Insurance companies have reacted in alarm at the surprise reduction in the Ogden rate, with many estimating it will cost them £hundreds of millions a year and will necessitate increases in the premiums paid by policyholders.

What is the ‘Ogden rate cut’ and what does it mean for your insurance premiums?
The Lord Chancellor recently announced that, from 20 March 2017, the Odgen rate of discount will be reduced from 2.5% to -0.75%. But what does this actually mean?

A bit of background: what is the discount rate?
In simple terms, the discount rate affects the amount of compensation a person actually receives in the event of a personal injury claim. It works under the theory that compensation awarded to an injured party will gain interest over time, especially with larger awards for those who are most seriously injured. Because interest rates have dropped in recent years there were some calls to review the rate.

What does the change in the discount rate mean?
Changing the discount rate from 2.5% to -0.75% will have a major effect on both claimants and insurers resulting in huge increases in compensation payments.

For example, the insurer Allianz has demonstrated that if a 30 year old man earning £25,000 a year were seriously injured and required nursing care for the rest of his life, the current calculations would award him compensation of £2,791,000. Following the reduction in the Ogden rate the compensation would now be calculated as £6,325,000.

What does this mean for your insurance premiums?
In order to accommodate this change in the Ogden discount rate, insurers are expected to increase insurance premiums to help cover the costs, particularly in the areas most affected by personal injury claims costs. Therefore we can expect to see increases in premiums for motor, public liability, employers' liability, motor trade and SME package insurances.

PricewaterhouseCoopers warned that the average annual comprehensive motor premium will rise by up to £75 and young drivers could see increases up to £1,000.

Duncan Sutcliffe, director, Sutcliffe & Co, commented: “Whilst a review of the Ogden rate was necessary, the impact across the insurance industry will be significant and that will filter through to customers. For example, anyone needing private or commercial motor insurance will be affected, as will those requiring liability insurance for their business.

“I’d strongly encourage anyone who thinks they will be affected to speak with their insurance broker for further detail.”

"May I congratulate you and your staff for the attention to detail and the service that you have given to Ductbusters over the years. We searched for a long time for an Insurance Broker that had the professionalism to resource the many and varied insurances we required and you have never failed ourselves."

Dermott Quinn, Managing Director Ductbusters Ltd

Read more Testimonials >>

"I highly recommend the Sutcliffe & Co team both for their proactive ongoing annual renewal work & also for helping during a recent claim. Its great to know we have a local firm with people we can rely on."

Julian Powell, Business Director, HallmarkHulme Solicitors

Read more Testimonials >>

“We had been with our current broker for several years and had become complacent. An increase in premiums led us to want to cross check with an alternative broker and we chose Sutcliffe. We found them a breath of fresh air; there was a transparency in our dealings, their advice gave us options and they found competitive ways of providing insurance from high quality companies."

Chris Oliver, Director, CHANE Investments Ltd

Read more Testimonials >>

“Talbot Transport has been with Sutcliffe and Co for many years and have the greatest confidence in their service. We like their friendly and personal staff and feel they have a good understanding of our business. Any problems we have are dealt with swiftly and smoothly with the least amount of disruption to our daily business”

Sophie Talbot, Partner, Talbot Transport

Read more Testimonials >>

“I was thrilled when I found Sutcliffe & Co, friendly, efficient and with competative prices. Their expert advisor really helped me through the insurance minefield and he went that extra mile that other companies just did not...."

Michelle Davies, Office Manager, Davies and Daughters Building Contractors

Read more Testimonials >>

"May I congratulate you and your staff for the attention to detail and the service that you have given to Ductbusters over the years. We searched for a long time for an Insurance Broker that had the professionalism to resource the many and varied insurances we required and you have never failed ourselves."

Anthony Eddies-Davies, Director, Live The Adventure Ltd

Read more Testimonials >>

 
 
Sutcliffe Insurance Brokers Ltd t/a Sutcliffe & Co is authorised and regulated by the Financial Conduct Authority 306068
2 Foundry Street, Worcester, WR1 2BJ tel:01905 21681 | Registered in England No 1167560

Small Business Insurance | Company Insurance | Professional Indemnity Insurance | Commercial Property Insurance | Buy To Let Insurance
Sutcliffe Insurance Brokers Ltd © 2017 | Privacy Statement | Terms Of Use | West Midlands Internet Marketing by WSI | Site Map | Login