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Discount rate update: the Government confirms further changes

Posted: 29/11/2017

The Justice Minister, Lord Keen, has recently confirmed that the Lord Chancellor, David Lidington, will be setting a new discount rate for personal injury damages ‘as soon as he can’.

The discount rate is set to calculate deductions from compensation to reflect interest that should accrue on the payment for compensation.

As outlined in our previous article, here, the current rate is set at -0.75%.

The new rate is likely to be in the region of 0% to 1% and based on rates of return on low risk investments rather than very low risk investments, the latter having been used when setting the current rate.

The review of the current rate is being assisted by a panel of experts who include an economist and an investment manager, amongst others.  The way the rate is set in future is to be more transparent and it will be reviewed on a more regular basis.

The Government still expects insurers to pass on any savings to motorists via their insurance premiums. 

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