The new -0.25% rate comes as welcome news to claimants who have suffered life changing injuries; whilst this will have a negative impact upon damages, the review has not led to the more significant change urged by the insurance industry, much to their chagrin.
The Discount Rate is the figure applied to future losses to adjust the final lump sum award to reflect the interest claimants can expect to earn by investing their compensation. For many years it was set at 2.5%; however, claimants were often unable to achieve the required returns on investments from lump sum payments unless they invested in portfolios with risk.
The new rate came into force on 5 August 2019. The government states that the change is in line with the Wells v Wells 100% compensation principle and the new rate should allow claimants to invest in ‘low risk’ portfolios.
As a firm specialising in personal injury claims, we welcome the change in rate news which now provides more certainty when it comes to negotiating high value claims and we agree with the Justice Secretary who said, ‘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’.
If you have a Personal Injury claim or would simply like some advice, get in touch with our specialist team now on 01482 323697.
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