So, the government has effectively rubber stamped the Jackson proposals and most of Lord Young’s recommendations will maintain their hearty Whitehall endorsements, despite the former Business Secretary’s indiscretion in November. However buried beneath this story in the papers is a topic which might get tongues wagging in personal injury circles from here on in.
It took the insurance trade media a couple of weeks to notice that the Discount Rate was officially under review but this certainly got the defendant lobby talking amongst themselves with the actuaries pulling out their calculators first off. Laura McMaster an insurance partner at the actuarial firm LCP, said: “To illustrate, a typical lump sum settlement of £6m agreed on a 2.5% discount rate could increase to around £7.2m on a 1% discount rate and to around £9.0m on a -0.5% discount rate.”
Insurance Times rounded on the topic on 2nd December in a subscriber only article and pointed to a potentially dark future for insurers. It suggested that a combination of the increase in numbers of Periodical Payment Orders being made by judges; their calculation now being linked to a faster inflating index ever since the Thompstone v Tameside judgement in 2008; and the potential of a reduced discount rate might mean premium inflation is essential to help them top up liability reserves. It appears the actuarial profession is warning the insurance industry to consider this seriously.
The review itself has been on the cards for some time. In another subscriber-only piece this time in Post Magazine from early 2009, Barlow Lyde and Gilbert partner James Dadge said: “General economics are clearly leading the claimant lobby to make its case to have the rate reduced.”
That about wraps it up for the discount rate coverage (ok it is a bit dry, I admit) so back to the juicy stuff and at what had effectively become rolling Jackson reform newsdesks, the Lawyer’s Katie Dowell reported how it happened by giving the drama from a journalist’s perspective, including an exciting Whitehall press conference called at a moment’s notice.
Interestingly, Guardian columnist Neil Rose suggested that a better venue for the announcement might have been Tory Central Office.
As the dust began to settle, Linda Lee’s impassioned plea to the profession in last week’s Law Society Gazette certainly added some perspective and it’s clear that 2011 will be something of a red letter year for legal services.