A not-for-profit organisation
committed to injured people
A not-for-profit organisation
committed to injured people

Severely injured people are not like 'ordinary' investors, experts warn

30 Apr 2024
APIL news

A review of how compensation is calculated has failed to help people with life-long life-changing injuries in Northern Ireland.  


The Department of Justice NI (DoJNI) consulted on the investment portfolio used to set the personal injury discount rate ahead of a review of the discount rate this summer.


“The outcome of this consultation is disappointing to say the least. Many of the underlying assumptions made about how injured people invest their money are not right but will remain unchanged. There is a real risk that injured people will be undercompensated,” said Oonagh McClure from the Association of Personal Injury Lawyers (APIL).


“The discount rate is calculated by using a notional portfolio of investments which is supposed to reflect a typical investment by an ordinary investor, however an injured person is not an ordinary investor,” Ms McClure explained.


“Treating injured people as if they were ordinary investors is wrong. Injured people have a specific objective when they invest which is to make sure their compensation lasts long enough to meet their needs, often for the rest of their lives. Their needs are individual to them and as injured people their appetite to take risks is very, very low,” she said.


The DoJNI has said it will make regulations to increase the allowance for the cost of professional advice on tax and investments sought by the injured person from 0.75 per cent to 1.25 per cent.


“This is an improvement but in reality the cost of advice according to APIL’s research is around two per cent,” said Ms McClure.


“The DoJNI has at least committed to sticking with a single discount rate as opposed to a number of different rates over the course of the investment. APIL believes the argument for dual discount rates wrongly assumes that the longer an investor is able to invest their money the more risk they will take on in their investments. There is no evidence that injured and often vulnerable people act in this way,” she added.




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