We’ve heard from insurers, law firms, trade bodies, and other industry stakeholders shortly after it was revealed that the personal injury discount rate is being adjusted from -0.75% to -0.25%. Most of the comments centred on how much of a letdown the decision was… now a particular camp is saying outright that insurance premiums will go up as a result of the Ogden rate, and pointed to a specific group of policyholders who will feel the greatest impact.
“It is disappointing that the Ogden rate, used to calculate compensation payments for catastrophic injuries, has been set at -0.25%,” said Warren Hetz, UK commercial director of insurethebox owner Aioi Nissay Dowa Europe (AND-E). “The change to the rate in February 2017 saw the youngest drivers – who have relatively more large claims and higher premiums – hit hardest. That was in addition to hikes in Insurance Premium Tax (IPT).
“We were, therefore, hopeful that Government and its advisors would take this on board when determining the new rate but sadly this has not been the case.”
As for the repercussions, Hetz cited what they believe is unavoidable.
“The inevitability of this latest decision is that insurance premiums will go up,” declared the AND-E executive. “And the youngest, highest risk drivers will continue to carry the biggest burden which is somewhat contrary to so many other government initiatives designed to improve social mobility for all, and especially the young generations coming into the working world.
“At insurethebox we have maintained a consistent position that the youngest drivers need to be treated differently from more experienced motorists. The development of our market-leading telematics technology means we can calculate the premium of each driver based on their individual behaviour rather than simply assuming all young drivers are bad drivers.”