Following a period where a decline in annuity rates has led to a decline in the popularity of structured settlements, the Law Commission has published a number of proposals which, if implemented, should re-affirm their place as an essential part of the personal injury litigator's armoury.Many of these proposals are designed to simplify the existing procedures for setting up a structure.

They include the recommendation that a life office be allowed to make the periodic payments tax-free and direct to the plaintiff, instead of the present system where the insurer has to gross-up its payments and recoup its tax later.This would re move a significant administrative burden from the insurer, which is an important factor in determining the discount on the conventional lump sum figure sought by insurers in return for entering into structured settlement arrangements.

As such, it seems reasonable to expect that if the proposal is adopted, the discount should be reduced and perhaps removed completely.Plaintiffs are likely to have to continue to provide some degree of financial incentive to get an insurer to enter into an agreement.

However, the grounds on which an insurer can justify it are diminishing because the only reasons for retaining a discount other than administration costs are to allow the insurer to share in the tax benefits, or because they view structured settlements as inherently valuable to the plaintiff.The commission rejected the idea canvassed in its consultation paper that the court should be able to impose structured settlements on unwilling parties.

This would have had a significant impact on the question of what level of discount could be charged, because it raised too many practical problems as to when the power should be exercised and who has responsibility if the structure fails.

However, it is arguable that plaintiffs should have the power to impose structures on unwilling defendants' insurers.Another crucial part of the commission's report is its emphasis on providing security for the plaintiff should the life company or the insurer fail.

The absence of any real security has been a matter of concern for many plaintiffs and is likely to have deterred some from using them, but views have differed on how to resolve the problem.Many have favoured leaving the question of security to the judgment of the plaintiff's legal advisers in individual cases, who may be able to obtain contingency insurance.

It is often hugely expensive to acquire such cover for the length of time involved with many structures and the question of who should bear that cost can sometimes obstruct negotiations.The solution proposed by the report appears to be the most sensible.

But having the life company make payments direct to the plaintiff does not amount to complete assignment of the insurer's liability, such that would make the plaintiff a policy holder of the company within the meaning of the Policyholders Protection Act 1975.

It would be possible if special provision were made within the Act for an annuitant pursuant to a structured settlement agreement.

This would provide the necessary level of security and make structured settlements a more attractive proposition for plaintiffs.It should be remembered that these proposals build upon what is already a favourable position.

Structured settlements are not a panacea for all cases.

Though initially flexible, problems can arise because once determined, they cannot be changed.

This can frustrate plaintiffs who want to manage the sum themselves, and can be disastrous if an unforeseen need arises post-settlement.

It is therefore necessary to tailor structures to a plaintiff's individual needs, and there is a tremendous pressure to get it right at the outset.However, structured settlements are often a better alternative to the lump sum where plaintiffs wish to avoid the cost and stress of managing such a substantial sum themselves.

As well as the tax benefits, the security against inflation and the certainty of a guaranteed income for life, the problem of life expectancy risks, with lump sums tending to be either too high or too low, can be avoided where periodic payments are linked to the plaintiff's life.If ther e is a dispute over life expectancy, as is sometimes the case, then as Bill Braithwaite QC has reported (see [1994] New Law Journal, 13 May) structured settlements can allow 'bottom-up' agreements which resolve what was apparently irresolvable.Increased certainty and the promotion of settlement are a feature of many of the Law Commission's other proposals in relation to damages generally.

One of these is that, in relation to lump sum awards, the commission has recommended that the Ogden actuarial tables be admissible as evidence in any proceedings where it is necessary to establish the value of future pecuniary loss.We welcome this proposal, which is long overdue.

For some years, the Ogden tables have been able to assess quite accurately the future loss of a plaintiff over long periods of time.

Notwithstanding this level of sophistication however, which often leads to the tables being used as de facto evidence, their suggested recovery is usually reduced by the court in the exercise of its discretion.This creates an unacceptable level of arbitrariness which mitigates against settlement because lawyers cannot predict the likely level of damages, and subjects plaintiffs to a discount which has no logical justification: awards rarely reflect the true value of the injury.We would have preferred the commission to go further than it did and compel judges to take notice of the tables when they are introduced as evidence.

However, making them admissible is a step in the right direction and an important part of a report which should go a long way towards producing a more scientific approach to assessing damages, and a more efficient system for compensating victims of personal injury.

The present need is for its recommendations to be the subject of active lobbying to ensure that they are implemented: they are much too crucial to be permitted to gather dust.