Altus Comments on Rising Car Insurance Costs, After Ogden Rate Change

Following the news that car insurance premiums have risen by up to 4.6% after changes to the Ogden rate, IE magazine has some comments from Patrick Hayward, consultant at Altus, on how this could impact both insurers and consumers.

“Premium increases are hardly surprising, given that the revised Ogden Discount Rate (ODR) is set well below industry expectations. Having provisioned for and released reserves on the basis of an increase from -0.75% to 0-1%, based on earlier comments made by the MoJ, the fact that the ODR has remained negative means that insurers’ operating profits for 2018 have had to take a hit.

“Ultimately, exposures to both new and existing high value personal injury claims will be significantly higher than previously anticipated, with insurers expecting offers made prior to the ODR decision to be rejected by claimants, who will be seeking compensation on the basis of the new rate. Insurers had arguably started to count their chickens early when acting prior to the announcement in July, but the reality is that they have had to act on assumptions about the ODR when dealing with in-flight claims and pricing in a highly competitive market.

“From a consumer perspective, any increase in premiums will simply be one more reason to look at changing providers, as the industry grapples with its reputation for punishing loyal customers. And at a time when premiums are under the spotlight, there is now a greater imperative for the Government to ensure that the whiplash reforms can be delivered for April 2020, as these may go some way to offsetting the pricing impact of the ODR decision.

There seems to be progress here, as the MIB continues to work with stakeholders on requirements for integration with the new portal, but the scale and complexity of developing a system that is fit for use by law firms, unrepresented litigants, MedCo and insurers, whilst configuring to align with anticipated changes to the CPR and Practice Directions, should not be underestimated.

About alastair walker 6497 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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