A new index to help insurers sharpen underwriting assumptions, reserving approaches and claims strategies has been published by the Lloyd's Market Association (LMA).
The LMA International Bodily Injury Index for 2024 and 2025 published in April this year, also reveals that the cost gaps between different legal markets globally widen sharply as injury severity increases and high-severity claims show the greatest volatility and tail risk.
The new Index is based on analysis of data from the 96 jurisdictions it covers globally in scope, with year-on-year analysis based on jurisdictions where data is available in both years for the same scenario.
According to a media release by LMA, with a second year of data now available, the Index is beginning to reveal clearer patterns in severity, volatility and cost drivers across jurisdictions, helping insurers sharpen underwriting assumptions, reserving approaches and claims strategies.
The Index is a three-year strategic project developed by the LMA’s International Liability Business Panel to support analysis of bodily injury awards trends across the 96 jurisdictions worldwide (excluding the USA).
Key trends from two years of data include:
• High severity outcomes are concentrated in a small number of jurisdictions
• Minor injury costs are relatively stable in many jurisdictions, with notable outliers
• The gap widens sharply as severity increases
• Volatility is most visible in severe injury categories
• Interest can be a major cost escalator, with wide variation in both rate and start point
For insurers, this reinforces the importance of timely claims handling, particularly in jurisdictions where interest can materially increase ultimate cost. It also underlines the need for careful reserving for interest and cost where claims take longer to settle.
The emerging trends have direct operational implications, including:
- Pricing and attachment points: higher severity jurisdictions may require different pricing adequacy tests, tighter policy limits or adjusted reinsurance structures.
- Reserving and capital allocation: volatility at the severe end increases uncertainty in ultimate loss cost, which can drive higher risk margins and more frequent assumption refreshes.
- Claims strategy: timely claims handling and early engagement are important in all jurisdictions. Where interest or penalty interest can materially increase ultimate cost, proactive case management and appropriate use of local counsel can help support fair and efficient resolution.
LMA’s International Liability Business Panel Secretary and Senior Executive, Technical Underwriting at the LMA Chris Mather said, “For insurers, the value of the Index is practical. It supports sharper underwriting assumptions and more resilient reserving, and it helps claims teams understand where local factors, including interest and severe injury awards, can materially influence ultimate outcomes and timeliness. This can support timely, well-informed decision making and fair resolution for claimants.”