We are now one month on from the discount rate moving to minus 0.25% from minus 0.75%.
The discount rate is a figure used to help calculate lump sum compensation payments for high value personal injury claims in England and Wales. Its purpose is to offset factors such as inflation, taxation and investment returns that impact on the adequacy of compensation awards for future losses and expenses.
Review of the rate has been estimated to result in savings of between £230million to £320million per annum for insurers, but the hope was for a significantly more positive rate.
The wider issue is part 36 offers (a tactical step used by both claimants and defendants designed to convince the other party to settle the claim early without the matter having to go to court), and how they now appear in terms of promoting settlement or providing cost protection.
In terms of day to day implications, compensators are well advised to review the implications of this change in rate to all part 36 offers made or received as the variation of the discount rate will not negate existing offers.
The change will also give rise to instances of Claimants failing to beat Defendant Part 36 offers made on the basis of the current rate and it will be interesting to see what approach the Courts take to Part 36 consequences in these circumstances