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Discount rate alert: government announces change to the way the rate is calculated

Headlines from this morning's discount rate announcement

Following an announcement to the London Stock Exchange this morning the MoJ has now published its response to the discount rate consultation along with draft legislation.

The headlines - taken from the accompanying press release - are:

1. Proposed legislation will change the way the discount rate is calculated. The proposals provide that:

a) The rate is to be set by reference to “low risk” rather than “very low risk” investments as at present, better reflecting evidence of the actual investment habits of claimants.

b) The rate should be reviewed at least every three years

c)  The Lord Chancellor will consult a panel of independent experts when setting the rate.

2. The proposals envisage that a review of the discount rate would be started within 90 days of the new law coming into force.

3. While it is difficult to provide an estimate, based on currently available information if the new system were to be applied today the rate might be in the region of 0% to 1%.

Consultation response homepage: The personal injury discount rate: how it should be set in future - Ministry of Justice - Citizen Space

Documentation (all pdfs)

Consultation response

Command Paper on draft legislation – includes the draft clauses (at pg 13)

GAD personal injury discount rate Analysis

BIICL briefing note on the discount rate applying to quantum in personal injury cases: comparative perspectives

Correspondence relating to the review of the discount rate 2017

Early press coverage:

Live blog: Ogden discount rate reform - Insurance Post (subscription may be required)

Insurers welcome positive Ogden rate plan | Latest News | Insurance Times (subscription may be required)

Insurers' victory in battle over accident compensation - BBC News

FTSE 100 rises as Direct Line boosted by discount rate change - BBC News

Litigation Futures Government unveils new basis for setting discount rate - Litigation Futures

Breaking: MoJ announces new discount rate policy | News | Law Society Gazette

Further details to follow. 

Contact

For further information please contact Alex Fusco, Professional Support Lawyer on 0161 603 5211.

By Alex Fusco

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This information is intended as a general discussion surrounding the topics covered and is for guidance purposes only. It does not constitute legal advice and should not be regarded as a substitute for taking legal advice. DWF is not responsible for any activity undertaken based on this information.

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