AN ACTUARIAL APPROACH TO ASSESSING PERSONAL INJURY COMPENSATIONS IN SINGAPORE: THEORY AND PRACTICE

In Singapore personal injury litigations, successful claimants usually receive their compensations as a lump sum. The main advantage of a lump sum payment is that the proceedings can be concluded with a 'clean break' between the parties. The lump sum is a result of discounting the future pecuniary values into a single present-day amount, considering the time value of money and the claimant's mortality. Conventionally, lump sum awards are determined by making reference to a spread of amounts in comparable cases. However, a fairer method would be one that involves input from not only lawyers but also other experts including economists and actuaries. This study, which is carried out by an inter-professional working group, provides a set of actuarially computed tables for use in personal injury settlements in Singapore. The calculations involve a consideration of recent advancements in stochastic mortality modeling and an empirical study on the econometrics of real returns on risk-free assets in Singapore. We then present two recent personal injury cases in Singapore, aiming at helping the Singapore legal profession understand and use the economic principles with actuarial tables, and educating economists and actuaries the legal concerns and concepts in personal injury cases.