July 2017 - Insurance Premium Changes

Insurance premium changes

In March 2017 the “discount rate”, a figure used to help set compensation pay-outs when people suffer serious injuries, for example following a car crash or medical negligence, was reduced from 2.5% to -0.75%.

This means in practice that damages in personal injury cases will be far higher than before; for example if a 20-year-old man earning £25k a year was injured at work and pursued a claim against his employer that included loss of earnings until age 65 he would have claimed £639,750 at the old rate; on the new -0.75% discount rate the loss of earnings claim would be £1,200,375, an additional £560,625.

Whilst ITC members will rarely face claims of this kind they will feel a knock-on impact from these changes since premiums for motor insurance and liability insurance are being increased to enable the insurance companies to meet claims at the new higher rate.