Julian Chamberlayne reviews the new personal injury discount rate & highlights some potential weak spots
- The personal injury discount rate has increased from -0.25% to +0.5%. For the first time, the rate was decided with reliance on a detailed report from an expert panel.
- Certain elements of the decision-making could be vulnerable to challenge by judicial review, including the assumptions made around earnings inflation and the risk profiles of assumed investment portfolios.
- It is also questionable whether the decision-making in setting the rate is truly consistent with the ‘full compensation’ principle.
On 11 January 2025, the personal injury discount rate (PIDR) for England and Wales increased from -0.25% to +0.5%. This was the first occasion on which this rate was set under the Civil Liability Act 2018 (CLA 2018) with reliance on a detailed report from an expert panel, who themselves were informed by an appended analytical report from the Government Actuary’s Department (GAD) and by economic scenario generator (ESG) modelling understood to have been performed by two external providers.
This preliminary analysis considers whether the
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