Earlier today, the new Lord Chancellor confirmed that the review of the Personal Injury Discount Rate (PIDR) for England & Wales, as required by the Civil Liability Act 2018, has begun. The review must be completed in no more than 180 days, meaning that if the full statutory period was required, the review would conclude in January 2025.

The Act also requires the Lord Chancellor to instruct an Expert Panel, chaired by the Government Actuary, to advise on the matter. The Panel has up to 90 days, within the overall 180, to submit its advice to the Lord Chancellor.

The announcement of the review may, until it concludes, cause some disruption and uncertainty in settling claims for damages for future loss in serious injury cases because any movement in the PIDR will materially affect amounts paid and recovered. Equally, there could be uncertainties for insurance and reinsurance arrangements renewing before the outcome of the review is known (which, as already noted, might not be until next January).

The review under the 2018 Act for England & Wales is unconnected to separate reviews of the PIDRs in Scotland and Northern Ireland. Those reviews are subject to different legislation but also involve the Government Actuary. They have already started, on 1 July, so the review of the English PIDR is therefore now very much running in parallel with them.

Recent changes to the PIDR legislation applying in Scotland and Northern Ireland mean that both jurisdictions have now adopted the same process for setting the PIDR. It is essentially an administrative process which involves the Government Actuary setting the rate by following the approach set out in detail in the relevant statutes. Notably, that must be carried out within 90 days, which means (a) that a new PIDR* will be in place in Scotland and Northern Ireland on or around 1 October and (b) that the Government Actuary’s supporting analysis and calculations will be published at the same time. [* The reference to ‘a’ PIDR here is intentional, given that the Government Actuary advised the devolved administrations in March 2024 that “a single rate remains appropriate.”]

The longer review period in England & Wales means that after 1 October there is potentially an ‘overhang’ of as much as a little over three months after the new reviewed PIDR will have been set for Scotland and Northern Ireland (and the Government Actuary’s associated analysis will have been published) but before the review in England & Wales concludes. It might well be anticipated that stakeholders in England & Wales would then study the Government Actuary’s analysis for the devolved administrations very closely for any indicators of overall UK economic conditions that might also inform the PIDR review in England & Wales.

It is difficult to predict how litigation and settlement behaviours here might be affected during this ‘overhang’ period, other than to suggest it could create further uncertainties and/or delays in resolution. It is simply impossible to say whether those are factors that might influence the Expert Panel and the new Lord Chancellor, Shabana Mahmood MP, to carry out their obligations under the 2018 Act more quickly than the respective 90 and 180 day periods.

What is clear is that there will be a new PIDR in force for Scotland and Northern Ireland on 1 October, something that is very likely indeed to cause stakeholders in England & Wales to heighten both their monitoring and analysis of this already very sensitive issue.