Long welcomes changes to how personal injury discount rate is set

Justice Minister Naomi Long has welcomed the passing of legislation to change how the personal injury discount rate is set.

The personal injury discount rate is a percentage applied to a lump-sum award for future financial loss, such as loss of earnings and cost of care, paid to a person who has suffered personal injuries.

The discount rate is applied to take account of the amount that would be expected to be earned from investing the lump sum. The award, as adjusted, should put the claimant in the same financial position they would have been in had they not been injured, without under, or over, compensating them.

Moving the Final Stage of the Damages (Return on Investment) Bill in the

Assembly today, Justice Minister Naomi Long MLA said: “The passing of this Bill is a significant step towards providing for a stable discount rate in Northern Ireland that better delivers full compensation for claimants, whilst also ensuring fairness for defendants.

“The Bill is important to those members of our society who have sustained serious, perhaps life-changing, injuries through no fault of their own. For too long there has been uncertainty around the discount rate which has caused difficulties in settling claims for both claimants and compensators. I very much welcome bringing that uncertainty to an end through the passing of this Bill.”

The Bill has three main aims:

•        to introduce a new statutory methodology for calculating the discount rate that will better reflect how a claimant would be advised to invest their award;

•        to ensure that the rate is regularly reviewed, at least every five years; and

•        to transfer responsibility for setting the rate from the Department of Justice to the Government Actuary. 

The Bill, introduced to the Northern Ireland Assembly in March 2021, is expected to receive Royal Assent before the end of January 2022, following which a new discount rate will be set as soon as possible.