Personal injury lawyers have warned against introducing a dual or multiple personal injury discount rate—the rate used to calculate damages in serious, life-changing injury cases
A rate of -0.25% was set in 2019 (adjusted from -0.75% in 2017). In January, the Ministry of Justice issued a call for evidence on the rate, including whether dual or multiple rates should be used, in its paper ‘Setting the personal injury discount rate’.
Responding this week, the Association of Personal Injury Lawyers (Apil) opposed a dual rate. It highlighted that catastrophic injury claim schedules are frequently 50 to 100 pages long, with hundreds of individual calculations, so changing to a dual or multiple rate ‘would significantly increase the complexity and costs of these calculations leading to the risk of error’.
Apil pointed to the dual/multiple rate system in Ontario, Canada, where parties often have to use experts to make the calculations. Apil said claimants would find it difficult to make informed decisions about settlement offers due to the added complexity.
Jonathan Scarsbrook, president of Apil, said: ‘Compensation is not a lottery win and neither is setting the discount rate a hypothetical maths problem.’
Scarsbrook said that, despite the Lord Chancellor’s adjustment of the rate in 2019, ‘a third of claimants were still expected to be unable to meet their total financial losses.
‘One of the realities is that claimants are usually advised to invest through a discretionary fund manager who can actively manage the portfolio. The actual cost of this must be taken into account, as must the increased tax burden, with personal allowance not moving over time and with capital gains tax and dividend allowances falling back significantly since 2019.
‘When taken together, the impact of these realities on catastrophic injury claims, where damages payments can easily reach £10 million, can be huge.’
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