A law has been passed that could help towards reducing the cost of GP indemnity cover.
The Civil Liability Act, first announced in March, has received Royal Assent and includes reforms to the process of setting the personal injury discount rate – the formula for calculating personal injury compensation payments.
Under the new law, the discount rate will be based on ‘low risk’ rather than ‘very low risk’ investments, as is currently the case, which the Ministry of Justice has said better reflects the actual investment habits of claimants.
It will also see the discount rate reviewed regularly – within 90 days of the legislation coming into force and then every three years.
Since the discount rate was cut from 2.5% to minus 0.75% in 2017, the cost of clinical negligence payouts have risen dramatically.
According to NHS Resolution, figures for the past year show that the NHS paid out more than £1.63bn in damages to claimants in 2017/18 – an increase from £1.08bn in 2016/17.
NHS Resolution said that £404m of the increase (33%) was due to a change in the discount rate from 2.5% to minus 0.75%.
GPs are due to have medical indemnity costs covered by a state-backed scheme from April next year.
The funding for the state-based indemnity scheme is still up for negotiation, despite the Government claiming it is set to come out of existing funding.
The Medical Defence Union (MDU) welcomed the news, adding that since the discount rate changed last year, high-value claims had doubled and sometimes trebled in size.
MDU director of professional services Dr Matthew Lee said: ‘The Act requires a change to the way the rate is set and should go some way to redressing the financial damage caused to the NHS and GP indemnity costs by the [discount rate] reduction.
‘The Civil Liability Act is a step in the right direction but we still need radical legal reform to restore balance and fairness to the way compensation is awarded.’
