The Scottish Government has published new legislation that it says will create a clearer, fairer and more credible way of setting of the personal injury discount rate for damages claims.
The personal injury (PI) discount rate is used to help calculate lump sum compensation to cover future losses such as future salary losses or future care costs in personal injury cases.
The Damages Bill, which has now been introduced in the Scottish Parliament, addresses concerns that the current process for setting PI discount rate lacks transparency and has not been reviewed frequently enough – with the most recent change resulting in a substantial shift to the rate.
Subject to Parliament’s approval, the Bill will:
- Put in place a new methodology for calculating the discount rate which should be applied to such losses
- Require the discount rate to be reviewed by the Government Actuary every three years
- Give courts in Scotland the powers to impose periodical payment orders for future financial loss
“This legislation is part of our wider programme of civil law reform which aims to ensure the system keeps pace with modern Scotland and the needs of its people,” explained Minister for Legal Affairs Annabelle Ewing. “While the number of people affected by the discount rate is relatively small, we know that those cases tend to involve catastrophic injury with little prospect of the individual’s full recovery. That is why it is so important the law determining how the discount rate is set is clear, fair, transparent and credible.”
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