Victims of crime seek an income: Father demands alternative to lump-sum compensation for son handicapped by assault
Sunday 08 May 1994
Peter Jones believes hundreds of criminal injury victims like his son Ross could benefit from such schemes, called structured settlements, each year. Yet the board has so far turned down Mr Jones's appeal on behalf of his son.
Ross, aged 14, has been handicapped since the age of three, when he was assaulted by his mother's then boyfriend. She had left her husband and moved to another part of the country, where she met her new partner.
The boyfriend was convicted in 1983 of causing Ross grievous bodily harm and sentenced to two years in jail.
Ross, who lives in Nottingham, cannot walk, dress or feed himself. He cannot speak, is incontinent, and is cared for at home mainly by his grandmother.
Mr Jones, an executive with IBM, the computer company, said: 'We calculate that the cost of caring for him properly is about pounds 50,000 a year, rising in line with inflation. Traditionally, criminal injury victims are paid lump sums, which they use as necessary.
'From my own point of view, I believe a regular income would help Ross more than any lump sum paid upfront. I want to know that if anything happens to me, his financial needs will be met for the rest of his life and his money will never run out.'
Despite a letter from a Government minister telling him that the board has the power to make structured payouts, not one had been made to date, he said. Structured settlements are recent imports into Britain from the United States, where they are a common way of meeting insurance claims, usually on behalf of accident victims.
Their advantage is that since 1987 they have been treated by the Inland Revenue as not subject to tax - unlike income from many kinds of lump- sum investments.
They also allow people who are not always used to managing large sums to know that their future needs, or those of their loved ones, will be looked after.
Ivor Levy, whose accountancy firm, Frenkel Topping, has negotiated several hundred such settlements in the past few years, said: 'We believe they can be suitable, from the largest claims, involving millions of pounds, to ones worth pounds 50,000. Once there has been agreement on the amount that will be needed to provide proper care - which is then index-linked - an injured person and their family will never have to worry about those things any more.'
Insurance companies prepared to offer structured annuities in Britain include Sun Life, Standard Life and Windsor Life. The latter's parent company, New York Life, has cornered a large slice of the market in the US.
Mr Levy said: 'The advantage for insurance companies and from any agency that has to pay compensation is that they do not have to pay all the money up-front. If a person dies early, they save money.'
Some government agencies, such as the NHS trusts, have agreed to make structured settlements instead of lump sum payments. However, the CICB denies that it has the power to do so, despite government claims to the contrary.
Another body sometimes unable to make such payments is The Motor Insurers Bureau, the body that pays compensation to victims of car accidents when the driver at fault is uninsured.
The MIB can be ordered by a court to pay structured settlements when the uninsured driver has been traced and can be sued. However, if the driver is not caught, the MIB does not have the power to make annual payouts.
Peter Spurgeon, a CICB director, acknowledged that a Law Commission report in 1992 had recommended the use of structured settlements for agencies such as his own.
But he said: 'There are some difficulties with this approach, which are acknowledged by the Law Commission. We are not a statutory scheme and the payments we make are made ex gratia.'
Were the Government to place the compensation scheme on a statutory footing, it might still be unwilling to consider using insurance company annuity schemes as a way of funding staggered settlements. 'The third element was that since the scheme has gone through change to a tariff form of compensation - which amounted to a lot of work - the amount of additional work needed to take this question forward was beyond our gift then,' Mr Spurgeon added.
'I do think it is one of the issues that needs to be considered very carefully. I do not want anyone to think this is going to be easy. There is no timetable for our considerations.'
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