Discount Rate change comes into effect 20 March 2017
Every day innocent people suffer from injuries caused by someone else’s negligence. Those who suffer from catastrophic injuries of brain damage, spinal cord injuries, amputation or multiple injuries perhaps leaving them unable to work or care for themselves require substantial compensation payments to ensure that appropriate lifelong care can be provided.
For many years the level of compensation awarded in such cases has been artificially low and now the Lord Chancellor has corrected the rate by which compensation sums are calculated.
This long overdue correction is about ensuring that seriously injured individuals receive adequate compensation and the change to the interest rate is not about serving the interest of lawyers. The importance of the Lord Chancellor’s decision is that people with life-altering injuries will no longer be at risk of running out of money before their needs are met.
The discount rate formula is a time-tested independent evidence-based method of calculating substantial compensation awards whilst reflecting the fact that injured people must invest their compensation wisely as they cannot go out and earn money to replace their losses due to the injuries sustained.
The decision to lower the rate as announced by the Lord Chancellor should be welcomed as a treating injured people fairly. It also puts the cost of caring for people exactly where it should be; with the insurers so that they can plan to pay the right amount of compensation, rather than leaving the state to pick up the tab in an already tight public budget.
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