Full Compensation And The Discount Rate (Pt 3)

It is highly unlikely that the proposed legislation to implement changes to the personal injury discount rate will achieve the Government's stated objective to 'reflect actual investment behaviour and ensure claimants are compensated in full, neither more or less'.

In the absence of a reliable, independent body of empirical evidence, it is questionable whether the first component of this objective can even be attempted. Even if there were such evidence, it would be overly simplistic and unfair to claimants to use the benchmark of investor behaviour as the sole measure of full compensation.

The Government asserts that the continuation of the current legal framework of a discount rate based on index-linked gilts (ILGS) would lead to claimants being 'on average over-compensated'. This assertion appears to be premised on the views of the majority of responses to the recent consultation, who, according to the government's impact assessment (the IA), were insurers and