Ogden Rate Change Set To Affect Premiums in Norwich, Norfolk

Posted 13/04/2017

In March 2017, the government made a significant change to the Ogden Rate, used as part of the calculation to determine the amount of compensation to be paid to seriously injured individuals.

They have changed the Ogden Rate from 2.5% to -0.75%.


Well, the Ogden Rate, also known as the Discount Rate, forms part of the calculation to determine the level of award in respect of cases involving serious injury. Claim settlements for injury are made up of a number of key components, including:

  •  Compensation for pain and suffering
  •  Future loss of earnings
  •  Future cost of care
  •  ‘Other’ financial support, either towards activities that cannot be performed as a result of the injury (i.e. driving, caring for dependents etc.) or the provision of additional support, such as prosthetics
  •  Legal and professional fees

When assessing future loss of earnings, the courts multiply the amount they consider the claimant will lose each year by factors such as their age and their life expectancy. Similar factors are applied to the amount required for future cost of care and it can be therefore equate to a considerable amount of money. As a result, an allowance is made by the courts in respect of future losses to reflect the fact that the claimant will be able to invest the lump sum awarded and earn interest on that investment over a period of time. The settlement is therefore ‘discounted’ by the amount of interest the claimant can expect to earn over that period. It is this adjustment which is known as the Ogden Rate and that is subject to the recently announced changes.


The Ogden Rate applies to injury claims, so any product which provides cover for Motor (including Motor Trade) or Liability (Employers’ Liability and Public & Products Liability) will be affected. This also includes Property-led products such as Property Owners and Landlords where liability cover is included. This means to account for the increase in potential claims, we are now recommending all liabilities be rated at £5,000,000 to mean you are not left in the lurch should a claim occur.

Due to the increase in claims payments, insurers are also inevitably having to increase their premiums. However, the exact amount of this will depend on a range of factors, including trade activities, approach to risk management, previous claims history and exposure to serious injury claims. But if the cost of large losses increases, then so must the contribution that everyone makes. This, unfortunately, therefore includes low risk and claims-free cases.

Should you have any questions, please feel free to contact the team on 01603 954054 who will be happy to help.

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Ogden Rate Change Set To Affect Premiums

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