The Civil Liability Act 2018 requires the Government to review the Personal Injury Discount Rate (PIDR) in England and Wales at least every five years, with the formal review starting on 15 July 2024 and due to be completed by 11 January 2025.  

Consultations have focussed to a degree on whether alternative models should be introduced rather than the single discount rate (of -0.25%) that is currently in force and has been since 2019. There are a number of reasons why alternative models are being considered including the different investment returns over time, mortality risks, possibility of higher levels of risk being applied to certain heads of loss and inflationary differences also for certain heads of loss.

What options are there?

1. Single rate –this is the current model and probably still the one likely to be followed.
2. Different rates by duration of award (including stepped, switched or blended changes) e.g. Jersey had 0.5% if damages are < 20 years and 1.8% if above.
3. Different rates by head of loss, e.g. Guernsey separate discount rates for price related heads of damage and earnings related heads.

Scotland has a different rate to England and Wales and whilst the rate itself is also being reviewed (outcome due at the end of September) a single rate remains likely, although where exactly that rate will sit compared to the current 0.75% remains unclear.

Insurers will need to keep the pending review/potential change when considering settlement on higher value claims where there are significant future losses and which may be greatly impacted by any change in rate. Some may be accepting reserve changes already, but we believe a pragmatic approach is necessary and each case should be considered on its own merit. In some situations a claim may be stayed pending the discount rate announcement or a trial vacated whilst in others claimants may be more willing to agree a settlement now before any change comes into force.

Medical malpractice insurance: mid-year review 2024 

• Case law update
  
  • Holmes v Poeton Holdings Limited [2023]
  • Man v St George's University Hospital NHS Foundation Trust [2024]
  • Clarke v Poole and others [2024]
  • Spellman v Portsmouth Hospitals University NHS Trust [2024]
  • Healey v McGrath and Ramsay Healthcare UK Operations Ltd [2024]
  • PHJ v HMA (unreported)
  • Cases still to be heard: CCC v Sheffield Teaching Hospitals NHS Foundation Trust
• Fixed Recoverable Costs: where are they?
• New damages guidelines published in April 2024
  
  • Sexual/ physical abuse claims
  • Technology
  • 10% uplift to account for future inflation
• Alternative Dispute Resolution becoming integrated into claims processes
  
  • Mediation in Low Value Claims
  • Alternative dispute resolution (ADR) consultation
• Expansion of the Damages Claims Portal (DCP) 

Get in touch

Aiming to be the firm of choice for medical malpractice insurers and those who they cover, we advise and support on all aspect of claims, inquests and associated proceedings.

To discuss how any of these issues may affect your organisation, please get in touch with Majid Hassan, Ed Mellor or Sarah Bryant.