Discount rate for serious injury compensation – why is Scotland different?
When it comes to accident victims who have suffered a serious injury, providing for their future care is imperative. This is one of the reasons why the discount rate is so important and why it has been such a controversial issue.
But did you know that the rate in Scotland is different to that of England and Wales?
For the Motor Accident Solicitor Society (MASS), Digby Brown Partner Brian Castle explains why this is the case.
What is the difference in discount rate in Scotland?
In England and Wales, the Discount Rate was recently amended to - 0.25% from - 0.75%, but the rate in Scotland remained at – 0.75%.
The discount rate is the percentage used in the calculation of lump sum damages for future loss claims such as earnings or care costs. It is based on the assumption that the person receiving the lump sum will invest the money and accounts for the return they would receive on their investments.
This means that injured individuals should not be over compensated. Or under compensated as they have been in previous years when the discount rate was 2.5%.