The Ogden Discount Rate and Personal Injury Settlements

The Ogden Discount Rate and Personal Injury Settlements

The Ogden Discount Rate, which is used by the courts to calculate personal injury settlements  has changed. This affects personal injury awards made to claimant and ultimately the premiums of all classes of motor and liability insurance, which involve compensation payments for personal injury.

When assessing lump sum awards for personal injury claimants the courts take into account the net rate of return (discount rate) that the claimant might expect  from a reasonably prudent investment of lump sum compensation.

Since 2001 the rate has been 2.5%. This has been amended by 3.25% to -0.75%. The rate change applies retrospectively to all current claims.

This removal of the discount rate is going to make a significant difference as certain awards (such as for nursing care) are paid annually.

Due to this change we expect insurers to have to pay out higher injury awards, which may filter through to premiums. However as an independent broker we use a wide panel of insurers and will continue to search the market for the best deal for you.

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