setting the cap at the financial equivalent of 60 days means that the insurer is therefore still spared the full cost of the treatment of the most severely injured patients whilst the NHS is enabled to recover the majority of costs for the majority of patients.

6. The new cap will apply to all road traffic accidents happening on or after 28 January 2002. As it takes an average of more than three and a half years to settle personal injury insurance claims involving relevant patients who stay in hospital for more than 60 days and NHS charges are not due until 14 days after settlement of a claim insurers can expect the full effect of the new cap to be delayed until 2005.


 
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Prepared 11 February 2002