UK Mulls Controversial Compensation Rate Changes

Law360, London (January 29, 2020, 4:29 PM GMT) -- The government will consider a different method for determining how people with life-changing injuries are compensated, a senior civil servant said Wednesday, as insurers have warned that the current system is “not fit for purpose.”

The so-called discount rate determines how much personal injury claimants get in lump-sum payments. The controversial rate cost insurers £3.5 billion ($4.5 billion) when it was changed from 2.5% to minus 0.75% in 2016, according to audit giant EY, as insurers were forced to funnel cash into reserves to pay out on more expensive compensation claims.

Martin Clarke, an actuary at the government actuary's department, told...

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