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Association of Personal Injury Lawyers

PI discount rate review imminent as insurers' bid to stall fails

20 Jan 2017
APIL news

Injury lawyers have welcomed a judge’s rejection of a callous attempt by the insurance industry to continue to avoid paying full compensation to seriously injured people.  

“For far too long, people with life-long and life-altering injuries have faced running out of compensation, or had to risk their compensation on uncertain investments to try to make up the shortfall because insurers do not have to pay the full amount needed,” said Neil Sugarman, president of the Association of Personal Injury Lawyers (APIL).

A discount is applied to compensation payments to offset the accumulation of interest (net of income tax and inflation) from the investment of the compensation, such as in a bank or building society. The rate has not been reviewed or altered since 2001 when interest rates were much higher than in recent years. Under the current rate, too much is deducted from compensation payments meaning severely injured people have lost millions of pounds.

“Insurers have been getting away with undercompensating vulnerable injured people for years,” said Mr Sugarman.

Today the Administrative Court has refused an application by the Association of British Insurers (ABI) for an injunction against the Lord Chancellor’s review of the discount rate for personal injury, which is due by 31 January. Permission for a judicial review has also been denied.

But an element of uncertainty remains for claimants as the ABI is to seek leave to appeal. The Lord Chancellor is still scheduled to make her statement on the discount rate on 31 January, unless the Court of Appeal grants the ABI permission for its judicial review and grants a stay on the Lord Chancellor’s announcement.

“This desperate attempt to stall the review shows that the insurance industry would rather see seriously injured people face hardship than honour its responsibility to pay full and fair compensation,” said Mr Sugarman.

“The Administrative Court’s decision today, to allow the Lord Chancellor to continue with her already long-overdue discount rate review, is the correct one,” he went on.

“We hope that the Lord Chancellor makes the correct decision and reduces the discount rate substantially. In fact this is the only acceptable option. An increase in the rate is unthinkable.”

APIL took the unusual step of launching legal action against the Lord Chancellor late last year after successive Governments failed to review the discount rate to reflect changes in the economy.

Calculations by APIL put the correct rate at between -0.5 per cent and -1.0 per cent, based on gilt markets on 31 October 2016.

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Notes to editors:

  • APIL (Association of Personal Injury Lawyers) is a not-for-profit organisation whose members are dedicated to campaigning for improvements in the law to help people who are injured or become ill through no fault of their own.
  • For more information contact APIL's press and communications officers Jane Hartwell on t: 0115 943 5416, m: 07808 768623, e: jane.hartwell@apil.org.uk, or Lizzy Freeman t: 0115 943 5431, e: lizzy.freeman@apil.org.uk.  
  • Visit the association's website at www.apil.org.uk.
  • • Follow @APIL on Twitter: www.twitter.com/APIL.

Past press releases

Government abandons full compensation for injured people, 23 Oct 2018
Extra pressure on NHS if Civil Liability Bill goes ahead, 03 Sep 2018
Bereaved relatives deserve fairness, 31 Aug 2018
Cut whiplash injuries with the headrest test, 15 Aug 2018
Grieving parents of stillborn babies fight for answers, 22 Jun 2018
Lawyers call for outright ban on cold calling for personal injury in Scotland, 01 Jun 2018
APIL, FOIL and MASS join forces for mediation project, 29 May 2018
Grieving relatives cruelly ignored by justice system, 27 Apr 2018

More past press releases

Head of Public Affairs
Lorraine Gwinnutt
0115 943 5400
lorraine.gwinnutt@apil.org.uk

Communications Manager
Jane Hartwell
0115 943 5416
jane.hartwell@apil.org.uk

Press & Communications Officer
Lizzy Freeman
0115 943 5431
lizzy.freeman@apil.org.uk