Positive news for insurers – Discount rate changed in Scotland

In significant news for those dealing with personal injury cases involving the assessment of future losses the new discount rate applicable to Scottish claims has now been announced.

For the first time since 2017 the rate will be positive being set at +0.5% and, as the report was published today (26th September 2024) and ought to have been laid before the Scottish Parliament at the same time, will take effect from tomorrow (27th September).

This is the first review to take place under the legislation applying only to Scotland and brought into force by the Damages (Investment Returns and Periodical Payments) (Scotland) Act 2019 and the Damages (Review of Rate of Return) (Scotland) Regulations 2024. The review of the rate applicable to claims in England and Wales remains outstanding but the rate in Northern Ireland will also be +0.5%.

The new rate will result in lower awards of damages for future losses. For example, and making no adjustment for early receipt or disability etc, a man who was 30 at the date of proof suffering a loss of £15,000 per year for life would have expected to receive £1,047,300 under the previous discount rate and will now see his reward reduced to £721,500.

Given that the rate will take effect tomorrow it would be prudent for insurers, and their solicitors, to review any outstanding offers which may need to be withdrawn as well as their level of reserves.