The High Court has dismissed a last-ditch attempt by insurers to delay the government’s announcement on the rate used to calculate discounts on compensation awards. The Association of Personal Injury Lawyers (APIL) has campaigned for years that the current rate – 2.5%, set by the lord chancellor in 2001 – is too high and penalises claimants.
The Ministry of Justice had previously confirmed in December that it would make an announcement on the new discount rate, set to calculate deductions from injured people’s compensation to reflect the interest the payments are assumed to have earned, by 31 January – more than four years after finally closing a consultation on the issue.
The Association of British Insurers, however, challenged the government’s announcement and applied for an injunction to stop the Ministry of Justice delivering on its promise, claiming the Ministry was rushing through ill-considered changes at a time of significant global financial uncertainty. Unsurprisingly this legal challenge was opposed by claimant lawyers who have argued for many years that adjustments to the discount rate were long overdue.
In the administrative court, Mr Justice Andrew Baker ruled that the government was not acting unlawfully and therefore refused permission for a judicial review. After the judgement the ABI expressed it consternation and said that it intends to appeal. Speaking after the judgement, the ABI director general of insurance policy, James Dalton, said that whilst his members were fully open to dialogue on how the current system could be properly reformed, they were not, however, prepared to ‘cave in to legal threats’ from personal injury lawyers. He also stated that by rushing through proposals the Ministry of Justice was undermining years of positive and constructive consultation:
‘Despite consulting over three years ago and not letting anyone know the outcome of that process, the lord chancellor seems to want to rush out a new discount rate at a time of significant global financial uncertainty.”
‘While we welcome [the] commitment not to make an announcement before 31 January, we call on the lord chancellor to provide a considered timeline which gives all stakeholders the opportunity to engage in a constructive dialogue on the way forward.’
Following the High Court judgement, a APIL president, Neil Sugarman, said:
‘For far too long, people with lifelong and life-altering injuries have faced running out of compensation, or had to risk their compensation on uncertain investments to try to make up the shortfall, because insurers do not have to pay the full amount needed.’
‘Insurers have been getting away with undercompensating vulnerable injured people for years,’ Sugarman added.