The Civil Liability Bill (the Bill) had its first reading in the House of Lords on Tuesday. It follows last year’s joint Ministry of Justice and Scottish Government consultation, “The Personal Injury Discount Rate: How it should be set in future.”

The Bill introduces two significant changes to personal injury compensation in England and Wales:

The Discount Rate

Its provisions aim to modernise the fixing of the discount rate to reflect real world investment practices, while supporting the 100% compensation principle. Setting of the discount rate will have a clear statutory footing with review by the Lord Chancellor every 3 years. Review will be on the basis of input from a panel of independent experts and chaired by the Government Actuary. It is hoped this will provide a more transparent and better informed system, as well as reassurance for claimants and underwriters alike.

Whiplash reforms

The Bill provides a new tariff structure for awards for pain, suffering and loss of amenity in whiplash claims. Courts will be empowered to increase the upper level of the tariff by a set amount in exceptional cases. The Bill also seeks to introduce a total ban on settling whiplash claims without medical evidence. It is expected that the changes will produce significant savings for the insurance sector which will be passed on to consumers via lower premiums.

North of the Border

The extent to which the Scottish Government will take a similar approach in the exercise of its devolved powers in this area remains to be seen. Although the proposals leading to the Bill came from a joint consultation, there is no guarantee that the Governments will work in tandem in relation to the legislation.

The Scottish Government’s legislative programme proposes a Bill to amend the Law on the Personal Injury Discount Rate and empower the courts to impose periodical payment orders in personal injury cases. A Damages Bill is part of the Scottish Government 2017/2018 legislative agenda, and is expected to be published later this year.