posted on 21 11,2017 / 10:59 am
The Ministry of Justice announced a new formula for calculating injury compensation in February this year. This was in terms of the injury claims of those who have suffered serious injuries. Elizabeth Truss, as the independent Lord Chancellor, made the decision. As a result, many, such as the media and injury solicitors met this with mixed responses.
In finalizing the compensation amount for injury claims concerning life-changing injuries, courts apply a calculation. This is called the Discount Rate. This percentage is linked to returns on the lowest risk investments. It is typically Index Linked Gilts. They have now lowered the Discount Rate to 0.75%t from the previous 2.5%. In fact, this took effect on the 20th of March this year.
The main reason for the lowered injury claims rate is to put claimants of personal injury compensation in the same financial position for a long period of time. Maybe their whole lives.
The law classifies claimants as investors that are reluctant to take risks. Therefore, it includes this fact in injury compensation awards. As a result, this benefits victims of life-changing injuries. They accept lump sum personal injury compensation payments. In accordance, the amount should be adjusted according to the interest they will be earning by investing it. As a result, this makes ample provision for loss of future earnings as well as care costs.
To learn about the step by step process concerning personal injury claims check Personal injury claims step by step.
Injury solicitors, who had campaigned in favor of the changes, welcomed the news from the Ministry of Justice. The Association of Personal Injury Lawyers said it was “long overdue”. This was after many years of lobbying for a change. “People already coping with the most severe injuries have been deprived of the help and care they need.”
The public response to this personal injury news appeared to be positive. Of course, this is due to the fact that the accident victims benefit. They do, in fact, receive higher injury pay-outs as a result.
Several industry leaders, such as Direct Line Insurance group, have criticized the government. This is due to the fact that they see that this will increase premiums. Therefore, it will cost the industry millions of pounds. Additionally, the insurance sector’s shares plummeted by as much as 7 percent. In fact, this was shortly after the announcement.
Experts fear that higher premiums could cost young drivers as much as £1,000 a year.
“We anticipate an increase of £50-£75 on an average comprehensive motor insurance policy, with higher increases for younger and older drivers – potentially up to £1,000 for younger drivers, and a rise of up to £300 for older drivers,” said Mohammad Khan. He is the UK general insurance leader at the accountancy firm, PwC.