by John Darer CLU ChFC MSSC RSP CLTC
The low interest rate environment continues to favor New York plaintiffs willing to try strong liability cases due to a 30 year old statutory growth rate juxtaposed against today's low interest rates.
- The 4% statutory growth rate under New York's Article 50-B statute, set in 1986, now exceeds the 10 year bond by 2.63%.
- Long term damage awards which used to afford a significant discount no longer do so, with the net discount rate closing in on -2%. A negative 2% discount rate is a growth rate of 2%.
What does this mean?
- Assume $1,000,000 net future pain & suffering (after accounting for the first $250,000 in future damages under Article 50-B)
- Instead of a discount, with a net growth rate of 2.63% for 10 years the present value adds $26,000 plus per year for 10 years to the verdict number.
- When calculating the present value of other elements of damages like future medicals and future lost earnings, you could be adding close to $20,000 annually per $1,000,000 to the verdict, for the number of years awarded by the jury
- Then interest gets added onto that at 9% (less if state or city government)
- Do the math.