The announcement today of new Personal Injury Discount Rates (PIDR) for both Scotland and Northern Ireland will be welcomed by insurers.
This morning, the Government Actuary Department (GAD) revealed the PIDR for Scotland is to be set at +0.5%, an increase from the current rate of -0.75%. At the same time, it also announced that the rate for Northern Ireland will also be set at +0.5%, an increase from -1.5%.
The new rates for Scotland and Northern Ireland come into effect from tomorrow, Friday 27 September, following an extensive review and consultation period.
In both countries the new rate better reflects the improved market conditions within which claimants have been investing their damages. The GAD's review for both Scotland and Northern Ireland each noted that “[4.4] … The greatest impact on the change in PIDR has been the increased investment return expectations between the last review and this review, adding around [2% and 2.7%] to the rate [respectively].”
The new rates reflect the 100% compensation principle, which aims to provide full compensation and to put injured parties in the same financial position but for an injury. It is good news, on behalf of our clients we had been hoping for a return to a positive discount rate. It is a move of 1.25% in Scotland, and 2.00% in Northern Ireland, which will see a significant change to damages payable for future losses in the respective jurisdictions. Hopefully, England and Wales will follow with a similar change.
A reminder that we are hosting an online briefing on Tuesday 1 October to discuss the review of the PIDR in Scotland and Northern Ireland and the potential implications of the new rate.