13 October 2017
LMA backs Government reforms on Personal Injury Discount Rate
The LMA has written to the Justice Committee in support of reforms set out in its 'Pre-legislative scrutiny: draft personal injury discount rate legislation inquiry'. The Government’s stated objective of legislation is to ‘reflect actual claimant investment behaviour and ensure claimants are compensated in full neither more or less’.
In its consultation response, the LMA stated that the existing rate-setting mechanism and the unrepresentative rate of -0.75% is leading to over-compensation and is driving up insurance premiums, increasing costs for individuals and businesses.
The LMA backs the government's current proposals. In addition, the LMA has recommended improvements to the draft legislation regarding timing of future rate changes:
- There should be provision for a specific announcement on day 1 of any 180 day review, to give clarity on when the process will conclude.
- There should be a specific timescale for the actual implementation of any new rate. This should take place as soon as possible after the rate review process is concluded and the new rate is announced. The suggestion is a maximum delay of 60 days.
David Powell, Non-Marine Manager, LMA said: "In May, we responded to the Ministry of Justice consultation by calling for a new process that would provide greater certainty and transparency, reducing the risk of unexpected and significant changes in the rate. We believe that the draft legislation meets the Government’s objectives and will deliver a fairer and more predictable discount rate, reducing costs for insurance customers".
The consultation closed on Friday, 13 October 2017.
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About the Lloyd’s Market Association (LMA)
Formed in 2001 and located in the heart of the Lloyd’s Building in the City of London, the Lloyd's Market Association represents the interests of the Lloyd’s underwriting community. All underwriting businesses at Lloyd’s are members, together managing gross premium income of around £30billion per annum.
For more information visit: www.lmalloyds.com.
For further information please contact:
James Milne, Head of Communications
Lloyd’s Market Association
T 0207 327 8405