Personal Injury Discount Rate

WSP Solicitors - Stroud Dursley Gloucester Nailsworth

Personal Injury Discount Rate

It was recently announced by the Lord Chancellor, Liz Truss, that the discount rate applied to personal injury compensation payments will be slashed to -0.75%.

Compensation awards using the rate should put the person bringing a claim (a Claimant) in the same financial position had they not been injured, including loss of future earnings and care costs. With interest rates remaining at an all time low for a number of years now, some Claimants have found that the levels of compensation for future losses have been inadequate when they are financially dependent on this lump sum, often for long periods or the duration of their life.

The new rate, reduced from the current 2.5%, came into effect on 20 March 2017. It is the first amendment to the rate since 2001.

The personal injury discount rate calculates how much money is removed from a victim’s insurance payout following an accident, in order to make up for money made should the money be invested over several years.

In finalising a compensation amount, courts apply a calculation with the percentage linked in law to returns on the lowest risk investments, typically Index-Linked Gilts.

What does this mean for you? In short, if you have had a significant or life changing injury, and it includes a claim for future losses, then you may stand to receive substantially more compensation and truer to interest rate changes.

Huw Evans, director general of the Association of British Insurers, said the decision was ‘crazy’ and warned there will ‘inevitably’ be increases in motor and liability premiums.

But the Association of Personal Injury Lawyers, which has long campaigned for a reduction in the rate, said the ‘overdue’ change means people who suffer severe life-changing injuries can now be assured that the compensation needed to look after them is calculated correctly, and is sufficient to provide care for the rest of their lives.

If you have any questions about the personal injury process, or about making a claim, please contact one of the Personal Injury Specialists at WSP Solicitors. We offer a first hour appointment for free and can then advise you on a “no win no fee” basis for the rest of your claim. Read more Personal Injury articles here.

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