The Institute of Actuaries has called for the scrapping of lump-sum damages awards in major personal injury cases in favour of income settlements.
Chairman Allan Martin claims the current system is potentially unfair to the victim, the insurer and the taxpayer because circumstances change.
He said: "Lump sums compensate on the basis of a certain life expectancy. But the problem essentially is that people do not die on time."
His comments were made as the Lord Chancellor issued a consultation document on whether to give courts the power to make income and benefit awards to personal injury victims.
Martin pointed out that if the victim's circumstances change for the worse, or if medical costs rise, he or she gets no extra help. Insurers may end up overpaying if the victim dies sooner than expected, or if unanticipated medical breakthroughs lead to partial recovery of the victim. Taxpayers, for their part, are left to pick up the tab if the victim lives longer than expected.
Martin said: "We believe the UK should now move away from lump-sum compensation to an income approach. What is needed is a monthly income that adequately covers all medical bills and living expenses – however long the victim lives."
Lump-sum awards have risen steeply over the past year after interest-rate multiplier the Ogden tables were lowered from 4.5% to 3%.
This meant that the size of awards increased because victims were expected to receive less annual income on invested monies.
But the proposal to switch to income awards was not welcomed by insurers.
An Axa spokesman said: "The only people who want settlements linked to income is the Institute of Actuaries and plaintiffs or solicitors of the injured parties.
"This arrangement has not been investigated enough for us to form an opinion and it has really only affected a certain small percentage of cases."