Overview of consultation

Between November 2025 and January 2026, the Northern Ireland Department of Justice sought views on whether or not there should be a change to the way inflation is to be allowed for by the Government Actuary when setting the personal injury discount rate for Northern Ireland. 

MPS response

Consultation Question 1

In principle, should the Damages Act provide more flexibility in relation to how the impact of inflation is to be taken into account by the Government Actuary when setting the personal injury discount rate for Northern Ireland? Please give reasons for your answer.

Medical Protection Society (MPS) is responding to this consultation as the world’s leading medical defence organisation (MDO) for healthcare professionals, offering protection to over 350,000 members around the world, including doctors, dentists and healthcare professionals in Northern Ireland and across the UK. Our membership benefits include the right to request assistance with clinical negligence claims and we therefore have a strong interest in policy considerations that impact the cost and/or management of claims.

MPS supports in principle increased flexibility into how inflation is taken into account when setting the PIDR in Northern Ireland.

There is a clear need for inflation assumptions underpinning the PIDR to reflect the inflationary pressures relevant to future losses, as accurately as possible. The current framework relies on a single specified index without adjustment; this creates the risk that price inflation and earnings‑related inflation may diverge from the assumed rate over time.

This also may result in injured claimants receiving more than 100% compensation, particularly where earnings‑linked costs such as care or long‑term support rise faster than general consumer prices. Over‑compensation is inconsistent with the principle of full but fair award, and may place upward pressure on indemnity costs for healthcare professionals and also on the total cost of claims incurred for Health and Social Care.

The implications of volatility in the PIDR also extend beyond individual claims handling. The approach used to set the PIDR is fundamental to the stability and adequacy of pricing across the healthcare indemnity and insurance market; actuarial reserving decisions and financial stability of organisations responsible for meeting the cost of claims, could also be impacted. For this reason, any increase in flexibility should be balanced with the need to avoid unnecessary volatility. It is essential that a stable, evidence‑based approach is adopted, with adjustments only made when justified by robust actuarial analysis.

Overall, MPS supports introducing increased flexibility, provided it is accompanied by clear safeguards and a stable actuarial framework that supports long‑term certainty in the cost of settling claims, as well as fairness for claimants.

Consultation Question 2

If more flexibility is to be provided, how should this be achieved?

(a) Prescribe an index, such as the consumer prices index, in the primary legislation, with the ability for the rate-setter to make an adjustment to that index;

(b) Prescribe an index, such as the consumer prices index, and an adjustment in the primary legislation, with the ability for the Department to amend the adjustment; or

(c) Another way (please explain)?

Please give reasons for your answer.

In our view, flexibility would be best achieved through Option A.

Prescribing a clear inflation index in primary legislation, while giving the Government Actuary the ability to apply an evidence‑based adjustment, provides the best balance between stability, transparency and technical accuracy. This option also maintains consistency with the modelling approach used to forecast long‑term investment returns while allowing the rate‑setter to incorporate changes in earnings‑based or claimant‑specific inflation when robust evidence supports doing so.

Overall, Option A offers a transparent, stable and proportionate mechanism to incorporate flexibility into the PIDR, while ensuring that any adjustments remain grounded in actuarial evidence and are subject to appropriate scrutiny.

Consultation Question 3

Which is the best inflation index to prescribe in the legislation: CPI, CPIH or another index? Please explain why.

MPS supports the use of CPI as the prescribed index in legislation.

Current economic modelling used to determine the PIDR is already expressed relative to CPI, and investment returns are forecast with CPI as the core reference point. Continuing the use of CPI therefore ensures consistency, as well as avoiding introducing additional forecasting requirements and complexity.

Whilst CPIH can have advantages in capturing housing related costs, it is not based on long-term investment return modelling. Any claimant specific inflationary pressures, such as wage based care costs or medical equipment inflation, are better addressed through the controlled discretion to apply an adjustment to CPI, rather than switching the underlying statutory index.

Consultation Question 4

Do you agree that the balance of inflation affecting lump-sum awards of damages in Northern Ireland is likely to be the same as that experienced in England and Wales? Please provide evidence for your view either way.

Overall, inflationary factors relevant to personal injury damages in Northern Ireland are likely to be similar to those in England and Wales. The main components of future losses, including earnings linked costs such as paid care, and price linked elements such as equipment or therapy, are generally comparable across the jurisdictions.

However, some local variation does exist. Regional differences in housing costs, social care wages or public‑sector pay settlements may lead to some differences in the inflationary pressures faced by claimants. These differences do not fundamentally undermine the comparison of inflationary drivers, but they do reinforce the importance of retaining a framework that allows the Government Actuary to incorporate Northern Ireland specific evidence when setting the rate.

With this in mind, MPS supports a model that recognises the overall comparability with England and Wales, while retaining the flexibility needed to reflect local circumstances when required.

About MPS

MPS is the world’s leading protection organisation for doctors, dentists and healthcare professionals with more than 300,000 members around the world. 

Our in-house experts assist with the wide range of legal and ethical problems that arise from professional practice. This can include clinical negligence claims, complaints, medical and dental council inquiries, legal and ethical dilemmas, disciplinary procedures, inquests and fatal accident inquiries.

MPS is not an insurance company. We are a mutual non-for-profit organisation and the benefits of membership of MPS are discretionary as set out in the Memorandum of Articles of Association.

Contact

Should you require further information about any aspects of our response to this consultation, please do not hesitate to contact us.

Megan Bennett
Policy and Public Affairs Manager
[email protected]