What happened?

On Monday the Lord Chancellor announced a reduction in discount rate (the rate used to reflect the investment return on lump sum settlements for catastrophic personal injury claims) from 2.5% to minus 0.75%.

The change will come into effect on 20th March.  In setting the rate, the Lord Chancellor made it clear that the new rate should be based on a three year average of real returns on index linked gilts.

 

What’s the reaction?

RSA is among a group of insurers who have called on the government to set a new discount rate this year, to try and mitigate the catastrophic effects of its decision to cut the rate earlier this week.