’It is to be hoped that the many levels of prudence baked into the last review are addressed as part of this review,’ says president
Motor insurers and insurance legal teams are hoping an upcoming review of the personal injury discount rate will deliver some relief in the face of rising claims costs.
That was according to Pete Allchorne, president of the Forum of Insurance Lawyers (Foil), who said that higher costs was likely being ”amplified by the personal injury discount rate”.
Under the Civil Liability Act 2018, the government is required to review the discount rate in England and Wales at least every five years.
The next review will start no later than summer 2024.
”As it stands, the rate in England and Wales is negative, which can add millions of pounds to the most serious of cases,” Allchorne said.
Figures
Allchorne made the claim after the ABI noted that motor insurers were continuing to absorb growing costs.
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Data published by the association on 29 April 2024 revealed that from the end of 2017 to present, costs for insurers to pay claims have risen by 23%.
Meanwhile, the average comprehensive car insurance premium sat at £635 between January and March 2024, up 1% from the previous quarter.
“The rise in car insurance premiums can be attributed to the numerous pressures insurers are currently facing,” Allchorne explained.
“The cost of claims is increasing – partly due to inflation, but then also other factors such as technological advancements, which are making it more expensive to repair vehicles.
“For example, an innocuous bump can result in the need to replace bumpers with sensors – insurance premiums therefore need to account for this possibility.”
Allchorne added that a great deal was riding on the legal review of the personal injury rates.
“The Lord Chancellor will shortly start the review of the personal injury discount rate in England and Wales,” Allchorne explained.
“It is to be hoped that the many levels of prudence baked into the last review are addressed as part of this review, meaning that the rate increases and the pressure on insurers is reduced as a result.”
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