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Notices of Amendments: 7 September 2018                  

8

 

Civil Liability Bill-[Lords], continued

 
 

“Schedule A1

 

Assumed Rate Of Return On Investment Of Damages: England and Wales

 

Periodic reviews of the rate of return

 

1    (1)  

The Lord Chancellor must instruct the expert panel to review the rate of return

 

periodically in accordance with this paragraph.

 

      (2)  

The first review of the rate of return must be started within the 90 day period

 

following commencement.

 

      (3)  

Each subsequent review of the rate of return must be started within the 5 year

 

period following the last review.

 

      (4)  

It is for the Lord Chancellor to decide—

 

(a)    

when, within the 90 day period following commencement, a review

 

under sub-paragraph (2) is to be started;

 

(b)    

when, within the 5 year period following the last review, a review

 

under sub-paragraph (3) is to be started.

 

      (5)  

In this paragraph—

 

“90 day period following commencement” means the period of 90 days

 

beginning with the day on which this paragraph comes into force;

 

“5 year period following the last review” means the period of five years

 

beginning with the day on which the last review under this paragraph

 

is concluded.

 

      (6)  

For the purposes of this paragraph a review is concluded on the day when the

 

Lord Chancellor makes a determination under paragraph 2 as a result of the

 

review.

 

Conducting the review

 

2    (1)  

This paragraph applies when the Lord Chancellor is required by paragraph 1(2)

 

or (3) to instruct the expert panel to conduct a review of the rate of return.

 

      (2)  

The Lord Chancellor must instruct the expert panel to review the rate of return

 

and determine whether it should be—

 

(a)    

changed to a different rate, or

 

(b)    

kept unchanged.

 

      (3)  

The expert panel must conduct that review and make that determination within

 

the 140 day review period.

 

      (4)  

When deciding what response to give to the Lord Chancellor under this

 

paragraph, the expert panel must take into account the duties imposed on the

 

Lord Chancellor by paragraph 3.

 

      (5)  

During any period when the office of Government Actuary is vacant, a

 

reference in this paragraph to the Government Actuary is to be read as a

 

reference to the Deputy Government Actuary.

 

      (6)  

In this paragraph “140 day review period” means the period of 140 days

 

beginning with the day which the Lord Chancellor decides (under paragraph

 

1) should be the day on which the review is to start.

 

Determining the rate of return

 

3    (1)  

The expert panel must comply with this paragraph when determining under

 

paragraph 2 whether the rate of return should be changed or kept unchanged

 

(“the rate determination”).

 

      (2)  

The expert panel must make the rate determination on the basis that the rate of

 

return should be the rate that, in the opinion of the expert panel, a recipient of


 
 

Notices of Amendments: 7 September 2018                  

9

 

Civil Liability Bill-[Lords], continued

 
 

relevant damages could reasonably be expected to achieve if the recipient

 

invested the relevant damages for the purpose of securing that—

 

(a)    

the relevant damages would meet the losses and costs for which they

 

are awarded;

 

(b)    

the relevant damages would meet those losses and costs at the time or

 

times when they fall to be met by the relevant damages; and

 

(c)    

the relevant damages would be exhausted at the end of the period for

 

which they are awarded.

 

      (3)  

In making the rate determination as required by sub-paragraph (2), the expert

 

panel must make the following assumptions—

 

(a)    

the assumption that the relevant damages are payable in a lump sum

 

(rather than under an order for periodical payments);

 

(b)    

the assumption that the recipient of the relevant damages is properly

 

advised on the investment of the relevant damages;

 

(c)    

the assumption that the recipient of the relevant damages invests the

 

relevant damages in a diversified portfolio of investments;

 

(d)    

the assumption that the relevant damages are invested using an

 

approach that involves—

 

(i)    

more risk than a very low level of risk, but

 

(ii)    

less risk than would ordinarily be accepted by a prudent and

 

properly advised individual investor who has different

 

financial aims.

 

      (4)  

That does not limit the assumptions which the expert panel may make.

 

      (5)  

In making the rate determination as required by sub-paragraph (2), the expert

 

panel must—

 

(a)    

have regard to the actual returns that are available to investors;

 

(b)    

have regard to the actual investments made by investors of relevant

 

damages; and

 

(c)    

make such allowances for taxation, inflation and investment

 

management costs as the expert panel thinks appropriate.

 

      (6)  

That does not limit the factors which may inform the expert panel when

 

making the rate determination.

 

      (7)  

In this paragraph “relevant damages” means a sum awarded as damages for

 

future pecuniary loss in an action for personal injury.

