Personal Injury Discount Rate
Effective from 11 January 2025, the personal injury discount rate (PIDR) in England and Wales will be increased from -0.25% to +0.5%. Kiran Athwal, head of our Personal Injury team explains the changes.
What is the Personal Injury Discount rate (PIDR)?
PIDR is a percentage applied to calculate future financial losses. The legal term is “special damages” which can include but is not limited to future loss of earnings/care and assistance and treatment costs.
When individuals receive a lump sum payment as compensation in more serious injury type claims the sum is calculated to cover various future costs, such as medical expenses, rehabilitation, care, loss of earnings and other related financial impacts.
By applying a discount rate, the awarded amount is adjusted so that, when invested or managed appropriately, it will adequately cover the projected future costs and losses helping address both the immediate and future financial burdens and securing long-term financial stability for the individual.
How often is the rate reviewed?
Part 2 of the Civil Liability Act 2018 amended the act which meant that the Lord Chancellor must review the rate every five years.
This review process aims to ensure that the rate reflects the current economic conditions and investment returns.
What do the changes mean and how will they affect Claimant’s compensation?
The adjustment in the discount rate will have a notable impact on the valuation of claims for future losses, despite individuals still receiving full compensation relative to losses.
The increase in the discount rate essentially reduces the present value of future claims, meaning the overall amount of compensation will be lower. Individuals with a higher life expectancy will be particularly affected as their compensation will be spread over a longer period. In contrast, individuals with limited future financial losses will experience a less significant impact. In cases with extreamely high values, the effect of the new discount rate could be substantial, potentially altering damages by significant sums.
Get in touch
Well known nationally for its successful handling of very complex, heavy weight caeses, including high value, seven-figure settlement figures for indivdiuals, our team deals with all areas of personal injury law. This includes injuries resulting from accidents at work and in public places, serious road traffic accidents, and clinicial negligence. It also deals with claims relating to complex injuries such as serious brain injuries, chronic pain cases, and limb amputations.
Our team offers a free initial consultation and offer a no win no fee service.
Let us help you decide whether you have a claim, contact us now.
