Finally a Fair Discount Rate for Injured Claimants

1st March 2017

This week, the Lord Chancellor announced a significant reduction to the discount rate used to calculate claimant’s future losses from 2.5% to minus 0.75%.

But what does this actually mean?

In substantial personal injury and clinical negligence claims, claimants often receive a large lump sum compensation payment. These payments can cover loss of future earnings and pensions, the cost of care and cost of future medical treatment, and adapted or alternative accommodation. The principle of compensation intends to put claimants in the same position they would have been had they not been injured.

A discount rate calculation is applied to adjust the actual amount received to reflect the interest claimants could earn if they invested it – typically based on Government Index Linked Stock.

However, the rate of 2.5% remained unchanged since 2001 despite Claimant lawyers arguing for a number of years that the economic position meant that Claimants were no longer able to earn the investment rates of return that they could in 2001 and were thus now being undercompensated. It took a threat of a Judicial Review from the Association of Personal Injury Lawyers (APIL) to force the government to change the rate which will comes into effect on 20 March 2017.

Reducing the discount rate so significantly means that claimants with life-long injuries will now stand to receive substantially more compensation, allowing them to adequately fund their future care and treatment requirements.

Dean Wilson’s personal injury and medical negligence team welcome the reduced discount rate and hope that the rate will be kept under review to ensure our clients and claimants are fairly compensated and provided with the security they need.

Alice Stuart-Miller is a trainee solicitor in the highly accredited personal injury and medical negligence department. To discuss a personal injury or medical negligence claim, please contact us on 01273 249200.