OLDWICK, N.J.--(BUSINESS WIRE)--In this A.M.BestTV episode, A.M. Best Senior Director, Analytics Catherine Thomas, examines a recent Best’s Briefing on changes in the Ogden rate, which is applied to claims for personal injury compensation in the U.K. These changes have forced some insurers to adjust their reserves and rates. Click on http://www.ambest.com/v.asp?v=ukdiscountrate617 to view the entire program.
As of March 20, 2017, the Ogden rate dropped 325 basis points to 0.75% from +2.5%. This was the first rate change since 2001.
“The expected impact on insurers exposed to bodily injury liability was significant,” said Thomas. “These insurers had to make a one off reserve charge, as well as factor in higher claims costs when setting reserves going forward.”
Thomas also addressed whether changes to how the Ogden rate is set could occur.
“Consultation is presently on-going on how the rate should be set,” she said. “However, a number of industry groups are suggesting that the Ogden rate should be based on a balanced low risk investment portfolio. These groups believe that this would better reflect the investment strategies of claimants, as would a more regular review.”
To access a copy of this Best’s Briefing, titled, “Ogden Update: Insurers Unveil Impact Of U.K. Discount Rate Change, but Uncertainty to Continue,” visit http://www3.ambest.com/bestweek/purchase.asp?record_code=262365.
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