 

Determination

 

4          

When the expert panel makes a rate determination, the expert panel must give

 

reasons for the rate determination made.

 

Expert panel

 

5    (1)  

For each review of a rate of return, the Lord Chancellor is to establish a panel

 

(referred to in this Schedule as an “expert panel”) consisting of—

 

(a)    

the Government Actuary, who is to chair the panel; and

 

(b)    

four other members appointed by the Lord Chancellor.

 

      (2)  

The Lord Chancellor must exercise the power to appoint the appointed

 

members to secure that—

 

(a)    

one appointed member has experience as an actuary;

 

(b)    

one appointed member has experience of managing investments;

 

(c)    

one appointed member has experience as an economist;


 
 

Notices of Amendments: 7 September 2018                  

10

 

Civil Liability Bill-[Lords], continued

 
 

(d)    

one appointed member has experience in consumer matters as relating

 

to investments.

 

      (3)  

An expert panel established for a review of a rate of return ceases to exist once

 

it has responded to the consultation relating to the review.

 

      (4)  

A person may be a member of more than one expert panel at any one time.

 

      (5)  

A person may not become an appointed member if the person is ineligible for

 

membership.

 

      (6)  

A person who is an appointed member ceases to be a member if the person

 

becomes ineligible for membership.

 

      (7)  

The Lord Chancellor may end an appointed member’s membership of the

 

panel if the Lord Chancellor is satisfied that—

 

(a)    

the person is unable or unwilling to take part in the panel’s activities

 

on a review conducted under paragraph 1;

 

(b)    

it is no longer appropriate for the person to be a member of the panel

 

because of gross misconduct or impropriety;

 

(c)    

the person has become bankrupt, a debt relief order (under Part 7A of

 

the Insolvency Act 1986) has been made in respect of the person, the

 

person’s estate has been sequestrated or the person has made an

 

arrangement with or granted a trust deed for creditors.

 

      (8)  

During any period when the office of Government Actuary is vacant the

 

Deputy Government Actuary is to be a member of the panel and is to chair it.

 

      (9)  

A person is “ineligible for membership” of an expert panel if the person is—

 

(a)    

a Minister of the Crown, or

 

(b)    

a person serving in a government department in employment in

 

respect of which remuneration is payable out of money provided by

 

Parliament.

 

    (10)  

In this paragraph “appointed member” means a person appointed by the Lord

 

Chancellor to be a member of an expert panel.

 

Proceedings, powers and funding of an expert panel

 

6    (1)  

The quorum of an expert panel is four members, one of whom must be the

 

Government Actuary (or the Deputy Government Actuary when the office of

 

Government Actuary is vacant).

 

      (2)  

In the event of a tied vote on any decision, the person chairing the panel is to

 

have a second casting vote.

 

      (3)  

The panel may—

 

(a)    

invite other persons to attend, or to attend and speak at, any meeting

 

of the panel;

 

(b)    

when exercising any function, take into account information submitted

 

by, or obtained from, any other person (whether or not the production

 

of the information has been commissioned by the panel).

 

      (4)  

The Lord Chancellor must make arrangements for an expert panel to be

 

provided with the resources which the Lord Chancellor considers to be

 

appropriate for the panel to exercise its functions.

 

      (5)  

The Government Actuary’s Department, or any other government department,

 

may enter into arrangements made by the Lord Chancellor under sub-

 

paragraph (4).

 

      (6)  

The Lord Chancellor must make arrangements for the appointed members of

 

an expert panel to be paid any remuneration and expenses which the Lord

 

Chancellor considers to be appropriate.


 
 

Notices of Amendments: 7 September 2018                  

11

 

Civil Liability Bill-[Lords], continued

 
 

Application of this Schedule where there are several rates of return

 

7    (1)  

This paragraph applies if two or more rates of return are prescribed under

 

section A1.

 

      (2)  

The requirements—

 

(a)    

under paragraph 1 for a review to be conducted, and

 

(b)    

under paragraph 2 relating to how a review is conducted, apply

 

separately in relation to each rate of return.

 

      (3)  

As respects a review relating to a particular rate of return, a reference in this

 

Schedule to the last review conducted under a particular provision is to be read

 

as a reference to the last review relating to that rate of return.

 

Interpretation

 

8    (1)  

In this Schedule—

 

“expert panel” means a panel established in accordance with paragraph 5;

 

“rate determination” has the meaning given by paragraph 3;

 

“rate of return” means a rate of return for the purposes of section A1.

