MoJ consultation calls for industry responses
The Ministry of Justice (MoJ) has published a consultation to help work out how to set the discount rate.
The consultation paper suggests this could either be worked out using a system based on index-linked government gilts or by a method based on a mixture of investment products.
The discount rate affects the amount insurers pay out in personal injury cases, as UK courts use it to calculate how much lump sum damages should be reduced by.
The discount rate level reduces personal injury claimants’ compensation to account for the extra income they would get for investing the money.
It has been set at 2.5% since 2001. The Lord Chancellor promised to review the rate in 2010, though nothing happened until now.
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