The Discount Rate is the figure which is ordinarily used when calculating lump sum compensation payments for future losses in high value personal injury claims.  It is designed to reflect the rate of return to be expected upon investment of the compensation awarded and is calculated using a rate aimed to put the claimant in the same financial position as if they had not been injured.

The decision to dramatically reduce the Isle of Man discount rate follows a review of the UK Ministry of Justice’s consultation into the methodology on which the old rate was based[2] and advice from the UK Government Actuary Department in relation to factors specific to the Isle of Man.

The discount rate was last set by Treasury in 2014.  It was challenged in the High Court[3] in 2017 on the basis that the rate of 2.5% was said to no longer reflect the rate of return which might be achieved upon investment of a lump sum award.  However, the challenge failed with the Court confirming that the rate set by Treasury would be upheld by the Courts and only departed from in exceptional cases where the specific facts of the case meant that a different rate would be more appropriate, until such time that it was amended by Treasury.  The case in question was not considered exceptional.

The new discount rate of -0.25% came in to operation on 17 June 2020, following approval of The Damages (Personal Injury) (Assumed Rate of Return) Order 2020 by Tynwald on 16 June 2020 and will apply to all future awards which compensate for future loss.

The reduction will substantially increase the sums which may be awarded in high value cases involving a significant degree of future losses.

A copy of The Damages (Personal Injury) (Assumed Rate of Return) Order 2020 can be found here.


[1] The Damages (Personal Injury) (Assumed Rate of Return) Order 2020
[2] https://www.gov.uk/government/consultations/setting-the-personal-injury-discount-rate-government-actuarys-advice-to-the-lord-chancellor
[3] De Yoxall v Moore [4 August 2015] ORD 2009/17 (Unreported)
Type

Insight

Locations

Isle of Man

Share
Twitter LinkedIn Email Save as PDF
Key contacts

Ruth Costain

Associate: Isle of Man

T +44 (0) 1624 647 988
E Email Ruth

Claire Corkish

Counsel: Isle of Man

T +44 (0)1624 647 951
E Email Claire

More Publications
13 Aug 2020 |

Special Purpose Acquisition Companies (SPACS) make a comeback

In this global article on SPACs we revisit the basics, then look to each of our key jurisdictions fo...

20 Jul 2020 |

Listing quoted Eurobonds on The International Stock Exchange

The International Stock Exchange (TISE or the Exchange) provides recognised facilities for the listi...

Contributors: Chris Smedley
23 Jun 2020 |

The International Stock Exchange – The home of UK Real Estate Investment Trusts (REITs)?

Real Estate Investment Trusts (REITs) were introduced in the UK under the Finance Act 2006 on 1 Janu...

Contributors: Chris Smedley
19 Jun 2020 |

Warranty Claims: On time, but too late?

A recent decision in the English High Court highlighted the importance of buyers acting quickly if t...

4 Jun 2020 |

2019: The Isle of Man M&A year in review Part 1 – Why is it significant?

In this, the first of a two-part series, Garry Manley considers the significance of mergers and acqu...

3 Jun 2020 |

Appleby’s overview of the key benefits of listing high yield bonds on TISE

In the last few years, an increasing number of issuers of high yield bonds have chosen The Internati...

Contributors: Chris Smedley
16 Apr 2020 |

COVID-19 – Charity AGM restrictions in the Isle of Man

The COVID-19 pandemic and associated restrictions place unprecedented difficulties on Isle of Man re...

Contributors: Kyle Sutherland