The rules around making personal injury claims are changing, to ensure people don’t “profit” from them.
Guernsey’s Policy & Resources Committee (P&R) and Alderney’s Policy & Finance Committee (P&F) have agreed to introduce a new ‘Personal Injury Discount Rate’ which will be used in deciding what can be paid out in ‘significant personal injury claims’ made from next month onwards.
This means that if someone suffers an injury that may affect them for life or a ‘significant period’, any financial award that includes the future cost of their care and other expenditure will be discounted to reflect the amount of money they can make if they invest their payout.
The new discount rate – which reflects a system in place in England and Wales – will account for the return on investment a claimant can receive, while also recognising the impact of inflation.
The States said this will “ensure that the amount required from insurers is appropriate and that claimants do not either profit from the advance payment or, importantly, have insufficient funding for their future needs”.
Express understands that Guernsey and Alderney are introducing the discount rate after large payouts were made in previous insurance claims.
In one personal injury case the Privy Council is said to have recognised that Guernsey should have its own rate.
He was just 20 when the accident happened in 2021. His settlement remains the highest ever awarded locally.
The previous largest payout for a personal injury claim in Guernsey was £14m awarded to Manny Helmot in 2010.
A Commonwealth Games cyclist, Mr Helmot was on a training ride when he was hit by a car in 1998.
Future cases like these two will be subject to the discount rate that will be applied from 14 August.
The regulations include a cap of 0.75% for damages which are subject to care cost inflation (the cost of carers or nurses providing care for the injured person), 0.5% for damages that are subject to earnings-related inflation (the loss of earnings and damages awarded for the costs for any professionals, including registered health care professionals, excluding the above), and 1% for damages that are subject to price inflation (all damages not included in either of the above categories).
Kevin Sockalingum was Chair of the Expert Panel which advised the States of Guernsey and Alderney.
“I am pleased that the Committees have adopted the Expert Panel’s recommendation of three separate discount rates,” he said.
“Our analysis showed that care costs, earnings-related losses and general price-related damages are each driven by materially different inflationary pressures, and a tailored approach provides a fairer and more accurate framework for assessing compensation.
“Setting a Personal Injury Discount Rate is ultimately an exercise in balancing competing interests.
“The objective is neither to under-compensate nor over-compensate, but to ensure that injured claimants receive appropriate compensation while recognising the impact that damages awards have on insurers, policyholders and the wider community.”
Mr Sockalingum said the rates “achieve that balance”.
He added: “I would also like to acknowledge the open, transparent and evidence-led process adopted by the States of Guernsey and P&R.
“The combination of independent expert advice, stakeholder engagement and public consultation has helped produce a well-reasoned outcome that reflects Guernsey’s unique circumstances and commands confidence in the process.”
