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15 July 2019 | Comment | Article by Cari Sowden-Taylor

New personal injury discount rate – welcome news for claimants

This morning the Lord Chancellor finally revealed the new personal injury discount rate following months of consultation.

The new -0.25% rate comes as welcome news to claimants who have suffered life changing injuries; whilst this will have a negative impact upon damages, the review has not led to the more significant change urged by the insurance industry.

The Discount Rate is the figure applied to future losses to adjust the final lump sum award to reflect the interest claimants can expect to earn by investing their compensation. For many years it was set at 2.5%; however, claimants were often unable to achieve the required returns on investments from lump sum payments unless they invested in portfolios with risk.

In February 2017 the rate was changed to -0.75% and since then there has been an outcry from defendant insurers to change the rate. Whilst the new rate is an increase, it is not as high as some were perhaps expecting and defendant insurers have already voiced their disappointment.

The new rate will come into force on 5 August 2019. The government states that the change is in line with the Wells v Wells 100% compensation principle and the new rate should allow claimants to invest in ‘low risk’ portfolios.

As a claimant lawyer, I welcome the change in rate news which now provides more certainty when it comes to negotiating high value claims and I agree with the Justice Secretary who today said ‘it is vital victims of life-changing injuries receive the correct compensation – I am certain this is the most balanced and fair approach following an extensive consultation. It is also right that the rate is informed by experts and reviewed on a regular basis to make sure this important calculation is accurate every time’ .

In light of today’s news it is vital that all claimant solicitors urgently review any Part 36 offers made or received and consider whether any action should be taken. For those cases involving claimants who lack capacity to manage litigation where settlement meetings have recently taken place, but the case is yet to be approved, then urgent review will be required prior to court approval as to whether higher compensation payments should be negotiated. Schedules of loss will also need to be amended in order to take account of the new -0.25% rate.

Author bio

Cari Sowden-Taylor


Cari is a Partner and Joint Head of the National Serious Injury Team, and specialises in representing adult and child claimants who have sustained life changing injuries such as traumatic brain injuries, spinal injuries, limb loss and polytrauma following road traffic collisions, injuries at work and assaults.

Disclaimer: The information on the Hugh James website is for general information only and reflects the position at the date of publication. It does not constitute legal advice and should not be treated as such. If you would like to ensure the commentary reflects current legislation, case law or best practice, please contact the blog author.


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