News & Insights

Month: August 2017

Changes to compensation payments

Insurers are entitled to discount compensation payments following a significant, life-changing injury due to the expectation that the claimant would receive compounded interest on the funds awarded. As the interest rate in the UK continues to be very low, the discount rate for compensation awards needed to be changed to reflect this.   With effect from the 20th of March 2017, the Ministry of Justice has revised the discount rate for compensation lump sum payments from 2.5% to -0.75%.   As insurers are now forced to pay larger settlements for claims, there needs to be an adjustment in the rate of premiums. Subsequently, insurane premiums for policies which include cover for personal injury claims, for example Motor and Liability insurances, have increased and we anticipate that they will continue to do so until the interest rate is re-revised.   For further information on The Ogden Discount Rate and the subsequent impacts, please refer to media articles reported by The Guardian and Telegraph etc.