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When someone suffers a catastrophic, life-long injury and receives a large 

compensation payment, a portion is deducted to offset any interest the money 

will accumulate over his or her lifetime. This is to ensure injured people only 

receive what they need, and the amount to which they are entitled.

But for many years, the rate at which this discount was set was far too high and 

did not reflect the economic climate. Too much was deducted from people’s 

damages.

Injured people whose cases settled when the rate was too high face an 

uncertain future, as the money could run out before the injured person’s needs 

are met. To have a hope of making up the shortfall, injured people are often 

forced to put their compensation into risky investments. 

A catastrophically injured person is averse to risk because he cannot afford to 

lose any money, and cannot simply work to earn the money back. Some people 

are too frightened of losing money to invest and are cautious about spending 

money on the things they need out of fear of becoming destitute. This can have 

an impact on entire families as they struggle with a severely injured person in a 

house which is not properly adapted, or children take on the role of carers.  It 

is therefore imperative that the rate is kept up-to-date and reflective of current 

financial markets. 

An eight-year old girl was brain damaged in a bus crash. The injuries have 

changed her life. It is expected that her compensation will run out when she is 

40 years old. She is expected to invest a lump sum now and live off the interest 

after the age of 40. When the case settled when the girl was 17, interest rates 

were below one per cent and the discount rate at the time assumed a 2.5 per 

cent return on her lump sum investment. The girl’s parents are desperately 

worried about how their daughter is going to survive past the age of 40, 

especially after they have passed away. 

Discount rate

The Criminal Injuries Compensation Scheme (CICS) helps injured 

victims of crime to pick up their lives. A limit on the amount of 

compensation available to a single claimant was capped at £500,000 in 

1996 and has remained the same ever since.

£500,000 may seem like a lot of money to most people, but it does not 

stretch very far for someone with the most serious of injuries.

Reggie* was just two months old when he suffered a fractured skull 

and subdural haemorrhage, with catastrophic consequences. The 

Criminal Injuries Compensation Authority agreed that Reggie was the 

victim of a violent crime. His vision is severely impaired; he needs a 

wheelchair and hoists; he only communicates by moving his head 

and arms; he is fed with a tube. He requires a great deal of special 

equipment just to get through day-to-day tasks such as showering. The 

family is only just getting by with partial adaptations to their home, as 

they must be mindful that the money must last for the rest of Reggie’s 

life.

Had Reggie received the same injuries in a car crash, for example, he 

could bring a claim in the civil justice system and his compensation 

would be calculated to ensure his needs would be met. In that 

instance, Reggie’s case would settle for a lump sum of between 

£750,000 and £1million with lifetime annual payments of roughly 

£100,000.

Criminal injuries cap