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Ministers' order confirms new damages discount rate in Scotland


The discount rate for personal injury awards in Scotland has been lowered from 2.5% to minus 0.75%.

An order made by the Scottish ministers, which takes effect from today (28 March), confirms that Scotland is adopting the same change as was announced south of the border by Lord Chancellor Liz Truss last month.

The rate is applied to capital sum awards of damages that will be invested to produce a return over a period of time. The previous rate was set in 2001, since when the rate of return on investments has fallen significantly. 

Insurers have warned that as the new rate will result in higher capital awards, premiums will rise. 

However the Association of Personal Injury Lawyers welcomed the news of the Scottish order as meaning that "People who suffer severe life-changing injuries can now be assured that the compensation needed to look after them is calculated correctly and is sufficient to provide care for the rest of their lives."

Describing the change as "long overdue", it added: "Insurance companies, which have saved millions of pounds in unpaid compensation, have been aware that a decision to change the discount rate has been on the cards for six years, since APIL first began judicial review proceedings on the issue. They have had plenty of time to prepare for this change and the fact that many are now saying premiums will have to rise to cover the cost simply beggars belief."

For the Faculty of Advocates, Vice Dean Angela Grahame QC commented: "The Lord Chancellor’s announcement about the change in the discount rate was dramatic and unexpected, but it is no surprise that Scottish ministers have decided that here in Scotland, too, the new rate will apply. The change will have a significant impact on all practitioners who work in the field of personal injury. Schedules of damages and advice on values of claims from both sides of the fence could be radically revised in light of this. The Faculty’s Training Committee is discussing an event to consider the implications of this seismic shift."


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