A report has been prepared in accordance with the Damages (Investment Returns and Periodical Payments) (Scotland) Act 2019 and follows from the September 2018 report for Scottish Government on the personal injury discount rate analysis.

The report sets out the breakdown of the rate, which takes effect from October 1, as below:

Gordon Keyden, a partner in Clyde & Co’s casualty team, said: “The decision is hugely disappointing for compensators such as insurers and public bodies, who will now face higher compensation settlements in Scotland, in comparison to those in England and Wales.

“Whilst a negative discount rate had been forecast at an expected figure of -0.25 per cent, the outcome greatly favours pursuers and will be viewed as highly unsatisfactory by compensators. The decision is likely to adversely affect policyholders as higher insurance premiums for those in Scotland when compared to the rest of the UK will likely result.

“The contrast between the discount rate in Scotland and the rate in England and Wales could encourage forum shopping as litigants, particularly in higher value claims, look to establish jurisdiction in Scotland. In turn, this could affect insureds who operate across borders.”

The Scottish arm of the Forum of Insurance Lawyers (FOIL) said: “The new rate is very disappointing for the insurance industry which considers that the rate does not adhere to the principle of 100 per cent compensation.

“This new rate artificially boosts compensation payments well beyond those being paid in the rest of the UK. As a result it is likely to mean increased costs which will have to be borne by Scottish taxpayers and policyholders.”