The Justice Select Committee has published its report concluding its pre-legislative scrutiny of the draft personal injury discount rate. Marjorie Ngwenya, President at the Institute and Faculty of Actuaries said:
“We welcome this report and the Committee’s request for clarification on what is meant by 100% compensation. As stated in our consultation response, such compensation will rarely be precisely achieved in practice. We are especially pleased to see this report identifying the risk of claimants exhausting funds due to living longer than expected.
“The IFoA has set out its belief that in many cases, Periodic Payment Orders (PPOs) provide the least risky option for claimants. While we accept that PPOs are inappropriate for some claimants, the low take up does suggest that claimants are accepting too much risk without understanding the potential that they could exhaust all their assets.
“We support the Committee’s request for further investigation into whether the discount rate should reflect actual investment. The IFoA has consistently argued that compensation should be independent of future investment behaviour. We would like to see any investigation into investment practices concluded as soon as possible to remove uncertainty for both claimants and insurers.
“We also support the Committee's recommendation that the Government should find the means to assess whether claimants are compensated fairly once the legislative framework is in place.”
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