Insurance leaders debate discount rate at Clyde & Co round table
Market Insight 01 August 2023 01 August 2023
UK & Europe
Senior representatives from more than a dozen leading insurance companies recently gathered at Clyde & Co’s global headquarters to debate the potential impact of proposed changes to the personal injury discount rate (PIDR) in the UK.
With statutory reviews of the discount rate taking place in all three UK jurisdictions over the next 18 months, the event was designed to give clients an insight as to the factors likely to shape policy, and consider the practical implications of any changes for insurers, particularly in relation to claims handling.
During the event, experts from Clyde & Co’s market-leading catastrophic injury and large loss team provided updates on the current position in England & Wales, Scotland and Northern Ireland, the timeline for rate changes and how the firm will continue to examine the implications of different models under consideration.
In addition, representatives from PWC spoke about the areas the MoJ will need to balance when setting a new rate in England & Wales, how inflation forecasts may shape future rate changes and the impact the PIDR reviews may have on motor premiums, particularly for younger drivers.
The event was convened following the Ministry of Justice’s formal ‘call for evidence’ on the pros and cons of dual or multiple discount rates for calculating future losses in serious personal injury claims in England & Wales, which closed on 11 April. While it was anticipated that the MoJ would publish a response document by the end of July, they are yet to do so.
Speaking at the round table event Alistair Kinley, Clyde & Co’s Head of Policy Development, said “In the absence of the Ministry of Justice publishing a response following the call for evidence, the round table event was an opportunity for industry professionals to gain a deeper understanding of their peers’ views towards any changes to the discount rate.
“We know that changes to the discount rate – combined with the impact of claims inflation, which is particularly acute in the catastrophic injury and large loss arena – will remain a critically important issue for insurers and claimants alike for the next 18 months. We were, therefore, delighted that senior insurance professionals and experts from PWC were able to join us in person for an engaging and insightful debate.
“We look forward to continuing to guide and support insurers through the respective PIDR reviews in the UK which, with a 300-strong team specialising in catastrophic injury and large loss claims, we are uniquely placed to do.”
A wide range of resources are available on Clyde & Co’s dedicated Personal Injury Discount Rate Hub including two webinars exploring the practical implications of the review, PIDRs around the world, and an interactive tool modelling the three options potentially under consideration by the MoJ.