Read the latest Personal Injury update from Partner and Head of the Personal Injury team, Natalie Marrison.

The Lord Chancellor has announced this week that the Personal Injury Discount Rate (“PIDR”) will be readjusted from - 0.75% to -0.25% with effect from the 5th of August 2019.

It was widely anticipated that the PIDR would be increased to around 1%, so this news has come as a surprise to some. While insurers are unhappy with this announcement, it has been welcomed by Claimants and their legal representatives.

The PIDR was previously set in 2001 at 2.5% and was reduced in February 2017 to - 0.75%. The Lord Chancellor has since faced a great amount of pressure from insurers to increase this again. Some have now criticised the Lord Chancellor for not increasing the PIDR by a sufficient amount and claim that this will continue to lead to higher insurance costs. However the Government Impact Assessment released on this topic does state that this move will bring savings to insurers of around £230- 300 million a year. The news has also been supported by APIL president Gordon Dalyell who acknowledged the government's new approach of setting the rate on the basis that injured people should be considered low risk investors.

So what does this mean for me as a Claimant?

Compensation should put a Claimant in the same financial position they would have been in had they not been injured, including for loss of future earnings and care costs. When a Claimant accepts a lump sum compensation payment the actual amount that they receive is adjusted according to the interest they can expect to earn through investment. This means that there is an expectation that they will invest the money and receive a return to be used on future needs- the PIDR should reflect the likely rate of return on investment.

However, it is unlikely that a Claimant will always invest sums for future losses received, they may choose to spend on healthcare needs and further financial support. It appears more than fair for the discount rate therefore to remain in the negative.

At Ramsdens we have a specialist team who will consider claims for past and future needs arising from Personal Injury or Clinical Negligence. Rehabilitation is our key focus. For a free and confidential discussion call 0800 804 450. Alternatively, fill out an online enquiry form and we will be in touch at a time that is suitable for you.