NI: BLM welcomes decision not to set interim personal injury discount rate
Insurance risk and commercial law specialist firm BLM has welcomed a decision not to set an interim personal injury discount rate pending legislation to introduce a new mechanism for setting the rate.
The Department of Justice ran a consultation this summer on how the discount rate or “real rate of return”, used by the courts to determine the size of personal injury awards, should be set.
Department officials told MLAs that they will seek to pass legislation early next year to deliver a new legal framework for setting the discount rate and will not set an interim rate in the meantime.
Alistair Kinley, director of policy and government affairs at BLM, said: “There was a real risk that the Justice Minister could have reset the rate using the same outdated legal framework as back in 2001, which would have had serious financial implications.
“Instead there will be a revision of the law in NI that will bring it into line with other parts of the UK. It’s actually a bit of a ‘Goldilocks’ thing - the rate needs to be not too high, not too low, but ‘just right’.”
John Guerin, head of BLM’s Belfast and Derry offices, added: “The clear stand out headline from the recent justice committee meeting is most definitely the DoJ’s intention not to reset the personal injury discount rate using the old law but to change it.
“Using the old law would have had an adverse impact on insurance costs and the NI Health Service by unrealistically increasing claims payouts.
“The new legislation should alleviate that and will probably come in this time next year. In the meantime, we’ll look to all sides to adopt a practical approach to resolving ongoing cases.”