Claimant personal injury solicitors are resigned to the discount rate moving back up as a result of the Government’s latest consultation on the matter, according to research commissioned by Bill Braithwaite QC.
The research has found that just 10% of claimant PI solicitors expect the rate to stay at minus 0.75%, with 65% believing it will be adjusted to between 1 and 1.5%. 16% predict it will change to 0%. Most, however, do not believe that an announcement will be made this year, with 81% believing that the Government will release the findings of its latest discount rate consultation during 2018.
Braithwaite (pictured) said that most of those surveyed also believe that the Government will “roll over and backtrack” on its decision to change the discount rate from 20 March this year. Prior to that move, the rate had been last revised in 2001.
“An adjustment to between 1 and 1.5% would be a compromise, face-saving position for the Government to adopt – but it would be a backward step for justice,” he said.
Braithwaite said that a return to the old discount rate of 2.5% was “unthinkable and simply cannot happen” – a view echoed by all claimant personal injury solicitors – but not by insurers. A recent report from EY said that motor insurers suffered combined losses of £3.5 billion as a result of the cut to the rate.
“Claimants should not be expected to run investment risks with money which a judge has declared is essential to their future health and well-being,” he said. “Yet this will be the reality of their situation if the Government moves the discount rate back up.”
The research also indicated that just 28% of claimant PI solicitors have settled future loss PI claims since the discount rate changed to minus 0.75%.
“This is further cause for concern,” said Braithwaite. “Are insurers delaying settlement meetings in anticipation of the discount rate moving upwards when the Government acts on the second consultation?”
Claimant solicitors are achieving successes under the new rate though, with 80% of claims proceeding under the minus 0.75% rate.
“If claims are actually settling at minus 0.75% it suggests a high proportion of claimant solicitors are securing the best possible settlement for their clients. This figure challenges the anecdotal information cited by insurers, that the industry is using 1%,” added Braithwaite.