The Ministry of Justice opened a ‘call for evidence’ today by which it is seeking empirical data and views/arguments relating to investment issues that are so critical to the setting of the PIDR under the Civil Liability Act (CLA) 2018.
This new information-gathering exercise, which will run until 9 April 2024, was announced by Civil Justice Minister Lord Bellamy. His Written Statement provides a link to the call for evidence itself, which sets out some 31 questions covering matters such as:
- typical breakdowns of awards for future losses (durations of awards, composition by heads of loss, etc)
- validity of assumptions made in 2019 when the PIDR was last set, (about, for example: the typical/hypothetical investor, economic conditions, and “low risk” investment approaches)
- rates of inflation applying to damages overall and to certain key heads of loss
- how claimants are advised, how they invest and what returns they generate
- appropriate allowances for tax and investment charges, and
- availability and take-up of Periodical Payment Orders
As was the case in 2023, the 2024 call for evidence also explores questions related to possible models for dual discount rates (whether by duration of loss or by head of loss), including the crucial balance between conceptual complexity and practicality of implementation.
The publication of the call for evidence is a very important step towards the next formal rate review, but it is not the start of that. As the final paragraph of its executive summary points out:
“The second review must be commenced by 15 July 2024, and it is important that the Lord Chancellor and the statutory consultees have the best available evidence relating to all relevant matters on which to base their conclusions. This paper has therefore been issued to gather evidence and data ahead of the second review of the PIDR under the process introduced through the CLA 2018.”
We will be exploring the questions raised by today’s announcement in further articles posted to our PIDR hub and in online briefings for our insurer clients which will be arranged over the next few weeks.
The PIDR is important in ensuring that claimants who suffer serious, life-changing personal injuries receive full damages, including for their future financial needs... It is assumed that claimants will invest this lump sum and accrue a return on that investment and the PIDR represents what the real rate of return on this investment is expected to be.
https://questions-statements.parliament.uk/written-statements/detail/2024-01-16/hlws180
