Scots motorists facing huge hike in car insurance
Premiums soar to fund compensation payouts
INSURANCE bills are set to rocket for Scots families under plans to pay victims of serious injury more compensation than anywhere else in the UK.
Scots who suffer severe traumas in accidents are on course to be handed bumper payouts.
In some cases these could be hundreds of thousands of pounds more than for victims suffering the same injuries in England, Wales or Northern Ireland.
Although favourable to those who suffer life-altering injuries, it will see the cost of motor insurance premiums soaring for millions of Scots drivers.
Scotland’s public sector also faces an extra bill of up to £20million a year because it will be forced to pay out more for serious medical negligence cases than health boards south of the Border.
Councils and private sector businesses will also see higher insurance price rises than those in other parts of the UK.
The decision is due to be rubberstamped by MSPs at Holyrood today as the Scottish Government’s Damages (Scotland) Bill faces its final vote before becoming law.
It deals with an adjustment to
‘Place them at a disadvantage’
compensation for future losses, which is awarded as a lump sum.
Alastair Ross, head of public policy for Scotland, Wales and Northern Ireland at the Association of British Insurers (ABI), said: ‘The Scottish Government’s Damages Bill would mean insurers and the NHS paying higher major injury compensation rates in Scotland than they would in England and Wales.
‘The reality is this pushes up the cost of underwriting insurance in Scotland and could mean consumers – including motorists, businesses and public bodies – pay higher premiums as a result.’
The Bill reforms the way that the ‘discount rate’ paid out on personal injury claims is calculated.
Since March 2017, the rate has been the same across the UK. However, a new rate applied to payouts in Scotland is expected to be -0.25 per cent, while the UK Government has indicated its rate will rise to between 0 per cent and 1 per cent.
A negative rate results in a larger payout than would otherwise be handed out.
The Scottish Government’s financial memorandum for the Bill states that when the UK rate was set in 2017, the provision made by NHS boards for medical negligence claims was increased by £160million.
It says the disparity between Scotland and the rest of the UK could add an extra sum between £2million and £5million per year to the overall cost of claims for public sector bodies.
The memorandum also states that if there was a one percentage point difference between Scotland and the rest of the UK, the public sector north of the Border would face an extra bill of between £8million a year and £20million a year.
Scottish Conservative economy spokesman Dean Lockhart said: ‘There is a risk that this late change by the SNP Government could cost public bodies in Scotland millions of pounds.
‘The NHS and local authorities are hard-pressed enough without suddenly having this additional financial burden.
‘This could place them at a disadvantage against public bodies elsewhere in the UK.
‘There could also be an impact on individual insurance payers, who would face higher insurance premiums than their counterparts elsewhere in Britain, purely to cover the costs of this changed policy.’
An analysis by the ABI estimates that the new rates could see claimants in Scotland benefit by tens of thousands of pounds. For example, a 58-year-old woman severely injured as a result of a workplace accident could receive £45,117 more in Scotland.
In 2017, Scots saw their insurance premiums soar by up to a fifth, compared with a UK average rise of 8 per cent.
While premiums north of the Border have usually been comparatively cheaper than in England, they are rising faster than anywhere else in Britain.
A Scottish Government spokesman said: ‘Costs to bodies such as the NHS should actually be less, as these changes should mean a higher discount rate than if we carried out the next review using the current method.
‘The system for calculating the discount rate we are recommending in the Bill is the result of the best available actuarial advice to ensure an injured person is given the proper level of compensation as far as possible.’