Change To Discount Rate Angers Insurers


Following the change to the discount rate announced by the government in late July, recent press reports have commented that many insurers are 'outraged' by the change from minus 0.75% to minus 0.25%.

The discount rate is used to accurately reflect what Claimants can expect to earn by investing their compensation, with both the current and the new rate reflecting that the average Claimant has little to no investment experience and accordingly, is likely to make a loss on any funds invested. Despite this, many insurers called for the discount rate to be increased to a positive rate, insisting Claimants make profitable investments following the settlement of their claims.

A higher discount rate would have left Claimants needing to take greater risks when investing their compensation to put them in the position they would have been in if the accident/negligence had not occurred and would have been very risky for the average Claimant with little to no investment experience.

Commenting on the debate, Stephen Green, Partner and Head of Personal Injury and Medical Negligence at Fosters said "In times where insurers are often getting their position prioritised above that of innocent Claimants, this is a good outcome which will ensure Claimants continue to be given fair and just compensation for their injuries and past and future financial losses".

If you believe you may have a personal injury or medical negligence claim, and would like to talk to one of our specialist team, please give us call on 01603 620 508 or for a free no obligation chat.

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