Zurich's chief claims officer 'disappointed' by Chancellor's decision to increase cost
The Ministry of Justice has laid down a statutory instrument in parliament to change the discount rate applicable to personal injury lump sum claim payments to minus 0.25%
The previous discount rate was set at 0.75% by then Lord Chancellor Elizabeth Truss MP in 2017.
In light of the decision, which has come following a call for evidence and statutory consultation with the government actuary and HM Treasury, Chancellor David Gauke MP said in a statement:
‘A new framework for setting the rate was established by the Civil Liability Act 2018. It makes clear that claimants must be treated as 'low risk' investors, reflecting the fact that they may be financially dependent on this lump sum, often for long periods or the duration of their life.'
He also said that the new methodology also requires he considers actual returns available to investors; actual investments made by investors of relevant damages; such allowances for tax, inflation and investment management costs as thought appropriate; and wider economic factors.
"Despite a lengthy engagement with the insurance sector on how to achieve a balanced rate, we are greatly disappointed with today's announcement of a -0.25% rate," said David Nichols, chief claims officer of Zurich.
"It's essential that claimants get the compensation they are entitled to following an injury. However, the government's failure to change the discount rate to a balanced level will only serve to increase the cost and, therefore, affordability of certain types of insurance. This rate is likely to reduce both market coverage and affordability for higher risk customers such as road hauliers, commercial fleets, young drivers and older drivers. It will also have a financial impact on public liability cover for the public sector and businesses."
Sharing sensitive health data
Symptoms, diagnoses, drugs, fertility information
Unveiled at The House of Lords
'Talk 2 10k'
CII CEO interview