Scottish Compensation Reform Affects Thousands of British Drivers

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The recent changes to the personal injury compensation scheme devised by the UK government have been described as simply “not enough” by insurers around the country. This could affect thousands of British drivers around the UK.

The change comes after Lord Chancellor David Gauke announced a change to the Personal Injury Discount Rate (PIDR). This rate is used to determine exactly what insurers should payout to those who have experienced a life-changing tragedy following an auto accident. The last time a change occurred, premiums went through the roof.

The change that was announced in July 2019 was to cut the PIDR from -0.75% to -0.25%. The move to -0.25%, the first time a negative rate was introduced, occurred in 2017. This change, however, would only apply in Scotland, leaving many Scots and the companies that work within Scotland out thousands of pounds.

The reason for the change is because the -0.75% rate was overcompensating victims of horrific incidents. It seems the move is being made primarily to protect the NHS, which is suffering due to underfunding in many parts of the UK. Before the change in 2017, the rate was 2.5%. This cuts the amount that claimants could earn if they were to invest their compensation in low-risk assets.

Firms expected the rate to bounce back after the uproar caused in 2017. They were expecting 0% to 1%, and instead the rate is set to change to -0.25%. Of course, leaving the rate at -0.75% is set to lead to result in higher compensation rates in Scotland than England, which further complicates the change as firms are more likely to charge Scottish businesses higher premiums. The change in compensation means that those seeking compensation could go to a Scottish court so that they can obtain the higher compensation sum than they would in their home town. This is known as “forum shopping”.

The assumption with this change is that it will save money, but as prominent insurance firms point out, the change will likely be a negative one for insurance customers and taxpayers alike. In order for this rate to work, claimants would need to “invest their damages in a way that would guarantee losing them money”, according to Huw Evans, a director general at a premium insurance firm.

The result will mainly mean that motor insurance premiums will increase, despite being stable if not cheaper than they have been in previous years. Costs are expected to increase between £15 to 25 for drivers over 25, whereas younger drivers can expect an astronomical increase between £50 to £75.

The changes in PIDR mean there will be a shift in compensation claims and compensation sums. There will also be higher premiums for businesses, drivers, and all other forms of insurance alike. The payout could be greater in certain situations, yes, but for the majority of Britons the move will only lead to higher costs. That being said, if you were injured and liable for compensation then referring to a specialist lawyer on your options is the best choice. You could make use of lower PIDR rates to claim higher compensation.

If you have been affected by this story, then please don’t hesitate to get in touch with us at The Compensation Experts where we can discuss your legal issue and help you to move forward with making a claim.

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