Rely on the most comprehensive, up-to-date legal content designed and curated by lawyers for lawyers
Work faster and smarter to improve your drafting productivity without increasing risk
Accelerate the creation and use of high quality and trusted legal documents and forms
Streamline how you manage your legal business with proven tools and processes
Manage risk and compliance in your organisation to reduce your risk profile
Stay up to date and informed with insights from our trusted experts, news and information sources
Access the best content in the industry, effortlessly — confident that your news is trustworthy and up to date.
With over 30 practice areas, we have all bases covered. Find out how we can help
Our trusted tax intelligence solutions, highly-regarded exam training and education materials help guide and tutor Tax professionals
Regulatory, business information and analytics solutions that help professionals make better decisions
A leading provider of software platforms for professional services firms
In-depth analysis, commentary and practical information to help you protect your business
LexisNexis Blogs shed light on topics affecting the legal profession and the issues you're facing
Legal professionals trust us to help navigate change. Find out how we help ensure they exceed expectations
Lex Chat is a LexisNexis current affairs podcast sharing insights on topics for the legal profession
The discount rate for personal injury claims will be set at minus 0.75%, the Ministry of Justice (MoJ) has announced. The new Discount Rate will come into effect on 20 March 2017, following legislative amendments. The Association of British Insurers (ABI) called the changes a ‘crazy decision’, saying that claims costs will soar and lead to an increase in premiums for millions of UK drivers and businesses.
Before it’s here, it’s on Lexis®PSL. Click here to take a free trial.
Currently, victims of life-changing injuries receive a lump sum compensation payment adjusted according to the interest they can expect to earn by investing it.
When finalising claims, the compensation courts apply the ‘Discount Rate’ calculation, with the percentage linked in law to returns on the lowest risk investments, typically Index Linked Gilts. The Discount Rate has been unchanged since 2001.
New discount rate
The MoJ has now announced a lower Discount Rate, from 2.5% to minus 0.75%.
This has been done, the MoJ said, because the law ensures claimants must be treated as risk-averse investors, reflecting the fact that they are financially dependent on this money, sometimes for long periods or all of their lives.
Composition awards using the rate should, therefore, ensure individuals are put in the same financial position as if they had not been injured, including loss of future earnings and care costs.
While this change will see compensation payments rise and have a significant impact on the insurance industry and those public services with large personal injury liabilities, the government has pledged that:
‘A crazy decision’
ABI director general Huw Evans called the changes ‘a crazy decision’, noting that: ‘Claims
costs will soar, making it inevitable that there will be an increase in motor and liability premiums for millions of drivers and businesses across the UK. We estimate that up to 36 million individual and business motor insurance policies could be
affected in order to over-compensate a few thousand claimants a year.
‘To make such a significant change to the rate using a broken formula is reckless in the extreme, and shows an utter disregard for the impact this will have on consumers, businesses and the wider operation of the insurance market.’
Subscribers to Lexis®PSL can enjoy a wealth of related guidance and insight, click here for a free trial to access.
Source: Press release: New discount rate for personal injury claims announced
Access this article and thousands of others like it free by subscribing to our blog.
Read full article
Already a subscriber? Login
0330 161 1234