Ogden discount rate increase "does not go far enough"
Posted on: 17 July 2019
On Monday, the Ministry of Justice announced a slight increase from -0.75% to -0.25% in the Ogden discount rate, to be effective from 5 August. However, the latest announcement has been met with consternation, with industry experts commenting that the increase is not sufficient.
The Ogden discount rate is used to calculate the amount of compensation a victim will receive from their insurer to cover the cost of future care. The rate is set by the Lord Chancellor and was previously set at 2.5% before reducing to -0.75% in 2017. Even with the latest increase, this remains the lowest discount rate in the Western world, according to the Association of British Insurers (ABI).
Simon McGinn, General Manager, Commercial & Personal, Allianz said:
We believe providing seriously injured people with a fair level of compensation is the right thing to do but the insurance industry is currently overcompensating. While today’s announcement has signified a move in the right direction, unfortunately the new rate of -0.25% does not go far enough. An opportunity has been missed to further tackle the increased cost of settling personal injury claims, which ultimately contributes to rising customer premiums. Whilst there was still some uncertainty, our approach was to maintain the status quo and reflect the current rate in our pricing until a formal decision was made"
Allianz CEO Jon Dye was one of a number of insurance industry leaders to sign a letter to the Lord Chancellor publicly committing to passing on to customers cost benefits arising from Government action to tackle the extent of exaggerated low value personal injury claims.
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