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Personal Injury Discount Rate Now +0.5%: Effects on Future Loss Multipliers, PPOs and Litigation Strategy in England and Wales

Published on: 18 February 2025

Published by a LexisNexis PI & Clinical Negligence expert
Legal News
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Article summary

What has been the impact of the new discount rate?

The most immediate and evident effect of the revised discount rate is a decrease in the value of future loss awards. This mirrors the Lord Chancellor’s stated view that claimants can now achieve stronger investment returns than before. The expert panel advising the Lord Chancellor considered it reasonable to assume claimants obtain CPI plus 1%. In the accompanying impact statement, this was projected to produce an annual fall in settlement values of about £350m, comprising expected savings of roughly £200m per year for the NHS and around £150m per year for insurers.

The reduction in future loss is best demonstrated by an example. Consider a 40-year-old male with average life expectancy settling a personal injury claim, on the following assumptions:

  • Loss of earnings of £35,000 per annum to retirement at 65;
  • Care of £15,000 per annum to age 70, then £20,000 per annum thereafter;
  • Treatment at £5,000 per annum for life;
  • Date of trial/head of loss: November 2024...

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