As of 27 September 2024, the Personal Injury Discount Rate (PIDR) in Northern Ireland has been increased from -1.5% to +0.5%. This adjustment, announced by the Government Actuary’s Department (GAD) on 24 September 2024, aligns the rate with that of Scotland, which also set its PIDR at +0.5% effective from 27 September 2024.
Understanding the Personal Injury Discount Rate
The PIDR is a critical factor in determining lump sum compensation awards for serious and catastrophic injury claims. It reflects the assumed rate of return on investments over the period the claimant is expected to live. A higher PIDR indicates that claimants are expected to earn a greater return on their compensation, thereby reducing the lump sum required to cover future losses.
Implications of the Rate Increase
The increase in the PIDR from -1.5% to +0.5% means that insurers may face reduced compensation payouts for future losses, potentially leading to lower insurance premiums. This change is expected to impact serious injury claims, where future losses constitute a significant portion of the compensation.
Comparison with Republic of Ireland
; rather, the rate is determined by the Ministry of Justice and is currently set at +1% for future care costs and +1.5% for future financial loss. The Minister for Justice confirmed these rates on 9 July 2024, following recommendations from an expert working group.
Lacey Solicitors are an all Island Law Firm and the summary that we are providing to Insurers regarding Ireland’s approach is as follows:
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No Change to Rates: The expert group found no evidence to justify changing the 1% (future care) or 1.5% (financial loss) rates.
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Risk-Averse Profile: Plaintiffs are considered more risk-averse than an “ordinary prudent investor” when calculating investment returns on lump sums, consistent with Russell v Health Service Executive [2015].
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Regular Review: An expert group will review the rates at least every three years, with a trigger mechanism to reassess the rate if economic conditions change or if challenged in court.
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Periodic Payment Orders (PPOs): Ireland is revising PPO regulations to provide ongoing annual payments for catastrophically injured plaintiffs, combining inflation measures (HICP) and nominal health earnings growth to better reflect future costs and care needs.
This approach provides certainty and fairness for plaintiffs and defendants in catastrophic injury claims, balancing adequate compensation with realistic financial assumptions.
Implications for Insurers and Insurance Defence Solicitors
For insurers and legal teams defending personal injury claims in Northern Ireland, understanding the PIDR is critical. The rate directly influences future loss calculations in serious and catastrophic injury cases, affecting potential lump sum payouts. Defence professionals must carefully consider the updated +0.5% rate when assessing claim valuations and negotiating settlements to ensure cost-effective and proportionate compensation.
Strategic Considerations
The increase of the PIDR to +0.5%, aligning Northern Ireland with Scotland, represents a notable change in claims management. Insurers and defence teams should review existing claims, reassess projected future losses, and adjust their risk management strategies accordingly. Proactive engagement with expert legal and actuarial advisors can help manage exposure and optimise outcomes in line with the new discount rate.
