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How the revised Ogden Discount Rate affects the insurance industry

Mohammad Khan and Sundip Mistry outline the potential impact on the insurance industry of the revised Ogden discount rate, which will come about as a result of the Civil Liability Bill

A person carrying a translucent cube containing a pie with a missing piece, and another person with a thought bubble containing said missing piece. Heated debate, significant change and crucial votes in the House of Commons. Sound familiar? No, we’re not talking Brexit, rather the Civil Liability Bill, the development of which drew its fair share of attention in 2018. At least at the end of it we now have a new Ogden discount rate (ODR).

This is of great significance to the insurance industry, as ODR is the rate used to calculate the value of lump sum awards for personal injury claims in England and Wales. As of August 2019, this is now set at -0.25%, lower than insurers were expecting and means motorists will have to pay more for their car insurance – possibly by up to £250.