The Discount Rate in Scotland
Scotland has today, 28 March 2017, adopted the Personal Injury Discount Rates reduction in line with the Lord Chancellor’s February statement for England & Wales. Given that our claims culture is broadly similar throughout the UK, it is not a massive shock that the Scottish Government has followed the same approach.
The rationale behind the Discount Rate applied to PI claims is to give accident victims protection that for sums awarded, assuming they are then invested in Government Bonds, they would guarantee an index linked return for the future years. The Discount Rate largely affects the high value claims for more serious injuries and the logic behind this, to safeguard against inflation, is sound.
With interest rates having been at such minimal rates for so long, clearly this needed to be addressed but both insurers and claims solicitors were all surprised by the current figure of +2.5% being slashed to -0.75%, effectively meaning that the Discount Rate to be applied to a personal injury award multiplier becomes not a discount but an increase.
Our NHS and the Association of British Insurers have all warned that this will have a massive impact on funds, premiums and service. There is no doubt that this is correct as in many instances, values of claims will potentially double when these figures are applied. For more information, please contact Martin Sinclair or call 01224 632464.