Expert Witness Journal Issue 67 June/July 2026 - Flipbook - Page 30
PIDR to re昀氀ect the claimant’s early receipt of their
compensation for their lifetime’s future loss, and the
fact that they will invest it and earn interest on it.
and much more likely to adopt a cautious approach
to their money and invest predominantly in low
risk but low return investments. On the basis of
this assumption, the PIDR now re昀氀ects the rate of
return that a properly advised recipient of a lump
sum of compensation for future 昀椀nancial loss could
be expected to receive from a low risk, diversi昀椀ed
investment portfolio.
Given the very substantial costs of care and other
future losses that follow severe disability, such as
cerebral palsy, brain injury, amputation or spinal
cord injury, even small di昀昀erences in multipliers
make a big di昀昀erence to the value of a claim. For
that reason, the factors that are considered in
setting the multiplier take on great signi昀椀cance in
a serious injury case and are often closely examined
and disputed by the experts and lawyers on each
side. Altering the multiplier is the most e昀昀ective
way to signi昀椀cantly increase or reduce the value
of the claimant’s claim. When the discount rate is
higher, claimants’ compensation awards are lower
(owing to the multiplier being discounted by more),
and when the discount rate is lower, compensation
awards go up.
In cases where the claimant’s circumstances are
unusual, such as where they expect to live and
invest their compensation abroad, either party can
challenge the general assumption that the standard
PIDR should be applied, and make their case for a
higher or lower discount rate to be applied to that
individual case.
Discount rate changes in current claims
When the discount rate changes, any active
compensation claims which include a future loss
element must be recalculated to ensure that the
claim takes into account the new discount rate and
its impact on the multiplier. PIDR changes may
have a signi昀椀cant impact on the value of a claim,
but our specialist medical negligence and personal
injury claims solicitors are skilled in anticipating
discount rate changes and responding to discount
rate challenges from defendants, such as NHS
Resolution.
How is the personal injury discount rate
(PIDR) set?
A discount rate could, in theory, be calculated for
every individual case, but this would mean carrying
out a detailed investigation of how the individual
claimant is likely to invest their compensation
throughout their life, their attitude to risk and
any other economic factors which will a昀昀ect their
compensation fund in future. To do so in every case
would unjusti昀椀ably increase the costs of the case,
waste court time and reduce the likelihood of early
settlements. To avoid these problems, the Damages
Act 1996 provides for the Lord Chancellor to set a
standard personal injury discount rate (PIDR) which
is used by the court and the parties in most cases.
Examples of recent claims in which we protected
our severely disabled clients from personal injury
discount rate challenges include:
The standard PIDR is set by the Lord Chancellor
after consideration of the types of investments that
are available, claimants’ investment behaviour,
taxation, in昀氀ation and investment management
costs. The PIDR is currently reviewed at intervals
of not more than three years. The Lord Chancellor
must take advice at each review from an independent
panel of experts with experience in actuarial,
investment management, economic and consumer
investment practice, and chaired by the Government
Actuary.
•
In a £31.5 million settlement in a birth injury
claim for a young teenager with cerebral palsy, we
successfully resisted NHS Resolution’s attempt
to delay settlement negotiations pending PIDR
changes which would have risked a signi昀椀cant
reduction in our client’s compensation.
•
We successfully defended NHS Resolution’s lastminute application for the court’s permission to
rely on expert evidence to support an increase
in the PIDR, which would have signi昀椀cantly
reduced the value of our client’s future loss
claim, in the reported case of CNZ -v- Royal
United Hospitals Bath NHS Foundation Trust.
Currently, the PIDR is set on the assumption
that claimants are low risk (but not very low risk)
investors. This is because, unlike other investors,
who might accept a greater element of risk in
the hope of higher returns on their savings and
investments, most disabled claimants are totally
dependent on their compensation fund to meet
their nursing, housing and other essential needs
for the rest of their lives. Given this dependency, it
is generally accepted that claimants are risk averse
EXPERT WITNESS JOURNAL
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