Victims of NHS blunders or crime to have injury payouts reduced

VICTIMS seriously injured in NHS blunders, crimes or road accidents will see their compensation payouts cut after the Government changed the rules on how much insurers must pay.

The move means a victim in their 30s awarded £50,000 annual compensation to pay for the loss of earnings and cost of care over their lifetime would see their payout reduced from £2.94million to £2.6million, a cut of £370,000.

However, insurers warned that the change, announced by David Gauke, the Justice Secretary, did not go far enough and could also increase the cost of some types of insurance including for older and younger drivers.

“The Government’s failure to change the discount rate to a balanced level will only serve to increase the cost and, therefore, affordability of certain types of insurance,” said David Nichols, Zurich’s chief claims officer.

Victims of life-changing injuries are awarded lump sum compensation payments based on the “discount rate” set by the Government. This rate reflects the interest they could expect to earn by investing the money, as well as the effects of tax, expenses and inflation on these returns.

The current -0.75 per cent “discount rate” will now be reduced to -0.25 per cent, which the Government claims is a more accurate assessment of the expected higher future returns on victims’ payouts.

Mr Gauke said: “It is vital victims of life-changing injuries receive the correct compensation. I am certain this is the most balanced and fair approach following an extensive consultation.”

Insurers said it did not go far enough and was still overgenerous to victims. Analysts had expected the rate to go to between 0 and 1 per cent, which was the figure insurers say they had been using in negotiations.

Under new laws the rate is now be reviewed every five years. A higher discount rate is better for insurance companies and worse for accident victims.