MSE News: Severely injured claimants to receive larger lump sums

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Victims of life-changing injuries will receive larger lump sum payouts from insurers as of 20 March...

Read the full story:
'Severely injured claimants to receive larger lump sums, but insurers warn of higher premiums'

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Reaper

The calculation assumes the beneficiaries will invest their lump sum award in loss making gilts.

Can't say that's what I would rush to do. Who thought that formula would be a good idea? Negative rates should never be used.

OnanTheBarbarian

Nobody sets out to invest badly, but claimants with large lump sums were not seeing the returns and were losing out due to the level of discount applied.

Hyped out of all reality by the insurer lobby and ably assisted by the clueless media though.

FOREVER21

A little off topic, but I wonder whether DWP will also use the same negative interest figure when assessing notional interest on capital for means tested benefits.

I bet they don't.

rudekid48

OnanTheBarbarian wrote: »

Nobody sets out to invest badly, but claimants with large lump sums were not seeing the returns and were losing out due to the level of discount applied.

Hyped out of all reality by the insurer lobby and ably assisted by the clueless media though.

Makes your 25% go a little further though eh? :D

Aretnap

Reaper wrote: »

The calculation assumes the beneficiaries will invest their lump sum award in loss making gilts.

Can't say that's what I would rush to do. Who thought that formula would be a good idea? Negative rates should never be used.

Someone will correct me if I'm wrong, but I think it means negative *in real terms*. The rate is based on the yields on index linked gilts - which are indeed negative after inflation, and have been for quite some time.

Which is fair enough - the people involved have to be treated as ultra-low risk investors. The money has to last the rest of their lives and they probably have no means of replenishing losses (eg by getting a job). So they can't risk putting it into the stock market and watching it crash, nor can they even risk putting it in a bank account and watching it being eroded by inflation. Index-linked gilts are likely to be the most appropriate home for the money.

Johno100

FOREVER21 wrote: »

A little off topic, but I wonder whether DWP will also use the same negative interest figure when assessing notional interest on capital for means tested benefits.

I bet they don't.

That was my first thought when this story. What is it £1 in interest per week per £250 in savings?

OnanTheBarbarian

rudekid48 wrote: »

Makes your 25% go a little further though eh? :D

Nobody is taking 25% off punters at that level of claim (£1m+ ) as it is the good old days of "costs on the standard basis" i.e the meter running at an hourly rate.

25% success fee deduction usually on cases of sub £25k value due to fixed costs regime.

rudekid48

OnanTheBarbarian wrote: »

Nobody is taking 25% off punters at that level of claim (£1m+ ) as it is the good old days of "costs on the standard basis" i.e the meter running at an hourly rate.

25% success fee deduction usually on cases of sub £25k value due to fixed costs regime.

Can't you just let me have a sly dig without correcting me with facts? :A

jamesd

The law requires that the victims are to be treated as risk-averse investors, which means using inflation-adjusted government bonds. Those have been paying well below the current rate for many years now, depriving the victims of being treated properly. The change is long overdue. Motorists might pay more but it's their victims who have been under-paid and motorists shouldn't be allowed to continue having their insurers pay less than they should so their insurance premiums can be lower.

Meanwhile there is to be a consultation on whether the treatment is the right one to use.

Johno100

jamesd wrote: »

The law requires that the victims are to be treated as risk-averse investors, which means using inflation-adjusted government bonds. Those have been paying well below the current rate for many years now, depriving the victims of being treated properly. The change is long overdue. Motorists might pay more but it's their victims who have been under-paid and motorists shouldn't be allowed to continue having their insurers pay less than they should so their insurance premiums can be lower.

Meanwhile there is to be a consultation on whether the treatment is the right one to use.

You do realise it isn't just us wicked motorists who will be impacted by this change. It is estimated that the NHS will see its medical negligence bill increase by £1bn per annum.