Pressure rises over injury discount rate

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MARGARET TAYLOR

The personal discount rate that applies to people who have suffered life-changing injuries in car crashes is set to be changed in England and Wales, but will Scotland do likewise?

should be set and no decisions have yet been reached”.

The ABI Scotland has already met the Government to push its case and, according to industry insiders, some insurers are using the threat of higher costs for motorists or even the withdrawal of their services from Scotland to force its hand.

“Just because there have been changes in England and Wales doesn’t mean there will be changes in Scotland,” one source said. “If that was to happen there would be different costs in the underwriting and that would be reflected in different premium rates.

“If England went to one per cent and Scotland went to minus one per cent, for example, you would see a significant shift in prices.

“You might even see some insurers say that for the size of their book in Scotland they might not

want to be here. That would reduce competition and could drive prices up.”

The flipside of the argument is that as the discount rate applies to claims made by people who have suffered severe, life-changing injuries the Scottish Government should be looking to maximise, not minimise, the amount of compensation they receive.

Patrick McGuire, a partner at Thompsons Solicitors, said: “This is about making sure that victims of the most serious injuries are fairly compensated.

“That’s what the discount rate is there to achieve: fairness and justice at the most serious end of the personal injury industry.

“It’s about catastrophic, life-changing injuries and people that require compensation to see them through the rest of their lives.”

It is now up to the Scottish Government to

decide how to balance the needs of these people with the threat to the finances of everybody else, although when it comes to the suggestion that motor insurance premiums will rise if the discount is reduced or eliminated McGuire has a scathing response.

“The prospect of insurance premiums being different in Scotland to England and Wales are slim because the insurance industry works on an industry-wide basis and premiums are set in that way,” he said. “Over the last 20 years the levels of compensation and legal fees in England and Wales have been substantially higher than in Scotland but during that time the premiums were not lower in Scotland.

“Any suggestion this will result in a Scottish premium has not been borne out in the last 20 years. This is a brilliant opportunity for the Government to do the right thing.”