Just one in ten personal injury lawyers expects the ‘discount rate’ applied to compensation awards to remain at the current level, a survey has found. Research commissioned by barrister Bill Braithwaite QC found 10% of lawyers predict the government will ignore protestations from the insurance industry to leave the rate at 0.75%.
The discount rate, also known as the Ogden rate, calculates what - if anything - should be taken from personal injury settlements to take account of the prospects of making more through investing the money.
Former lord chancellor Liz Truss set the current rate in February but faced a barrage of criticism before leaving her position last weekend. Now PI lawyers are seemingly resigned to her replacement resetting the rate.
Two-thirds of the 131 partners at PI firms surveyed expect the rate to be adjusted to between 1% and 1.5%. Almost one-fifth of respondents predict it will change to 0%.
Braithwaite said solicitors are ‘pragmatic’ about the chances of the government holding off insurer calls for action.
‘Under pressure from the powerful insurance lobby, they believe the government will roll over and backtrack on its decision earlier this year,’ he said.
’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.’
He added that a return to the old discount rate of 2.5% was ‘unthinkable and simply cannot happen’.
Around one-fifth of PI lawyers expect an announcement this year, with 81% believing the government will release the findings of its latest consultation during 2018.
Insurance companies suffered combined losses of £3.5bn last year following Truss’s decision, according to a report published by consultancy firm EY. The consultancy also forecasts another surge in motor premiums that had already reached record highs in 2016.