Discount rate a "pressure cooker waiting to blow" says Willis Towers Watson
If Ogden rate is changed to -0.5% cost of providing car insurance will rise by £700m per year and the one-off reserve charge could hit £4.9bn.
If the Lord Chancellor was to revise the Ogden discount rate from 2.5% to negative 0.5%, the motor insurance industry is likely to experience a material one-off reserve charge of about £4.9bn, according to analysis by Willis Towers Watson.
In addition, the research revealed that there would be a roughly £700m per annum increase in the cost of providing motor insurance in the future.
According to Willis Towers Watson reinsurers will be most affected by the rate change, but it expected that UK
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