 

      (2)  

A provision of this Schedule that refers to the rate of return being changed is

 

to be read as also referring to—

 

(a)    

the existing rate of return being replaced with no rate;

 

(b)    

a rate of return being introduced where there is no existing rate;

 

(c)    

the existing rate of return for a particular class of case being replaced

 

with no rate;

 

(d)    

a rate of return being introduced for a particular class of case for which

 

there is no existing rate.

 

      (3)  

A provision of this Schedule that refers to the rate of return being kept

 

unchanged is to be read as also referring to—

 

(a)    

the position that there is no rate of return being kept unchanged;

 

(b)    

the position that there is no rate of return for a particular class of case

 

being kept unchanged.

 

      (4)  

A provision of this Schedule that refers to a review of the rate of return is to be

 

read as also referring to—

 

(a)    

a review of the position that no rate of return is prescribed;

 

(b)    

a review of the position that no rate of return is prescribed for a

 

particular class of case.”

 

Member’s explanatory statement

 

This amendment would require that the discount rate was set by the expert panel, not the Lord

 

Chancellor.

 

Richard Burgon

 

Gloria De Piero

 

Imran Hussain

 

Yasmin Qureshi

 

Lloyd Russell-Moyle

 

22

 

Parliamentary Star - white    

Clause  10,  page  10,  line  13,  at end insert—

 

“( )    

the expert panel established for the review;”

 

Member’s explanatory statement

 

This amendment, together with Amendment 23, would require the Lord Chancellor to consult the

 

expert panel before the initial discount rate determination, rather than just the subsequent ones as

 

currently required.


 
 

Notices of Amendments: 7 September 2018                  

12

 

Civil Liability Bill-[Lords], continued

 
 

Richard Burgon

 

Gloria De Piero

 

Imran Hussain

 

Yasmin Qureshi

 

Lloyd Russell-Moyle

 

23

 

Parliamentary Star - white    

Clause  10,  page  10,  line  21,  at end insert—

 

“( )    

The expert panel must respond to the consultation within the period of 90 days

 

beginning with the day on which its response to the consultation is requested.”

 

Member’s explanatory statement

 

See explanatory statement for Amendment 22.

 


 

Rory Stewart

 

5

 

Clause  12,  page  15,  line  30,  leave out subsection (1) and insert—

 

“( )    

This Act extends to England and Wales only, subject to the following

 

subsections.”

 

Member’s explanatory statement

 

This amendment and Amendment 6 provide for NC2 to have England and Wales extent.

 

Rory Stewart

 

6

 

Clause  12,  page  15,  line  35,  leave out “This Part extends” and insert “Sections

 

(Report on effect of Parts 1 and 2)(13) and 11 to 14 extend”

 

Member’s explanatory statement

 

See the explanatory statement for Amendment 5.

 


 

Rory Stewart

 

7

 

Clause  14,  page  16,  line  6,  leave out subsection (2)

 

Member’s explanatory statement

 

This amendment removes the privilege amendment inserted by the Lords.

 


 

Rory Stewart

 

NC2

 

To move the following Clause—

 

         

“Report on effect of Parts 1 and 2

 

(1)    

Regulations made by the Treasury may require an insurer to provide information

 

to the FCA about the effect of Parts 1 and 2 of this Act on individuals who hold

 

policies of insurance with the insurer.

 

(2)    

The regulations may provide that an insurer is required to provide information

 

only if it has issued third party personal injury policies of insurance on or after 1

 

April 2020 to individuals domiciled in England and Wales.


 
 

Notices of Amendments: 7 September 2018                  

13

 

Civil Liability Bill-[Lords], continued

 
 

(3)    

The regulations may—

 

(a)    

specify the information or descriptions of information to be provided;

 

(b)    

specify how information is to be provided;

 

(c)    

specify when information is to be provided;

 

(d)    

require that information or specified descriptions of information be

 

audited by a qualified auditor before being provided;

 

(e)    

make provision about the audit;

 

(f)    

require that details of the auditor be provided to the FCA.

 

(4)    

Regulations under subsection (3)(a) may in particular require an insurer to

 

provide information, by reference to each of the report years, about—

 

(a)    

the amount paid by the insurer during the report period under its relevant

 

third party personal injury policies of insurance in respect of personal

 

injuries sustained by third parties, where the amount of damages for the

 

injury is governed by the law of England and Wales;

 

(b)    

the amount that the insurer might reasonably have been expected to pay

 

in respect of those injuries if this Act had not been passed;

 

(c)    

the mean of the amounts paid during the report period under those

 

policies in respect of those injuries;

 

(d)    

what might reasonably have been expected to be the mean of the amounts

 

paid in respect of those injuries if this Act had not been passed;

 

