Our head of personal injury, Elaine Walker, weighs in on this week’s personal injury (PI) reforms and soaring insurance premiums.
This week (27th February 2017), the PI sector saw the proposal of long-overdue government plans to change the way PI claims are calculated, in a move that would increase the compensation due to claimants who require life-long care as a result of their injuries.
Under the plans, Justice Secretary Liz Truss announced that the Ministry of Justice will cut the discount rate (the calculation used to determine lump sum compensation to claimants who will require life-long care) from 2.5% to -0.75%.
The discount rate reflects the expected rate of return for the investment of the lump sum. The market has changed so much since the rate of 2.5% was set and the change reflects a different investment marketplace. It means that victims of accidents who have sustained most serious injuries will receive more compensation, reflective of their needs.
Following Ms Truss’ announcement, the press has been awash with outcries from the insurance industry this week, calling for government reforms and warning that insurance prices would soar as a result.
It is unfortunate that the insurance industry intend to penalise motorists to pay for this, especially as not all accidents happen on the road. The insurers knew the reforms were coming as it has been the subject of a lengthy consultation. They should have prepared for it. Elaine Walker, Head of Personal Injury