Expert Witness Journal Issue 67 June/July 2026 - Flipbook - Page 28
What is the personal injury
discount rate (PIDR)?
by Susan Brown, Partner at Boyes Turner LLP.
The personal injury discount rate (PIDR) is an
actuarial tool that helps lawyers calculate the
amount of compensation that should be paid to an
injured claimant in a medical negligence or personal
injury claim.
The PIDR adjusts the multiplier (the number of
years by which an annual cost or loss is multiplied)
to avoid the windfall scenario by factoring into the
calculation the claimant’s early receipt and potential
investment interest from their compensation.
The PIDR is used to adjust the amount of
compensation that an injured claimant will receive
for future expenses or 昀椀nancial losses that they will
su昀昀er over the course of their lifetime, to re昀氀ect
the fact that they are receiving their full lifetime’s
compensation early in one lump sum. When
correctly pitched and applied, the PIDR is designed
to ensure that the injured person is neither overcompensated nor under-compensated for their
injury and its 昀椀nancial consequences, when factors
such as their expected lifespan and the interest that
they will receive from investing their compensation
are taken into account.
What impact does the personal
injury discount rate (PIDR) have on
compensation for serious injury?
The PIDR has an enormous impact on the value of a
medical negligence or personal injury compensation
claim, particularly where the injured person’s claim
includes a large element of future loss. In claims
involving permanent severe disability, such as from
injury to the brain or spinal cord or the loss of a
limb, the claimant often has a substantial claim
for future loss related to long-term loss of income,
lifelong dependence on care, therapies, specialist
vehicles and equipment, assistive technology and
other support, resulting in signi昀椀cant annual
costs. A lower or higher discount rate makes a huge
di昀昀erence to the amount of compensation that
the injured person receives for those future losses,
because it determines the ‘multiplier’ that is applied
to the claimant’s annual loss.
Why is a discount rate applied to future
losses in medical negligence and personal
injury claims?
The personal injury discount rate (PIDR) is one
of the ways in which the law ensures that injured
claimants receive su昀케cient compensation to cover
the losses that they will su昀昀er over their lifetime as a
result of a wrongfully caused injury, in full, but not
more or less.
During the calculation of an injured claimant’s
compensation claim, all recurring, annual losses
and expenses that the claimant is expected to su昀昀er
in future, such as loss of earnings or costs of care, are
multiplied by a multiplier. The multiplier is a 昀椀gure
which represents the number of years that the cost
or 昀椀nancial loss will be su昀昀ered, for the purposes
of arriving at a lump sum for the claim. Choosing
the multiplier is rarely as simple as just identifying
the number of years that the speci昀椀c type of loss
will be incurred, although that is an important
starting point. The multiplier that is applied to the
various types of annual loss has been adjusted by the
The defendant must compensate the claimant fully
for the injury that they have caused as a result of
their negligence, but compensation is not intended
to punish the defendant, as a 昀椀ne would under
criminal law. Applying the same principle, neither
should compensation create a windfall situation for
the claimant if their lump sum, when reasonably
prudently invested, would actually put them
(昀椀nancially speaking) in a better position than they
would have been without the injury.
EXPERT WITNESS JOURNAL
26
JUNE 2026
