What does the latest ruling mean for insurer payouts?

The Court of Appeal's decision to the uphold the ruling that the retail price index (RPI) undercompensates claimants is far from revelatory.

Yet the significance of the move, for claimants and insurers alike, will not be clear for some time.

In the first instance, the matter is likely to be referred to the House of Lords, which could mean a hiatus of as long as 18 months.

Second, the dispute over the index used to calculate payments for future loss of earnings and future costs of care is not as clear cut as it once was. The gulf in terms of payout between the RPI and other indexes, including ASHE 6115 (which is linked to earnings, not prices) is narrowing.

Third, the uptake of periodic payments may not rise as a matter of course in the wake of the judgement. Almost three years since their introduction, the vast majority of claimants and claimant lawyers continue to favour lump sump settlements on the grounds of certainty and investment returns.

Sources however suggest that the matter being thrust more forcefully into the public domain will act as catalyst for the further uptake of periodic payments, in particular because the discount rate for lump sums (currently set at 2.5%) has been proved to be too high.

While the judgment could cost the NHS over £1.5bn, experts warn that insurers too could face similar exposure.

Nicholas Bevan, senior solicitor at Bond Pearce, says the issue will impact in three areas: "Liability insurance, as this will effect the reserves of both high value personal injury claims as well as moderate claims; Professional indemnity, as there is abundant anedoctal evidence from informed sources that claimant solicitors are not giving their clients full and proper advice on the dilemma, and Claimant Personal Injury, as the case for advising on periodical payments mechanism is overwhelming."

Insurers are understandly keen to play down the significance of the decision, but there can be little doubt that behind the scenes some furious number crunching will be going on during the months ahead.