According to the Ministry of Justice (MoJ), victims of accidents at work, medical negligence, or road accidents in Northern Ireland are currently receiving much less than the rest of the UK.
The disparity in compensation awards exists because of a “discount rate” applied during the calculation process. This has not been reviewed in Northern Ireland to bring it at par with the rest of the UK, primarily because of the absence of a power-sharing government.
What is Ogden discount rate?
In serious injury cases, claimants will usually receive their compensation as a lump sum and invest it. With this, they can expect to receive a rate of return over the remainder of their lives—which is where the Ogden discount rate comes in.
The principle of an accident or medical negligence compensation claim is that the victim should be returned to the same financial position they would have been in if they had not suffered their serious injuries. That also means they can be overcompensated to a point where they are put in a better financial position.
The Ogden rate is applied to calculate how much the total sum should be discounted to reflect the interest-earning potential. The higher the rate, the more the compensation award is discounted.
The rating is used by courts to calculate how much compensation is owed to victims. Any “upfront” compensation award will have the Ogden discount rate applied effectively reducing or increasing the award to reflect any loss or profit an insurance claimant might expect to make on their investment over the course of a lifetime. This is so they are rightly compensated.
The Ogden rate has been stuck at 2.5% in Northern Ireland. It cannot also be changed until a power-sharing government returns. The Ogden rate in England and Wales was at -0.75% and is only just being increased to -0.25% on 5 August 2019 by contrast. That increase still brings it nowhere near the current rate in Northern Ireland.
This means that compensation awards will continue to be much lower for victims of accidents and medically negligent procedures in the province limits.
There are increasing calls on the Department of Justice (DoJ) to amend the Ogden rate in Northern Ireland to bring it into line with England and Wales. The DoJ has confirmed that a statutory review was commenced on 1st July and that they are also waiting to see what decision is made in respect of the Ogden rate in Scotland.
Find our more about personal injury in Northern Ireland from Wilson Nesbitt Solicitors.