Does the new Baremo satisfy both the Insurance Companies and the injured party?

The Baremo is a tarrif based system

The Baremo, new system for the assessment of personal injury damages in road traffic accidents

Cristina Carbonell, specialist personal injury damages (Baremo)Por Cristina Carbonell Suárez-Ibaseta

In 2011, the Spanish Government began the reform of the “Baremo” – the tariff based system-; introduced in 1995 for the assessment of personal injury damages in road traffic accidents; which is used in other personal injury matters as well.

The new Baremo is the result of the agreement reached by the majority of those (injured parties, Insurance Companies, Spanish Courts) who considered that it was necessary to reform the former law to adapt it to the European legislation.

The new Baremo is contemplated in the Act 35/ 2015 of 22nd September (“Act 35/2015”) regulating the quantification of damages for personal injuries in RTAS); which will come into force on the 1st January 2016.

Meet the requirements of all parties involved

However, does the Baremo meet the requirements of all parties involved including Insurance Companies?

Most of the new rules are favourable to the injured party.

Thus, the most relevant legal developments relate to the following:   (I) the new Baremo aims to achieve the principle of full compensation. (ii)  Damages awards will be increased significantly and, in my opinion, one of the most significant and a relevant development is the new applicable law in respect of the recovery of the loss of earnings: the Baremo specifically regulates separately the heads of claim under the General damages and the heads of claim under the special damages.  (iii) The role of medical experts in assessing compensation becames statutory.

Under the previous provisions the loss of earnings was not calculated by reference to the injured parties expected loss but rather as a percentage uplift to the non-pecuniary damages in accordance with statutory tariffs.

In relation to special damages:

New heads of claim under special damages are introduced including:

  1. a) Gratuitous care and assistance provided by family which was not previously contemplated.
  2. b) Future medical expenses or medical treatment including life long medical treatment for seriously injured victims.
  3. c) Future travel expenses.
  4. d) Loss of amenity when the injured party is no longer able to perform activities such leisure activities, social life sport, sex life etc…
  5. e) Reasonable miscellaneous costs arising out of the accident.

In relation to general damages:  

Temporary incapacity: The new Baremo also provides for the right to full compensation for loss of earnings during the period of temporary incapacity.  It contemplates an award for the pain and suffering and loss of amenity during the period of time until the injuries heal.

Permanent incapacity:  Under the current Baremo the point for assessing future medical care needs is taken when the injuries have healed except for cases in which the injured party will need treatment throughout their life. In the new Baremo damages will be assessed from the date of the accident up to the death of the injured party, taking into account their life expectancy.

The compensation for serious injuries will increase on average between 15% to 50%.

The injured party´s inability to carry out housework or any relevant prejudice on the future labour market will be taken into account to calculate the quantum.

Fatal cases: It is specifically regulated who will be entitled to compensation for the loss of earnings in case of deceased independently of the existence of the right of others beneficiaries.  The categories of beneficiaries include:  a) the widowed spouse; b) the parents; c) the children; d) siblings and also those who had a close relationship with the victim.

The latter would have had lived for the last five years with the victim. In the new Baremo, each beneficiary who falls within this category will be entitled to compensation, and the courts shall therefore no longer rule in the spouse and children´s favour taking priority over siblings.

In the relation to the medical expert

 The assessment of physical injuries shall have to be done in accordance with a medico-legal report which meets the rules of the Baremo.  The expert reports prepared by English medical experts are not usually drafted in line with the Baremo rules.  This statutory rule will have an impact in those claims brought before the British Courts and it remains to be seen whether the British Courts will require medical evidence from a Spanish expert as from my point of view this is a procedural matter.

In the light of the above, injured parties are favored with the amending and new rules of the Act 35/2015.  However, Insurance Companies have also been given some privileges.

One of the most controversial points relates to the privilege given to the insurance Companies set out in article 7 of the Act 35/ 2015.

The article 7 of the Act 35/ 2015 sets out the obligation for the Claimant to put forward an out of court proposal before issuing proceedings. It will not possible to issue proceedings in Spain without having submitted such proposal.

The above is a privilege only comparable to the one given to the administration in Spain.

Action of the British Courts

The question now is: Would British Courts require the Claimants to have submitted the out of court settlements prior to the issuing of proceedings in UK?

The EU Regulation 864/2007 (“Rome II”) is clear and procedural matters will be governed by the law of the forum.  It remains to be seen what British Courts decide on this point.

Another privilege given to the Insurance Companies refers to the reduction on the compensation to be awarded on whiplash claims. The whiplash injury will be awarded with within a range of points from 1 to 5.  It is also necessary that the symptoms have appeared within 72 hours from the accident and conclusive medical evidence will be required.

The new Act also contemplates the mediation figure which was not previously contemplated.

Summarizing, we can conclude that, in general the new Act is a step forward in line with other European countries aimed to increase the damages of personal injury claims.

Cristina Carbonell