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‘All the lobbying appears to have paid off’ – Berkeley Alexander

by: Geoff Hall, managing director at Berkeley Alexander
  • 14/12/2017
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‘All the lobbying appears to have paid off’ – Berkeley Alexander
When the Lord Chancellor announced a change to the Ogden discount rate (used to calculate compensation awards for serious personal injuries) back in March, the decision was met with widespread uproar and furious backlash from the insurance community.

The Association of British Insurers (ABI) went as far as describing the decision as “crazy” and “reckless in the extreme” amid criticism that the unexpectedly deep cut – from 2.5% to -0.75% – would “overcompensate” injured victims.

As a result, premiums for most policies that include any element of liability cover – including motor, commercial and liability insurance – have risen.

All the lobbying appears to have paid off.

The government backtracked in October by announcing that the House of Commons Justice Select Committee would be undertaking to deliver a revised outline of plans to readjust the rate once again, along with other improvements to the legislation, as a result of the impact of higher insurance premiums on both individuals and businesses with a target legislation date of early 2018.


Two sides to every coin

Of course, there are two sides to every argument, and lobbying by the likes of campaign group Access to Justice (A2J) is now dominating the headlines on this issue, as they call for the government to “put injured people at the heart of its inquiry into the discount rate”, not insurer profits.

Whatever the eventual outcome, premium increases have been a lead topic of conversation across the insurance market in 2017, with Ogden, as well as further Insurance Premium Tax (IPT) rises, putting significant pressure on insurer margins.

But how has this, and more importantly, how will it continue to impact brokers and advisers?

For your retail customers, they have most likely to have noticed this with motor insurance premium increases. However, there will be a larger impact on your business clients who will have been experiencing increasing premiums across a range of policies as they are likely to have cover for employers and public liability as well as business cars and vans or a fleet of vehicles.

But it’s not just about the premium – do they have sufficient cover? Many smaller businesses may only have £1m of public liability cover – this is no longer enough with the new Ogden rates, as injury awards running into seven figures are now much more likely.

Talk to them and review their insurance needs, whether they be commercial risks or motor fleets.  They will appreciate this level of attention to detail, and the superior level of customer service delivered by anticipating and responding proactively to issues they themselves may not have even realised they have yet.

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