Naomi Long

The Damages (Return on Investment) Bill, which follows a public consultation last year, will change how the personal injury discount rate is set.

The personal injury discount rate is a percentage applied to a lump-sum award for future financial loss, such as loss of earnings and cost of care, paid to a person who has suffered personal injuries.

The discount rate is applied to take account of the amount that would be expected to be earned from investing the lump sum. The award as adjusted is intended to put the claimant in the same financial position they would have been in had they not been injured, without under- or over-compensating them.

The bill aims to introduce a new statutory methodology for calculating the discount rate that will better reflect how a claimant would be advised to invest their award; to ensure that the rate is regularly reviewed, at least every five years; and to transfer responsibility for setting the rate from the Department of Justice to the Government Actuary.

It will require the Government Actuary to review the discount rate under the new legislation as soon as it comes into operation and to complete his review within 90 days.

Justice Minister Naomi Long said: “It is important that we change how the discount rate is calculated so that it is fairer to all parties involved in personal injury litigation, whilst ensuring that claimants who have suffered serious personal injuries are fully compensated.

“I am aware that the recent uncertainty about the discount rate has caused delays to personal injury claimants receiving their compensation. This legislation will bring that uncertainty to an end.”