Page 80 - Pharmacy Appeals 1/4/04 to 31/3/05

56 Performance analysis

Aside from this factor, the increase in the provision Where Covid-19 does affect the provision, there are
from another year's worth of activity has been broadly two partly offsetting factors: expected lower claim
offset by favourable movements in assumptions in numbers from lower clinical activity, particularly
relation to claims inflation. Claims settlements have, for non maternity activity in 2020/21, offset by
in recent years, not risen as fast as historical patterns new risks and potential sources of claims.
have suggested, and we have reduced the claims
Lower activity in 2020/21 reduces the IBNR provisions
inflation assumption again for the 2021/22 financial
across CNST and CNSGP by around £0.3 billion. This
year. However, it is important to recognise that the cost
is offset by the IBNR provision for new Covid-19 risks
of clinical negligence across the NHS in-year continues
and potential claims which is £1.3 billion, hence the net
to be significant. The estimated cost of incidents
impact of Covid-19 is to increase the provision across all
arising from the clinical activity in 2021/22 covered
schemes by around £1.0 billion. This compares to a net
by our CNST scheme was £13.3 billion (see Note 2.1
impact of Covid-19 of £0.5 billion across all schemes last
to the accounts). This figure is materially higher than
year. The main driver of the increase relative to 2020/21
the £7.9 billion reported in 2020/21 - reflecting:
is the higher number of assumed claims in relation to
• the change in the HM Treasury long term the indirect impacts of Covid-19 of delays, cancellations
discount rates, which places a much higher and misdiagnosis reflecting longer waiting lists.
value on projected claims costs; and
Given the time lag in reporting claims there have
• the assumption that clinical activity would have only been a small number of Covid-19 related
increased in 2021/22 compared with 2020/21 claims reported to date. Given the lack of historical
where activity would have been impacted by the claims data the high-level approach adopted to
pandemic. We estimate that the annual cost of quantifying the impact of Covid-19 on the provisions
incidents would have been £8.7 billion without is discussed in detail in Note 7.2 to the accounts.
the impact of the change in discount rates.
The estimated impact of Covid-19 on the
provision continues to be limited because:
• the vaccination programme was successful in
reducing the impact on NHS activity in 2021/22;
• the impact of Covid-19 is largely on incidents
which have occurred in the last two financial
years and the majority of the provision
relates to incidents before this; and
• the majority of the provision relates to maternity
claims (70%) and the evidence available to date
suggests that the number of claims to expect
for 2021/22 will be similar to previous years.