Increased Profit at the Expense of the Injured Person
10 May 2018
Increased Profit at the Expense of the Injured Person.
The then Lord Chancellor Liz Truss on 27th February 2017 announced that the discount rate applied to personal injury compensation payments will be reduced to -0.75% from the current 2.5%. This came into effect on 20th March 2017. It was the first amendment to the rate since 2001.
For Claimant’s suffering catastrophic injury this ‘should have’ been a phenomenal development as they would have been able to fund their care needs throughout their life, rather than as previously was occurring their deputies and case managers having to skimp and save with a view to spreading the pot to avoid it running out and the Claimant’s becoming dependent on the state, because 2.5% under-compensated Claimant’s and rewarded the profits of the insurers as it did not reflect market trends which result in the pot of money for seriously injured Claimants often being insufficient to cover their care needs for the rest of their life.
What perhaps may surprise is that 15 senior executives from the Insurance Industry attended Downing Street the day after to discuss why that was too much of a change. No Claimant representatives were invited to this behind closed doors meeting. To no-one’s surprise an announcement was made subsequently that while the Lord Chancellor had previously said that this was the only decision she could make, she rapidly backed down and said a review would be commenced into the decision.
Currently the -0.75% still applies but a modified basis of calculation is going to be introduced probably within the next 12 months. It is likely to be somewhere between 0-1% or mean in financial terms for catastrophically injured Claimant’s a reduction in the pot of damages of maybe perhaps more than £1 million. The justification is that Claimant’s do not in the opinion of insurers invest their money which is designed to safeguard their future in very low risk investments and can be expected to gamble their money in low risk investments that will give a better rate of return. To us and many other serious injury solicitors the assumption that a catastrophically injured person can risk their money on investments is not satisfactory, but once again the bargaining and financial power of insurers will win over the needs of the catastrophically injured members of society.
Correspondingly it comes as no great surprise that the insurers have announced substantial profits again!
Serious injury solicitors will always fight your corner but the purse strings are going to get tighter again.
The Medical and Serious Injury Team at Curtis Law is led by Jerard Knott, Senior Associate Solicitor, an APIL Accredited Senior Litigator and Clinical Negligence Specialist. We are committed to promoting Patient Safety. The team only acts for Claimants and is dedicated to providing a client care centred high level of service, providing the best possible advice and maximising damages. The department acts on a large number of fatal (including representation at Inquests) and high value cases. The department regularly advises on cases with valuation exceeding £1,000,000. We can be contacted on 01254 297130 or MedNeg@curtislaw.co.uk.
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