IFoA disappointed by changes to personal injury claims discount rate

The Institute and Faculty of Actuaries (IFoA) is concerned that claimants’ needs are not being prioritised in today’s draft legislation on the personal injury discount rate. It is disappointing that the Lord Chancellor has now removed the distinction between what claimants should receive as lump sum compensation and how they invest it. We firmly believe the two issues are separate.

IFoA President Marjorie Ngwenya said:

“Claimants should receive compensation that does not force them to take on any investment risk. A system which leaves Individuals open to investment loss is not one which places the needs of the injured party at the centre of the compensation process. It’s crucial to ensure that those who suffer personal injury, and in some cases life changing injury, receive suitable compensation for the injury sustained.”

“Claimants receiving lump sums are already at risk – if they live longer than expected, they could be left without any money. Forcing claimants to then manage the investment of their lump sum places too much risk with them rather than those best placed to manage it: namely, insurers and government.”

Additionally, while the IFoA has insisted upon a market consistent rate, we welcome the MOJ’s commitment to review the discount rate every three years.