Minister hints at Ogden rate change

The government may change the way the personal injury discount rate is set, a Treasury minister has indicated.

Speaking at the ABI’s Brexit conference in London today, Economic secretary to the Treasury Stephen Barclay said the government has been consulting on “moving away from a mechanism that has grown outdated and, with negative returns on interest-linked gilts, lost its connection with the way people invest in the real world”.

Earlier this year, the government controversially cut the Ogden rate on personal injury payouts from 2.5% to minus 0,75%, potentially costing the insurance industry millions in extra payouts. Chancellor of the Exchequer Philip Hammond subsequently said it would consult with the industry about revising the cut.

Barclay told the ABI meeting that he was concerned that consumers should have access “to good insurance at the right price”. But he added that many consumers will have been affected by the change in the discount rate.

“We want to make sure that the way the rate is set is put on the firmest possible footing in future, so that we have a better and fairer system for claimants and defendants,” Barclay told the ABI meeting.

“In doing so, we will keep true to the 100% principle: that a claimant is paid no less than they should be, and no more.”