Discount Rate Reduced in Significant Victory for Claimants
In a significant victory for personal injury Claimants, the Ministry of Justice has today announced a reduction in the discount rate from +2.5% to -0.75%.
The discount rate is a figure by which future financial losses, such as the cost of care and loss of earnings, are reduced to take account of the fact that a lump sum can be invested and earn interest. Personal injury Claimants are not however ”normal” investors who can afford to gamble on the stock market with their compensation. When the rate was originally set it was based on a very secure type of investment. However in the last 16 years since the rate was set the returns on those secure investments have dropped dramatically, meaning that severely injured people have been forced back onto the stock market if they are to have any hope of meeting their lifelong needs.
The move to a rate of -0.75% is therefore to be warmly welcomed because it means that seriously injured people can keep their compensation secure whilst also meeting their lifetime needs.
As Partner at Coffin Mew, I specialise in helping Claimants who have suffered catastrophic injuries or clinical negligence, often with securing settlements with a value of many millions of pounds. I took part in the Government’s consultation on the rate change and am delighted that my views, and of others in the profession, have been accepted by the Government.
I see, on a daily basis, the impact that serious injuries can have on people’s lives. Not just the injured person, but their families and friends who all have to live with the consequences of the injuries.
This change will directly lead to an improvement in their quality of life. In the case of children who suffer from cerebral palsy as a result of medical negligence, it could lead to a tripling of compensation fur future losses and expenses.
At Coffin Mew we have many years experience of dealing with Claimants with some of the most complex and challenging injuries, whether it be personal injury or medical negligence and often recovering damages of hundreds of thousands or millions of pounds.