(e)    

the amounts described in paragraphs (a) to (d), determined by reference

 

only to cases where—

 

(i)    

the amount paid by an insurer under a policy, or

 

(ii)    

the amount that an insurer might reasonably have been expected

 

to pay under a policy,

 

    

falls within one of the bands specified in the regulations;

 

(f)    

the amount charged by the insurer by way of premiums for relevant third

 

party personal injury policies of insurance where the cover starts in the

 

report period;

 

(g)    

the amount that the insurer might reasonably have been expected to

 

charge by way of premiums for those policies if this Act had not been

 

passed;

 

(h)    

the mean of the premiums charged for those policies;

 

(i)    

what might reasonably have been expected to be the mean of the

 

premiums charged for those policies if this Act had not been passed;

 

(j)    

the amounts described in paragraphs (f) to (i), determined as if the

 

references to a premium charged for a relevant third party personal injury

 

policy of insurance were references to so much of the premium as is

 

charged in order to cover the risk of causing a third party to sustain

 

personal injury;

 

(k)    

if any reduction in the amounts referred to in paragraph (a) has been used

 

to confer benefits other than reduced premiums on individuals,

 

information about those benefits.

 

(5)    

The regulations may make provision about the methods to be used in determining

 

the amounts described in subsection (4)(b), (d), (g) and (i), including provision

 

about factors to be taken into account.

 

(6)    

The regulations may provide for exceptions, including but not limited to—

 

(a)    

exceptions relating to policies of insurance obtained wholly or partly for

 

purposes relating to a business, trade or profession;

 

(b)    

exceptions relating to policies of insurance of a specified description;


 
 

Notices of Amendments: 7 September 2018                  

14

 

Civil Liability Bill-[Lords], continued

 
 

(c)    

exceptions for cases where the value or number of policies of insurance

 

issued by an insurer is below a level specified by or determined in

 

accordance with the regulations, and

 

(d)    

exceptions relating to insurers who, during the report period, issue

 

policies of insurance only within a period that does not exceed a specified

 

duration.

 

(7)    

Before the end of a period of one year beginning with 1 April 2024, the Treasury

 

must prepare and lay before Parliament a report that—

 

(a)    

summarises the information provided about the effect of Parts 1 and 2 of

 

this Act, and

 

(b)    

gives a view on whether and how individuals who are policy holders have

 

benefited from any reductions in costs for insurers.

 

(8)    

If insurers provide additional information to the FCA about the effect of Parts 1

 

and 2 of this Act, the report may relate also to that information.

 

(9)    

The FCA must assist the Treasury in the preparation of the report.

 

(10)    

In the Financial Services and Markets Act 2000—

 

(a)    

in section 1A (functions of the Financial Conduct Authority), in

 

subsection (6), after paragraph (cza) insert—

 

“(czb)    

the Civil Liability Act 2018,”;

 

(b)    

in section 204A (meaning of “relevant requirement” and “appropriate

 

regulator”)—

 

(i)    

in subsection (2), after paragraph (a) insert—

 

“(aa)    

by regulations under section (Report on effect of

 

Parts 1 and 2) of the Civil Liability Act 2018,”;

 

(ii)    

in subsection (6), after paragraph (a) insert—

 

“(aa)    

by regulations under section (Report on effect of

 

Parts 1 and 2) of the Civil Liability Act 2018;”.

 

(11)    

A statutory instrument containing regulations under this section is subject to

 

affirmative resolution procedure.

 

(12)    

In this section—

 

“the FCA” means the Financial Conduct Authority;

 

“insurer” means an institution which is authorised under the Financial

 

Services and Markets Act 2000 to carry on the regulated activity of—

 

(a)    

effecting or carrying out contracts of insurance as principal, or

 

(b)    

managing the underwriting capacity of a Lloyd’s syndicate as a

 

managing agent at Lloyd’s;

 

“qualified auditor” means a person who is eligible for appointment as a

 

statutory auditor under Part 42 of the Companies Act 2006;

 

“relevant third party personal injury policy of insurance” means a third

 

party personal injury policy of insurance issued by an insurer to an

 

individual domiciled in England and Wales;

 

“report period” means the period of three years beginning with 1 April

 

2020;

 

“report year” means a year beginning with 1 April 2020, 2021 or 2022;

 

“third party personal injury policy of insurance” means a policy of

 

insurance issued by an insurer which provides cover against the risk, or

 

risks that include the risk, of causing a third party to sustain personal

 

injury.”

 

Member’s explanatory statement

 

This new clause provides for regulations requiring insurers to supply information about the effect


 
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Revised 07 September 2018