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New rules on compensation pay-outs for serious personal injury claims in Guernsey come into force next month, the States has said.
The Policy and Resources Committee has agreed a discount rate on pay-outs - determining how much a lump sum payment can be adjusted to reflect the potential return from investing it.
A personal injury discount rate is used in significant personal injury claims to calculate lump-sum compensation for future financial losses.
It is standard practice in the UK, but this is the first time Guernsey and Alderney will have an island specific rate.
Kevin Sockalingum, chair of the expert panel, said their analysis showed three discount rates were required because care costs, earnings-related losses and general price-related damages were each driven by "materially different inflationary pressures".
She said this would provide a "fairer and more accurate framework" for compensation.
She said the objective had been neither to "under-compensate or over-compensate" - but to ensure compensation was "appropriate", while recognising the impact damage awards have on "insurers, policyholders and the wider community".
When someone has suffered an injury that may affect them for life or for a significant period, any financial award of damages will include future costs of care and any other future expenditure needed.
When claimants receive money for future needs it means they are able to invest this until the time it is needed, potentially seeing a return on investment.
The decision to introduce the discount was based on a case in which the Privy Council's judgement recognised the need for a rate in Guernsey, the States said.
A consultation led to the creation of an expert panel to recommend a rate, which will come into effect on 14 August.
The States said discounts would be:
- 0.75% for damages which are subject to care cost inflation
- 0.5% for damages that are subject to earnings-related inflation
- 1% for damages that are subject to price inflation
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