Guernsey’s Policy and Resources Committee (“the Committee”) has recently consulted on the recommendations of its expert panel on the personal injury discount rate (“PIDR”). Stewarts has submitted a comprehensive response to the consultation, which closed on 31 August 2025, drawing on our long-standing experience representing individuals in claims for personal injuries of the utmost severity, including major claims in Guernsey, Jersey and Bermuda. Partners Julian Chamberlayne and Chris Deacon summarises the consultation proposals and Stewarts’ response.

What is the personal injury discount rate?

The PIDR is a percentage discount applied in the calculation of damages awards to reflect the net real rate of return claimants (or plaintiffs as they are still known in Guernsey) can expect to earn by investing damages after allowing for the effects of tax and investment expenses and inflation on those returns.

To keep pace with prices inflation, and to avoid forcing seriously injured claimants to make risky investments in an attempt to ensure their compensation lasts their lifetime, the regime in Guernsey assumes an investment in index-linked government securities (GILTS).   In reality, this is a proxy and it is irrelevant, and unknown at the time off assessing damages, how the claimant will actually invest their damages.

Historically, Guernsey does not have a fixed, statutory discount rate. In Helmot v Simon, the Privy Council agreed that a discount rate of -1.5% should apply for earnings-related losses and 0.5% for all other heads of loss. Those rates were adopted based on the economic position at the time and the case’s individual circumstances. Without a statutory discount rate, claimants in Guernsey can argue for a bespoke discount rate that reflects the prevailing economic and individual circumstances, guided by expert economists and actuarial evidence on a case-by-case basis.

What changes to the personal injury discount rate is Guernsey proposing?

Guernsey is now considering two alternative approaches to the PIDR:

1. Three PIDRs, which should initially be set at +1.0% for price inflation-related damages, 0.5% for earnings inflation-related damages and -0.75% for care cost inflation-related damages. This is the approach favoured by the expert panel convened by the States of Guernsey.
2. A dual-PIDR approach, if this is the preferred approach of the Committee, with a blended PIDR of -0.75% for earnings and care cost inflation-related damages.

The proposals follow a consultation in early 2022 on wider reform of Guernsey’s personal injury law. Reassuringly, plans to cap damages appear to have been shelved. Instead, the States of Guernsey has focused on the PIDR and convened an expert panel to make recommendations.

In August 2025, the Committee published the report of the expert panel. The expert panel favours option 1 above “to tailor the award more precisely to the circumstances and underlying drivers”. The expert panel acknowledges that this will add “a small degree of additional complication to claims”, but notes the legal profession is now used to calculating damages with reference to multiple rates, and considers the additional accuracy of this approach outweighs the added complexity (and costs) on a case-by-case basis.

The expert panel recommends a review of the Guernsey PIDR every three years or, alternatively, whenever there is a shift of more than 1.5% in yields on UK index-linked gilts, the form of investment used to benchmark assumptions on return on investment of claimant damages underpinning the PIDR.

How has the challenge of care provision in Guernsey and anticipated earnings growth impacted the expert panel’s recommendations?

When the legal representatives for a claimant with life-changing injuries present the claim in the schedule of loss, they do so by breaking down the losses into distinct categories. The expert panel stressed that, where the future cost depends on the earnings of those providing the service, the calculation of those losses must reflect anticipated earnings growth.

In relation to future care cost inflation, the expert panel noted two key issues, with reference to Professor Wass’s concepts of “catch-up” and “catch-up plus”. This is to take account, first, of a catch-up in carer wages caused by a fall in relative earnings from 2010 and, second, to reflect the increased demand for care created by an ageing population. The expert panel concluded that these concepts are likely to push care costs above general earnings inflation in the future. There is an additional challenge in Guernsey that care cost inflation could be higher than the mainland UK because, alongside tighter immigration controls, “Guernsey is recruiting in a smaller pool where supply is already insufficient. Regulation, professionalisation and training for Guernsey to reach UK standards for complex care are all inflationary and demographic pressures … likely to be greater in Guernsey than in the UK.”

