On 20th March 2017, the government finally adjusted the Discount Rate used for the calculation of future loss claims in personal injury and clinical negligence claims. This had remained at 2.5% for 16 years but has now been changed by the Lord Chancellor to minus 0.75%.
When the victim of a personal injury or medical accident is seriously injured, it is very likely that they will have to make a claim for losses that they will incur in the future, such as loss of earnings. Historically, the injured person has had to give credit for what is known as “accelerated receipt”. In other words, the Court has assumed that on receipt of their compensation, the injured person will invest the money relating to their future loss and will therefore derive further income from such investment.
The calculation is based on the net return which can be gained from index-linked government stock. As these returns are now negative, the Lord Chancellor has brought about the necessary change to the Discount Rate to ensure that the victims of accidents are properly compensated.
At Bell Lax, we welcome this development. We act for many clients who have sustained life-changing injuries and it is essential that adequate compensation is recovered to enable them to rebuild their lives and to pay for future costs. Often these are very expensive and can include such items as private care and treatment.
The change has been met with a very negative response from the insurance industry and we anticipate that there will be strong lobbying from the Association of British Insurers to have this change reversed.
For now, we are seeing the value of claims made by some of our clients (where they have future loss claims) increase by tens and even hundreds of thousands of pounds following this announcement. This is enabling us make more adequate provision for their future which is often so uncertain.
If and when the government bows to the pressure of the insurance industry, unfortunately this will have the opposite impact for our clients.
If you have been seriously injured in a personal injury accident or as a result of medical negligence, we can help you to obtain compensation for your injuries and also for the future losses you will incur as a result of those injuries. This also applies if you have tragically lost a loved one through the fault or negligence of someone else.
If you have recently settled such a claim and your solicitor advised you to do so using the 2.5% discount rate, you might have a claim for professional negligence against them as a positive change for claimants had been anticipated for some months. At Bell Lax, we can advise you whether a mistake has been made by your solicitors and where this is the case, recover compensation for you.
If you think we may be able to help you, call us today on 0121 355 0011 and speak to Stuart Andrews or Natalie Bradshaw.