The Association of Personal Injury Lawyers (APIL) has warned that the current discount rate is costing critically injured people the money they need to cover the cost of their care in the future.
APIL expressed their concern that the government is preoccupied with changing the legal parameters, which govern how the rate is set, for all the wrong reasons and that severely injured people, forced to gamble with their compensation to cover the cost of future support, could face having the damages cut further under the government’s proposals to increase the discount rate.
APIL Chair, Matthew Stockwell said: “If a man is paralysed, for example, he is likely to need specialist equipment and therapies for the rest of his life. His damages to pay for these things are very carefully calculated by the Courts, but under the current discount rate that money is being reduced too far and there is a very real danger it could run out.”
The current discount rate has not been reviewed since 2001 and therefore is based on dated figures that do not truly reflect the current interest rates and with the government debating on whether or not to increase the rate, things could get a whole lot worse.
Mr Stockwell added: “Some people have been forced to invest their compensation in more risky initiatives in an effort to make sure the money doesn’t run out before they die. Yet the government has suggested the discount rate should be increased, to take this practice into account.”
“The government doesn’t seem to understand that people are being forced to take these risks. Critically injured people don’t want to speculate on investments that carry risk and should not have to.”
He went on to criticise defendant insurers for profiting from the current discount rate for years and insisted that the concerns of the insurance industries bank should not be a factor when deciding how to act on the discount rate, but more so the effect it will have on the people who have suffered the injury.
He said: “The key principle of compensation is to put the injured person’s life back on track, or as close to it as it can be. Under the current discount rate, there is a very real risk that damages could run dry and the state will be forced to pick up the bill when the party responsible for the injury should be responsible for ensuring future care needs are met.”