The new +0.5% Discount Rate will provide certainty in personal injury cases and aligns the UK rates.
The announcement of the new PIDR of +0.5% effective from 11 January 2025 is expected to facilitate settlement of the highest value cases that have been in abeyance pending the result of the review.
The rate itself was widely predicted and is no surprise – and it means that rates are now aligned across the UK of course, announcements already having been made for Scotland and Northern Ireland.
Overall, the 0.5% rate will make a significant reserving difference on some (but not all) large loss claims. The differential increases the longer the life expectancy. The younger the claimant, the greater the differential if life expectancy is long or indeed unimpaired.
We will need to await the market’s reaction and quantification of the impact for insurers now that the rate is positive, but we anticipate that there may now be a slight uptick in interest for periodical payments from claimant lawyers as lump sums become not quite so attractive, albeit the difference is not vast.
PREDiCT modelling outputs can be updated at the click of a button to reflect the new PIDR and we will be sharing these with clients over the coming days to support their own reserve reviews but please get in touch with us to discuss any issues arising out of this announcement.
For further information, contact our solicitors.
For further information on PREDiCT.
