Matthew Maxwell Scott, executive director at the Association of Consumer Support Organisation, responded to the Northern Ireland Department of Justice consultation on ‘The personal injury discount rate: How should it be set?’.
The following is an extract from the submission:
“While the political situation in Northern Ireland has delayed the review of the discount rate-setting mechanism, it should be noted that the changes to the rate in England & Wales and the subsequent changes in Scotland were themselves long overdue. The impact of the global financial crisis meant that the previous, long-standing rate of +2.5% – which the UK’s then Lord Chancellor, the Rt Hon Liz Truss MP, changed to -0.75% in 2017- was far too high, meaning significant under-compensation for many seriously injured persons and an equally significant windfall for the insurance sector. That this +2.5% rate endures in Northern Ireland is unfortunate, not least given the continuing low investment return and the further negative impact on these as a result of the COVID-19 pandemic.
“The relative novelty of the changed effected by the provisions of Part 2 of the 2018 Civil Liability Act (CLA) means they cannot yet be fully assessed but it is essential in Northern Ireland that any reforms adhere to the 100% compensation principle and the specific legal principles set out in Wells v Wells if there is to be a fair outcome for all parties.
“Where there is doubt, and given that the process must rely on assumptions, the rate should be set to reflect the needs of injured persons above all. The long-term consequences of under-compensation can mean an unacceptable additional burden on these persons, their families and, inevitably, on the state.”