Ministers to 'urgently consult' on changes to personal injury rates
The Government is to "urgently consult" on future changes to personal injury rates after fears of a spike in car insurance provoked an angry backlash.
The move - following meetings between Chancellor Philip Hammond and insurance sector leaders - comes after warnings that car insurance could be sent soaring by changes being introduced this month.
A joint statement from the Chancellor and the director general of the Association of British Insurers, Huw Evans, said: "Claimants must get the money they're entitled to following an injury in order to support their future needs.
"It is important that, going forward, personal injury discount rates are set at a level that is fair to both claimants and consumers.
"The Government will progress urgently with a consultation on the framework for setting future rates and bring forward any necessary legislation at an early stage.
"The industry will contribute fully to the upcoming consultation and the Government will carefully consider all evidence and arguments submitted."
Lord Chancellor Liz Truss surprised the insurance market on Monday by putting forward changes to the discount rate calculation, which is expected to increase payments given to victims of life-changing injuries through medical negligence, car crashes and other incidents.
Ms Truss said that from March 20, the rate would be cut from 2.5% to minus 0.75%, reflecting the changes in gilt yields.
The Association of British Insurers has described the decision to change the way personal injury claims are calculated as "crazy", warning it would have a huge impact for individuals, businesses and public bodies.
It estimates up to 36 million individual and business motor insurance policies could see premiums hiked as a result of the changes.
The Treasury said that the changes announced by Ms Truss would go ahead.
Mr Hammond said the system must be fair.