Let’s gallop into the future by thinking about what 2024 may bring in some of the areas in which Clyde & Co operates in Scotland, focusing on insurance-related claims and litigation in matters of personal injury and property damage.

Claims inflation is a continuing trend. Nobody needs any reminder that the cost of things has been going up. For obvious reasons, this can impact, upwards, the cost of claims. The extent to which inflation has impacted compensation for the pain, suffering and loss of amenity of injury itself, called “solatium” in Scotland, will become clearer when the 17th edition of the Judicial College Guidelines for the Assessment of General Damages is published, likely in 2024.

The “personal injury discount rate” (PIDR) is also to be reviewed and re-set in both Scotland and England & Wales in the second half of 2024, under different methodologies. The PIDR is used to factor notional investment return into awards of damages as a lump sum for future loss, commonly future loss of earnings and the cost of care into the future, in personal injury claims.

Tam O'Shanter riding his mare from the ‘hellish legions’ – ‘Ae spring brought off her master hale But left behind her ain gray tail’. If only he’d carried out a risk assessment for the timing of his journey home... (Picture: Hulton Archive/Getty Images)

The lower the PIDR, the higher the lump sum award. The current Scottish minus 0.75 per cent PIDR can drive massively higher lump sum awards in Scotland than the current minus 0.25 per cent PIDR for England & Wales. With the Scottish Government continuing to consider changes to the constituent parts of the Scottish PIDR-setting methodology, with continuing market uncertainty and the possibility of dual, or multiple, PIDRs, for different heads of claim or durations of loss, it remains premature to predict the outcome of this year’s reviews with any certainty.

What would Burns have made of the rise of artificial intelligence (“AI”)? He may well have considered it even more fanciful than the “warlocks and witches in a dance” he imagined Tam encountering. Regardless, 2024 will likely see both further threats and further opportunities from technology. Cyber insurance will likely be sought by more people and organisations. AI and data analytics will become more useful in detecting insurance-related fraud.

Burns wrote of Tam riding home through a storm: “The wind blew as ‘twad blawn its last; the rattling showers rose on the blast”. 2023/24 is the ninth year, running from September to August, that the UK Met Office, working with other meteorological authorities, has been naming storms. There were between four and 11 named storms affecting the UK in each of the first eight years. Storms Gerrit and Henk were, respectively, the 7th and 8th named storms affecting the UK in 2023/24.

Property damage from storms can cause massive cost to insurers. The Association of British Insurers estimated £560m as the total cost to UK insurers of the October-November 2023 storms Babet, Ciaran and Debi. Storms Ciara, Dennis and Jorge all came in February 2020 and cost insurers £543m. Storms Dudley, Eunice and Franklin all came in February 2022 and cost insurers £497m. Property owners and insurers alike will be hoping for a calmer February 2024 but only time will tell.

Tam survived his journey home, but his horse lost its tail. Tam hadn’t risk-assessed the timing of his journey home and acted rashly in shouting out to the witches. If there is a moral of Tam O’Shanter, it is that actions and omissions have consequences, something worth remembering as we begin another year, albeit untroubled by warlocks and witches!

Vikki Melville, Partner, Clyde & Co

The tale of Tam O'Shanter can teach us lessons - Vikki Melville

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