The Lord Chancellor has announced a change in the discount rate, which is a figure used to help set compensation pay-outs when people suffer serious injuries, for example following a car crash or medical negligence. It has been reduced from 2.5% to -0.75, effective from 20 March 2017.
We want the discount rate to be as accurate a reflection as possible of what happens when people receive a lump sum payment, so it needs to reflect current investment practices and the investment environment. Instead, the Ministry of Justice has announced a new figure based on an outdated method which risks distorting the compensation process and pushing up insurance premiums.
Director of General Insurance James Dalton has blogged about the issue. Read more here.