Insurers to raise premiums following statutory increase in compensation

What’s happening?

The Government has announced that compensation awards following serious injury claims are to be increased substantially.  Amendments are being made to the complex formula used to calculate awards, known as The Ogden Table, to take into account current low investment rates.

These tables are an aid for actuaries, lawyers and others when calculating the lump sum to be paid in compensation for financial losses or expenses (such as care costs) directly caused by personal injury or death. They are prepared by an inter-disciplinary working party of actuaries, lawyers, accountants and insurers.

On 27 February the Lord Chancellor announced that under the provisions of Section 1 of the Damages Act 1996 the prescribed discount rate to be taken into account by the courts when assessing lump sum damages awards for personal injury would be lowered from 2.5% to -0.75% with effect from 20 March 2017

What it means to you

Basically insurers will pay out a far greater amount of compensation and claims costs and, therefore, they will almost certainly increase their pricing on a range of insurances which could potentially incur an injury claim, including Private and Commercial Motor, Motor Trade, and Policies which include Liability covers.

What will SIB do?

As this change will be applied by all UK insurers to all applicable policies, as an Insurance Broker we will continue to closely monitor the market to guarantee that any increases are kept to a minimum for all our clients.

 

 

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