The lord chancellor and justice minister, David Gauke, will begin the long-awaited review of the personal injury discount rate later today.
The London Stock Exchange confirmed the news this morning. Given the 140-day deadline to complete any review as provided in the recently passed Civil Liability Act, Gauke is obliged to confirm any change by 5 August.
Reacting to the rate review, Association of Personal Injury Lawyers president Brett Dixon said he hoped Gauke would consider the needs of people who suffer catastrophic, life-changing injuries when coming to his decision.
Dixon added: “It is also important to remember that compensation for very serious injuries can sometimes be paid by installments (‘periodical payment orders’, or PPOs). The need to address barriers to that system is now urgent.”
“The needs of some catastrophically injured people are best served by a lump sum payment, others by installments and still others by a combination of the two. If the government is determined to make changes to the discount rate, it is important to make sure we have a new way of using PPOs at the same time.”
The Civil Liability Act, which passed into law late last year, moves the calculation of the personal injury discount rate, currently set at -0.75%, away from ‘very low risk’ to ‘low risk’ investments. It also requires the formation of an expert group to advise on its level every three years.
A consultation on the discount rate, giving interested parties the opportunity to inform government thinking, closed at the end of January.
Commenting on the rate review announcement expected today, James Dalton, director of general insurance policy at the Association of British Insurers, said: “We welcome today’s announcement. Insurers remain committed to paying 100% compensation and want to see a process for setting the discount rate that delivers a fair outcome for claimants, motorists and taxpayers. The outcome of the review must deliver this, and we will continue to play our part to ensure that it does.”