Claimant lawyers resigned to future discount rate rise
June 16, 2017
Claimant personal injury solicitors are resigned to the discount rate moving back up as a result of the Government’s latest consultation – with the majority believing it will be adjusted to between 1 and 1.5%.
New research commissioned by barrister Bill Braithwaite QC shows that just 10% of claimant personal injury solicitors expect the rate to stay at minus 0.75%, with 65% believing it will be adjusted to between 1 and 1.5%. 16% predict it will change to 0%.
Claimant personal injury solicitors do not expect the change to happen any time soon. Just 19% are expecting an announcement this year, with 81% believing the government will release the findings of its latest discount rate consultation during 2018.
Commenting on the findings, Bill Braithwaite QC said:
“Claimant personal injury solicitors are pragmatic. Under pressure from the powerful insurance lobby, they believe the Government will roll over and backtrack on its decision earlier this year.
“An adjustment to between 1 and 1.5% would be a compromise, face-saving position for the Government to adopt – but it would be a backward step for justice.”
Bill Braithwaite believes a return to the old Discount Rate of 2.5% is “unthinkable and simply cannot happen” – a view echoed by all claimant personal injury solicitors – but not insurers. A report from EY yesterday said that motor insurers suffered combined losses of £3.5bn as a result of the cut to the Discount Rate.
Continued Bill Braithwaite:
“The new rate came into effect on 20 March 2017. Prior to this, the discount rate was last set in 2001. The revision was long overdue – a fact the insurance industry is well aware of and has had years to prepare and reserve for.”
“Claimants should not be expected to run investment risks with money which a Judge has declared is essential to their future health and well-being – yet this will be the reality of their situation if the government moves the discount rate back up.”
The research indicates that just 28% of claimant personal injury solicitors have settled future loss personal injury claims since the discount rate changed to minus 0.75%.
“This is further cause for concern,” said Bill Braithwaite. “Are insurers delaying settlement meetings in anticipation of the discount rate moving upwards when the Government acts on the second consultation?”
Claimant solicitors are achieving successes under the new rate though, with 80% of claims proceeding under the minus 0.75% rate.
“If claims are actually settling at minus 0.75% it suggests a high proportion of claimant solicitors are securing the best possible settlement for their clients. This figure challenges the anecdotal information cited by insurers, that the industry is using 1%.”