The Association of British Insurers (ABI) has failed to stop the government’s plans to review the discount rate for personal injury damages.
The High Court recently rejected the legal challenge previously launched by the ABI, which called on the government to change the methodology of the review before proceeding.
“We are disappointed with today’s ruling and will appeal,” said James Dalton, ABI director of general insurance policy.
“It is vital that claimants get the compensation they are entitled to,” he added. “Insurers are open to a proper dialogue on how to reform the system, but caving in to legal threats from personal injury lawyers is not the way for the Ministry of Justice to do it.”
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Designed to ensure claimants are not under or over-compensated, the discount rate adjusts personal injury damage awards to account for the expected return when a compensation lump sum is invested.
The Lord Chancellor announced in December that a review of the discount rate would be complete by January 31.
Without a complete consultation and change in methodology, the ABI said the planned review of the discount rate will take a “flawed approach based on a fundamental misunderstanding of how people invest their compensation.”
“Despite consulting over three years ago and not letting anyone know the outcome of that process, the Lord Chancellor seems to want to rush out a new discount rate at a time of significant global financial uncertainty,” Dalton said in a new statement.
He urged the Lord Chancellor to provide a “considered timeline” that gives all stakeholders the opportunity to engage in a constructive dialogue.
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