When looking at economic forecasting to inform the PIDR, the expert panel noted a lack of large-scale evidence on average earnings growth for Guernsey and no reliable, independent evidence on past increases in earnings-related losses in personal injury claims. The expert panel therefore looked to forecasts used by the UK’s Government Actuary Department, justifying this approach on the basis that complex care packages in Guernsey are usually recruited from UK mainland care agencies.

As acknowledged in the expert panel’s report setting out their recommendations to the States of Guernsey, there are ongoing concerns with the methodology used in the UK forecasting, which departed from the Office of Budgetary Responsibility’s (“OBR”) long-term projections on earnings growth. Stewarts’ Julian Chamberlayne outlined these concerns in more detail in this article for the New Law Journal. The expert panel therefore recommended that its proposed adjustments be informed by the OBR’s current estimate of the future rate of real earnings growth, but at the top end of the OBR forecasts to reflect the unique challenges of care costs in Guernsey.

How does the approach to personal injury discount rate impact individuals?

The impact of the current approach to the PIDR in Guernsey was seen in the case of JG v AC (2024), where the Royal Court of Guernsey recorded terms of settlement agreed in the highest-ever personal injury award in the jurisdiction. Stewarts achieved a lump sum settlement of £23m for our client, a young Guernsey man, who sustained life-changing injuries, including a C7 complete spinal cord injury following an unstable fracture to his C6 vertebrae, in a road traffic incident on the island. JG is now dependent on full-time carers to meet his personal needs and a wheelchair for mobility.

The level of settlement in JG v AC reflected the claimant’s young age, long life expectancy, requirement for two carers at certain times during the day to meet his care needs safely and the prevailing economic factors in Guernsey. As the expert panel recognises in its August 2025 report, the cost of providing specialist spinal cord injury care has risen sharply in recent years, and it comes with added challenges on a small island with limited resources for spinal injuries, such as Guernsey.

If the Committee accepts the expert panel’s recommendation to adopt option 1 and introduces a triple PIDR into Guernsey law, this will ensure the calculation of personal injury damages keeps up, as closely as possible, with anticipated future increases in the costs of meeting the care needs of serious injury victims in Guernsey. This approach provides a framework for respecting the 100% compensation principle, notably for claimants who have a higher proportion of care and medical needs as part of their overall claim for damages.

Insurers and claimants/plaintiffs are not in equal positions. Insurers can offset perceived over-compensation in some cases against under-compensation in others. Claimants who do not achieve 100% compensation (or as close as possible to that) will be left without the means to support their considerable needs arising from injuries in the latter part of their lives, such that they will have to turn to the Guernsey States for care, treatment and income. It is therefore imperative to avoid, as far as possible, any scenario that increases the likelihood of a claimant being required to take an increased investment risk or compromise on their complex care needs if the PIDR results in them not receiving 100% compensation.

Stewarts’ response to the consultation

Stewarts has endorsed the recommendations of the expert panel in full.

The proposal to apply different rates for different heads of loss is likely to lead to fewer catastrophically injured claimants being under-compensated and reduce the likelihood that claimants will need to rely on the state to meet their long-term needs. For the same reasons, the recommendation that the Guernsey PIDR should be reviewed on a regular basis, either every three years or earlier where there has been a shift of more than 1.5% on real yields on UK index-linked gilts, should also be welcomed and implemented.

The expert panel’s proposals provide greater flexibility and, in turn, help to ensure the fairest outcomes for the most seriously injured claimants.

What comes next for the personal injury discount rate in Guernsey?

Once the Committee has considered further responses to its August 2025 consultation, we can expect the Guernsey PIDR to become fixed by law and to apply when assessing damages for claimants in the future. Claimants and practitioners should be alert to any review and update to the Guernsey PIDR, seeking specialist input from experienced advisors to ensure the victims of life-changing injuries whose claims are governed by Guernsey law maximise the recovery of damages to meet their lifelong needs.

Interestingly, the Committee does not yet appear to be contemplating legislation for periodical payment orders (PPOs) in Guernsey. PPOs provide injury claimants with an index-linked, tax free annual payment to meet their lifelong future losses and, therefore, provide a means of more accurately allowing for increases in the cost of meeting a claimant’s future needs.  In the meantime the parties to claims of the utmost severity in Guernsey can mutually agree a PPO and the proposed triple PIDR approach works well either in the alternative or alongside that approach.