At 31 December 2016 the estimated liability of Delegated State Authorities in respect of claims under management by the SCA was €2,201m (2015: €1,789m), of which €1,671m (2015: €1,353m) was attributable to Clinical Claims and €530m (2015: €436m) to General Claims. The estimated liability is calculated by reference to the ultimate cost of resolving each claim including all foreseeable costs such as settlement amounts, plaintiff legal costs and defence costs. The SCA has based its estimated liability in respect of certain active clinical claims at 31 December 2016 on a real rate of return of 1% and 1.5%. The increase in the estimated liability of Delegated State Authorities in respect of claims under management by the SCA from 2015 to 2016 is due in large part to a change in the real rate of return assumption in these estimates, in respect of certain active clinical claims, from 3% in 2015 to 1% and 1.5% for the year ended 31 December 2016. The impact of this change on the estimated liability as at 31 December 2015 has been estimated at circa €300m.

The 2015 estimated liability calculation was informed by actuarial assumptions which employed the then prevailing real rate of return of 3%. However, on 5 November 2015, the Court of Appeal, upholding an earlier High Court judgment, ruled that in cases involving catastrophic injuries, claims for the cost of future care should be calculated at a real rate of return of 1% and claims for future pecuniary loss should be calculated at a real rate of return of 1.5%. The SCA made Legal Submissions to the Supreme Court in March 2016 seeking Leave to Appeal the decision of the Court of Appeal to that Court.

Pending the Supreme Court’s determination, the SCA continued to settle cases involving catastrophic injury on the basis of a real rate of return of 3%. The settlement agreements in these cases included a provision for additional compensation to be paid should the Supreme Court refuse Leave to Appeal or having heard such an Appeal determined that the real rate of return should be lower than 3%. The additional compensation would represent the difference in the rate calculations and it is now expected that the additional compensation due will be in order of circa €40 million, as advised by the actuaries to the scheme. This additional compensation is included in the estimated liability of claims under management at 31 December 2016.

• Other claims include claims re-opened in the period, claims closed in the period and designated to a prior period.
• The number of active claims at 31 December 2016 includes 1,797 mass action claims.

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