Despite intense pressure from the insurance industry, the Lord Chancellor has announced a much more favourable Personal Injury discount rate than many practitioners expected.
Predictions for the new rate had varied between 0 % and 1% and indeed many insurers had applied pressure, relying on this uncertainty, when negotiating settlements irrespective of the current rate being -0.75%.
With effect from 5 August 2019, the new discount rate to be implemented changes the current rate from -0.75% (which had been set in February 2017) to -0.25%.
The Insurance industry is unsurprisingly very happy at the new rate to be applied and are now likely to see the benefits from any previous uncertainty surrounding the discount rate significantly curtailed.
Personal Injury practitioners will find the Justice Secretary’s comments a refreshing change to the usual PI bashing with David Gauke confirming that:
‘It is vital victims of life-changing injuries receive the correct compensation – I am certain this is the most balanced and fair approach following an extensive consultation. ….It is also right that the rate is informed by experts and reviewed on a regular basis to make sure this important calculation is accurate every time.’
It also offers comfort to cynical Claimant practitioners that the new methodology for setting the rate does indeed listen to those “in the know” as opposed to any partisan lobbying group that shouts loudest!
The government, in accordance with the new legislative methodology, will review the personal injury discount rate within a five year period following this review, to ensure that it remains fit for purpose in the future.
Future reviews will be conducted using an expert panel specifically established for the review.
The change is very good news for a group of vulnerable individuals in society, who have through no fault of their own, suffered catastrophic injuries.
Good news for claimants!