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Various local and national headlines today (27th February 2017) have shouted loudly about the increase of insurance premiums as a result of the Ministry of Justice in England and Wales reducing what is known as the discount rate in personal injury cases. This rate is used in calculations of a claimant’s future losses. It reduces the amount of compensation payable to allow for any profit he or she may make from investing their lump sum payment. The end result is defendants, mainly insurance companies, having to pay less.

The reporting of this change has been greatly biased in its focus on Insurers’ reaction to it. There has been little mention of the fact that this move is perfectly appropriate in recognising that interest rates and investment returns have reduced significantly in recent years. Successful claimants do not have the same opportunity to gain a good return on any investment they make as a result of their win. Indeed the Association of Personal Injury Lawyers (APIL) has welcomed the development, one that was in no small part due to its lobbying of the Ministry for several years, tweeting: “Severely injured people need and deserve the discount rate reduction. APIL welcomes this recognition from the Lord Chancellor.”

It should be noted that the change has not yet been implemented in Northern Ireland as it needs a change in legislation here. However, our Department of Justice was engaged in the consultation process with the Ministry of Justice and it is widely anticipated that the change will be ratified here in due course.

Contact Claire Wilson for advice in relation to all personal injury queries.