Consultation launched on the setting of Discount Rate in Personal Injury CasesJune 10, 2020 ADMIN 0
The Minister for Justice and Equality, Charlie Flanagan TD, has today launched a consultation seeking views on the manner in which the discount rate in personal injuries cases should be set. The Cost of Insurance Working Group (CIWG) was established in 2016 to analyse the high costs imposed by insurance companies to determine what actions the Government might take to address any issues that might be contributing to these costs. The Group has undertaken two main research projects – an examination of the motor insurance sector and an examination of the employer liability and public liability insurance sectors.
In its report on the cost of Motor Insurance, the CIWG recommended (recommendation 24) that an examination of the setting of the discount rate be undertaken. Following the completion of that examination, the CIWG recommended that a public consultation be carried out on the issue. This consultation gives effect to that recommendation.
Minister Flanagan said:
The discount rate, also known as the real rate of return, is used by courts to determine the size of an award necessary to compensate a person for damages for future loss. At present, the rate is determined by case law, although the Minister has the power under the Civil Liability and Courts Act 2004 to set the rate by Order.
The Minister is requesting views on two key issues as they relate to the discount rate:
- In determining the discount rate, should it be up to the Judiciary to decide on the appropriate rate on a case by case basis, or should the existing section 24 of the Civil Liability and Courts Act 2004 be amended by introducing principles and policies to allow the Minister for Justice and Equality to determine the rate and review at intervals thereafter?
- As has happened in the UK, is there a need to update the investment strategy that a plaintiff is assumed to take in determining the discount rate (currently very risk averse)?
The Minister stressed that:
In engaging in this consultation my intention is not to change the fundamental principle that a claimant should be fully compensated but to ask a series of questions about what, if anything, needs to be done in order to update the current system of setting the discount rate.
In particular, I am calling on academics and practitioners with a particular interest or expertise in this area of insurance law, to provide their input and help us to develop a system that will ensure consistency.
Submissions to the consultation must be made to email@example.com by 5 August, 2020.