New legislation may mean those with life-changing injuries could receive less money to pay for future healthcare and support
Thompsons Solicitors has made its case to the Justice Select Committee in Parliament on the government’s draft legislation which proposes changes to the way the personal injury discount rate should be set.
The discount rate is the assumed rate of return that those receiving damages from a serious, long term personal injury will be able to earn on their lump sum award. The rate determines whether victims receive the correct level of damages over the duration of their disability.
Thompsons considers that the new legislation being proposed by the government will mean that, in many cases, those with life-changing injuries will receive less money to pay for the many years of healthcare and income support, rehabilitation and housing adaptations that is often required, and that the losses sustained by those injured people will be matched by extra profit going into the hands of insurers. The firm argues that this is not acceptable and undermines the fundamental and longstanding principle that those who are victims of injuries that are not their fault should receive full compensation for their losses.
Thompsons’ evidence to the Justice Committee explains that the government’s approach to the discount rate is informed by the false assumption that serious injury claimants are often ‘overcompensated’ for their injuries. Any changes to existing legislation must always place the needs of the victims of injury at the heart of the assessment of damages.
"The bottom line for the select committee and for the government should be to ensure that the victims of personal injury – those who have been injured, often catastrophically, through no fault of their own – are not under compensated and as a result fall back on the state for help."
Thompsons’ three key messages to the Justice Committee are:
- Those investing a lump sum award of damages should not be expected to take any more than a minimal risk.
- The Lord Chancellor should continue to be responsible for reviewing the rate of return, but should do so on a more regular basis in order to be able to respond to significant changes in market conditions.
- Injured people who receive lump sum payments in damages must always be provided with the best investment advice. Mechanisms should be put in place to make sure no one is captured by financial advisors, whose best interests may not always be the same as their clients’.
Gerard Stilliard, head of personal injury strategy at Thompsons, said: “The government has made heavy weather of amending the discount rate. The previous Lord Chancellor made the correct call, albeit inevitable and long-overdue in March 2017 to amend the rate to ensure it was fair and reflected the market. Sadly, since then, under pressure from the powerful insurer lobby, the government has been peddling backwards and has acted in unseemly haste to introduce this draft legislation which we fear will be used to increase the return it is supposed that seriously injured people can get from their investments.
“The driver for the government’s proposals is made clear by their adoption of insurance company references to ‘over compensation,’ which our extensive experience shows hardly ever occurs. The bottom line for the select committee and for the government should be to ensure that the victims of personal injury – those who have been injured, often catastrophically, through no fault of their own – are not under compensated and as a result fall back on the state for help.”
Read Thompsons’ full submission to the Justice Select Committee here.
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