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"Hugely disappointing for insurers" - DWF comments as Lord Chancellor sets discount rate at minus 0.25%

15 July 2019

The Lord Chancellor has this morning announced the outcome of the first discount rate review under the new methodology provided for in the Civil Liability Act 2018.

The rate applicable to personal injury lump sum compensation payments will be minus 0.25% and it will come into force on 5 August 2019.

Charles Ashmore, head of Catastrophic Injury at global legal business, DWF, said: "The decision will be seen as hugely disappointing by insurers. Whilst it may not be a complete surprise in light of developments in Scotland during the passage of the Damages (Investment Returns and Periodical Payments) (Scotland) Act 2019 where the predicted rate has been in the region of minus 0.25%, it will be considered to be at the very lowest end of expectations and at a level which many believe will still result in overcompensation to claimants.

"A dual rate was apparently considered but ruled out at this stage due to insufficient evidence, though it has not been ruled out in future and there will be further consultation.

"The indications are that the next review will take place "within 5 years" so for the immediately foreseeable future all parties have certainty, even if they do not currently have the multipliers available – new versions of the Ogden tables will no doubt be available shortly."

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