The Lord Chancellor (LC) Liz Truss bit the bullet today and set the discount rate at minus 0.75%, to apply from 20 March. The news was issued via this statement to the Stock Exchange at 07:00 this morning. As a matter of process, Ms Truss should be congratulated for not ducking a very awkward decision – even if the financial implications of her decision are of huge importance for new and current outstanding cases alike. As to substance, views will inevitably differ hugely.
The lowered rate (it’s decreasing by a staggering 325 basis points from 2.5%) has attracted notable criticism this morning from insurers because of its inflationary effect on awards and reserves. The LC said today that she “recognise[s] the impacts this decision will have on the insurance industry. My Rt. Hon. Friend the Chancellor will meet with insurance industry representatives to discuss the situation.” It could be expected that that might be a fairly high-tempered discussion.
On 7 February, the Justice Select Committee heard evidence from the Association of British Insurers represented by James Dalton, Director of General Insurance Policy, and the Association of Personal Injury Lawyers represented by its President, Neil Sugarman into the proposed whiplash reforms set out in the Ministry of Justice’s consultation issued in November 2016.
Is a compensator to be precluded from re-opening a settlement agreement relating to a personal injury claim in which it suspected the claimant was dishonestly exaggerating his symptoms for financial gain but nonetheless entered into the settlement?
This question is at the heart of Zurich Insurance v Hayward, which was heard by the Supreme Court today.
With judgment expected some time in the next few months, the court’s decision – whatever it might be – will certainly emerge into a claims environment in which fraud remains very much front and centre; whether in the work to take forward the recommendations of the Insurance Fraud Task Force or in respect of implementation of the reforms to whiplash and small claims proposed in the 2015 Autumn Statement.
Please feel free to contact me by email if you would like a more detailed account of the day-long hearing before the court.
About the Author
Alistair Kinley is BLM’s Director of Policy & Government Affairs.
Alistair is responsible for BLM’s engagement with government departments and regulators on policy and public affairs issues and consultations affecting the firm and its customers. He coordinated BLM’s market-facing activities in connection with the Insurance Act 2015 and the consultations which preceded its publication and introduction in Parliament.
He is a member of the Civil Justice Council (CJC), a regular speaker and experienced commentator on legal and procedural reforms and was a contributing editor to the Law Society’s Litigation Funding Handbook (September 2014).