Insurers who establish annuity funds to fund periodical payments could be wasting money, a top actuary has warned.
Lane Clark & Peacock partner Joe Monk said self-funding payments was "the cheaper option".
Monk said the subtle shift in wordings between the first and final draft of the Courts Act puts less emphasis on the insurer being able to make payments for the duration of period specified by the judge.
The first draft considered it to be of the "utmost importance", while the finalised version only considered it "very important".
"The security issue has been weakened and it has opened up some options," Monk said.
The problem is that the Courts Act, which came into being on 1 April, has no experience to draw on. So establishing periodical payment options is tricky business, warned Monk.
"From a professional point of view, I would recommend self-insuring, as long as the insurer can take on the investor and mortality risk," he said.
And with mortality rates predicted to slide, the early death of a claimant could leave self-insured carriers with a windfall when payments cease.
The alternative, he said, was to wait for annuity funds to come on to the market.
But, Monk warned, "if judges realise that self-insuring can pay then they will order it."
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