Emergency Contact The Discount Rate: Has the Government gone far enough? Home Latest updates News The Discount Rate: Has the Government gone far enough? 23 Jul 2019 Download Sign up for alerts The Lord Chancellor last week announced a change in the discount rate following a review under the Civil Liability Act 2018. As of 5 August 2019, the discount rate will increase from -0.75% to -0.25%. The discount rate is a figure used to help calculate lump sum compensation payments for high value personal injury claims. It reflects the fact that a Claimant will invest a lump sum payment and receive a return on such investment. The Club published an article in 2018 which focused on the ongoing saga of the discount rate, how this rate is applied and the impact in practice of such a rate (set at -0.75% in March 2017) on damages payable in claims for personal injury. In the recent review, the Government had the opportunity to readdress what many insurers saw as an imbalance between how it is anticipated that Claimants will invest their lump sum personal injury damages awards and how they actually invest them. There is a common acceptance among many in the industry that the current rate of -0.75% has resulted in Claimants being overcompensated. There was no doubt therefore that the review, the first of its kind since the introduction of the Act, would produce an increase in the discount rate. However, in many insurers opinions, this result has not readdressed the ongoing imbalance and therefore is seen as an opportunity missed. It was anticipated that the discount rate would increase to somewhere between 0% and +1% This rate applies in England & Wales only and will not be reviewed again for five years. A similar review process is currently being undertaken in Scotland with a predicted rate of -0.25% there too. In Northern Ireland the discount rate is currently +2.5%. As part of the recent review, there was also the possibility of a split rate, reflecting the differe