Page 173 - Pharmacy Appeals 1/4/04 to 31/3/05

NHS Resolution Annual report and accounts 2021/22 149

Figure 33:
Sensitivity to changes in the nominal discount rate

>
s.
0c
z
C3

3 -2 -1 +0 +1 +2 +3

Change in nominal discount rate (%)

Sensitivity to differential between ASHE and CPI

The ASHE index, used in the calculation of damages in PPO cases where care costs are a component, measures the
rate of change in the wages of carers. The current assumption is that the rate of inflation in carers' wages is 1.75%
higher than CPI price inflation each year. The graph shows the effect on the value of the CNST IBNR provision where
this differential is varied and, as the following chart shows, this is a non-linear relationship. An additional +/- 0.5%
difference between ASHE and CPI will either increase the provision by 8% or reduce it by 7% respectively.

Figure 34:
Sensitivity to differential between ASHE and CPI