Why has my insurance gone up?
As your insurance broker it is our job to ensure that you have the peace of mind knowing that your personal and business assets are well protected. One aspect of this is monitoring the latest insurance industry news and being aware of any changes that may affect you as a customer. As of 20th March it was announced that the Ogden discount rate has been reduced from 2.5% to -0.75%. What does this mean and will it have an impact on you as a customer?
What is the Ogden rate? Well, the Ogden rate or the ‘personal injury rate’ is a system that is designed to calculate future losses in personal injury and fatal accident cases. When courts are assessing compensation awards and how much interest the money will earn when invested, they take into account this discount rate. The higher it is, the lower the initial lump sum. As you can see with a reduction from 2.5% to -0.75% initial lump sums to be paid out by insurers is going to increase significantly.
For example, the insurer Allianz has demonstrated that if a 30 year old man earning £25,000 a year was seriously injured and required nursing care for the rest of his life, the compensation awarded before the rate reduction would be £2,791,000. Following the reduction in the Ogden rate the compensation would now be calculated as £6,325,000!
As you can imagine this is going to have a major impact on insurance company profits. For example, Admiral are anticipating a hit of £185 million this coming year and Aviva are preparing for £385 million!
You are probably wondering how all of this will affect you? Well, the insurance companies are planning to pass on the additional expense to their customers. In other words: you.
Any insurance policy type that is affected by personal injury claims will see premiums increase. Therefore we can expect to see premium increases for motor, public liability, employers’ liability and motor-trade.
Industry analysts have warned that the average annual comprehensive motor premium will rise by up to £75 and young drivers could see increases up to £1,000.
Now is the time that people really need an independent insurance broker to help protect their interests. If you are reading this then you have already made that wise decision. When you receive your renewal documentation and note that there is an increase in your premium, this is most likely due to the reduction in the Ogden rate. However, we work with over 130 different agencies and you can be assured that we have worked diligently to review the markets of your behalf and have obtained the best possible premiums for and cover to meet your demands and needs.
Remember we are only a telephone call away, so if you have any additional questions or require further information about how these industry changes may impact your insurance then please feel free to give us a call on 01732 471950.