The Ministry of Justice will hold a consultation over their decision to alter the personal injury discount rate. Insurers and solicitors have six weeks to present their cases on whether to keep or alter the current rate.
In February, the Lord Chancellor, made the decision to reduce the personal injury discount rate from 2.5% to -0.75%. The rate’s design is to protect the compensation of catastrophic injury victims.Therefore the personal injury sector were in full support of the reduction. However, rather predictably, the insurers created an instant furore, branding the rate “absurdly low”.
What does the rate do?
It is important for the courts to take into account long term costs when calculating compensation for catastrophic injury victims. Given that the cost of goods and services generally rise over time, changes were overdue to ensure claimants are not left short. The discount rate applies to cases where claimants require long term care. It’s design is to protect them in the future.
Having seen no change since 2001, the Liz Truss thoroughly reviewed the rate before making her decision. As part of the announcement she said:
“The law is absolutely clear – as Lord Chancellor, I must make sure the right rate is set to compensate claimants. I am clear that this is the only legally acceptable rate I can set.”
Consultation opened
Over the next six weeks, claimant lawyers will consult the MOJ on why the rate should remain the same. That is to protect vulnerable claimants, ensuring they receive the correct compensation. Insurers will consult on the opposite, insisting that premiums will face further increases to cover the losses they make.
The claimants who the discount rate applies to are highly dependent on the compensation sum they receive. Therefore, it is baffling why insurers so vehemently oppose to the decrease. The compensation for long term care in these cases goes 100% towards the claimant. As Scott Rees and Co Partner, David Byrne commented previously, the interests of the insurers is only to protect the profits they gain by under-settling victims of catastrophic injury.
Scott Rees and Co are supporting the decision to retain the reduction of the discount rate. We are hopeful that the government will stand by their initial decision to protect the rights of catastrophic injury claimants.
Can I still claim?
If you, a friend or family member suffer an injury, you can still claim at the current rate while the process is on-going.
Scott Rees & Co has been helping victims of personal injury for 25 years. We have access to a wide network of specialists allowing us to guarantee the very best care for our clients.
To talk to an adviser today and get free advice about your injury, call us on 01695 722 222. Our lines are open weekdays 9am to 7pm). Alternatively, you can visit our website here for more information or arrange a call back at a time easier for you.