A review is being undertaken by the Treasury into a possible change to the way personal injury compensation payments are calculated through the discount rate.
The final figure awarded to victims of life-changing injuries is adjusted via the rate to reflect the interest that is expected to be earned by investing the award, as well as the effect expenses may have on returns, such as taxation and inflation.
Discount rates are set through legislation and must be considered by the courts when compensation is awarded. The Treasury has responsibility for setting discount rates in the Isle of Man and any change is subject to the approval of Tynwald.
The UK Government recently undertook a major review of how discount rates are set in England and Wales, which recognised that the methodology applied required further consideration and that previous discount rates were inequitable. Following this review, a revised discount rate has now been introduced in England and Wales by the Lord Chancellor.
Today’s announcement follows a previous commitment made by Treasury Minister Alfred Cannan MHK to review the Isle of Man’s discount rate following the completion of the work carried out in the UK.
The review is now underway and the Treasury is considering the detailed findings of supporting documentation published with the Lord Chancellor’s announcement, alongside developments in other jurisdictions such as Scotland, Jersey and Guernsey.
Mr Cannan said:
‘It is vital that victims of life-changing injuries receive the appropriate compensation and I remain committed to ensuring that the Isle of Man has a fair and balanced approach to setting discount rates which have a vital role in ensuring that this happens.
‘The Treasury is currently assessing all available information and has also commissioned further advice from the UK Government Actuary’s Department to consider factors that are specific to the Isle of Man.’
‘This process is likely to take a number of months to complete, but I wish to offer reassurance that this matter remains a priority for the Treasury. I will bring amending legislation forward for consideration as soon as possible, but no later than the January 2020 sitting of Tynwald.’