News analysis: Insurers take a hit from discount rate cut
Brokers prepare for premium hikes as insurers calculate the cost of Lord Chancellor’s Ogden rate change
Lord Chancellor Liz Truss shocked the insurance sector in February when she announced that the discount rate, otherwise known as the Ogden rate, would be cut from 2.5% to minus 0.75%.
The rate, designed to ensure injury victims receive the right pay out, had not been moved since 2001 and affects motor and liability claims.
The change came into effect on 20 March and left insurers slashing their profits as they attempted to cushion the burden of additional personal injury pay outs.
Truss
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