Doubling up? Future economic loss calculated with precision and buffer – NRMA Insurance Limited v Buckley [2016] NSWSC 475

A claims assessor awarded the claimant $1,292,777.61 plus costs of $82,858.72. The insurer submitted that, in assessing future economic loss, the assessor failed to express her reasons, failed to comply with s 126 of the Motor Accidents Compensation Act 1999 (NSW) and failed to afford procedural fairness. The insurer sought judicial review and an order declaring the decision to be invalid.

The claims assessor calculated future economic loss as follows:

• 50% of pre accident earnings of $1,256 net per week = $628 net per week

• Years to age 67 is 23 years

• $628 net per week x 23 years (multiplier 721.2) – 15% vicissitudes = $384,976

• Buffer for early retirement – $100,000

• Total future economic loss – $484,976.

His Honour confirmed that claims assessors have an obligation only to set out 'the actual path of reasoning' by which the assessor arrived at the assessment.² Where there is more than one conclusion available, a preference for one conclusion rather than another is all that is required.³

The task of assessing the value of the claimant’s earning capacity involves an estimation of possibilities not proof of probabilities. It requires an adjustment of an award for damages to reflect a degree of probability that an event, in the future, would occur or might have occurred.⁴

His Honour held that the finding of early retirement was open to the claims assessor given the deteriorating nature of the claimant’s physical and mental situation.

His Honour disagreed with the suggestion that there was a doubling up of compensation through a reduction in earning capacity and a buffer for early retirement. This was because the precise calculation related to the reduced capacity, whereas the buffer was based on the possibility of a reduced retirement.

The insurer’s application for judicial review was dismissed.

This decision highlights that insurers should be cautious when considering a judicial review of a claims assessor’s certificate, particularly where the primary ground for review is that the claims assessor failed to give reasons. This decision confirms prior decisions which indicate that a claims assessor is only required to provide brief reasons which demonstrate a path of reasoning.

This decision also demonstrates that future economic loss may comprise both a precise calculation and a buffer where each component is intended to compensate the claimant for a different type of loss. In this case, the precise calculation compensated the claimant for a 50% loss of earning capacity for the rest of the claimant's working life. The additional buffer compensated the claimant for a chance (over and above the 50% loss of capacity) that the claimant may need to retire early as a consequence of his injuries.