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Weightmans expert reacts to Ogden rate change announcement

The Ogden rate is going to be set between zero percent and one percent following a consultation launched in March.

The Ogden rate is going to be set between zero percent and one percent following a consultation launched in March.

The change, which awaits parliamentary approval, will be reviewed every three years to ensure claimants receive fair compensation.

David Johnson, partner and head of the political and market advisory team at Weightmans, commented:

“The Government’s proposals for change pave the way for a more logical and fairer means of compensating claimants for future losses. They go some way towards mitigating the impact of the current illogical rate. However, the delay in implementation means that the public purse, compensators and the wider premium-paying public will continue to be potentially penalised in the short term.

“The proposals also vindicate the pragmatic approach that many parties have adopted when negotiating high value claims. In anticipation of an impending change, the current rate of -0.75% has in many cases effectively been ignored, with alternative rates between 0 % and 1% used to calculate damages. It’s likely this will continue for claims that are not due to come to trial before Easter 2018. We might see this behaviour recurring on a cyclical, three-yearly basis, given the Government’s commitment to review the rate at least once every three years.
 
“This announcement is also a welcome – and long overdue – recognition from the Government that the discount rate must reflect the reality of how claimants invest their damages, and that the current rate of -0.75% simply does not do that.”

 

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