Biba 2011: MoJ to conduct top-down damages payments review

The government has revealed that it is taking a top-down look at the formula for calculating personal injury damages.

Responding to a question by opposition justice spokesman Andy Slaughter yesterday, justice minister Jonathan Djanogly told parliament that the government is reviewing the discount rate, which is used to calculate the compensation that accident victims receive.

The review of the methodology that the discount rate is based on goes further than the more straightforward review that the Ministry of Justice (MoJ) has been carrying out of the level that it is set at.

Djanogly said: “The Lord Chancellor is in the process of reviewing the discount rate. In this context he has sought views from HM Treasury and the Government Actuary as required by the Damages Act 1996, and has received representations from the Association of Personal Injury Lawyers (APIL) and the Association of British Insurers.

“In the light of the views received, he has decided to conduct a wider consultation on the methodology to be used in setting the discount rate. A consultation paper will be published soon, and the review will be completed on as timely a basis as possible.”

Djanogly’s statement follows APIL’s threat to take Lord Chancellor Kenneth Clark to court if he did not proceed with a review of the discount rate level. APIL has been pushing for a review because a reduction in the rate would increase payouts for accident victims.

AXA commercial director of underwriting and claims David Williams said: “This is very good news.”

He said that a wider review would enable the MoJ to look at other forms of investment, and not just gilts.