Media Release 15 July 2019
IUA COMMENT ON DISCOUNT RATE ANNOUNCEMENT
The announcement of a new personal injury discount rate of minus 0.25% is a surprising and disappointing outcome for insurers, the International Underwriting Association has stated.
Dave Matcham, IUA chief executive, said: “The new methodology for calculating the personal injury discount rate promised to introduce a much fairer and more realistic assessment of investment strategies. This was widely expected to result in a figure of between zero and 1%, which indeed, was the indication given by former Lord Chancellor David Lidington in a statement to the House of Commons in September 2017, when the process of reform began.
“We have always supported a rate which fairly reflects the ‘100% compensation principle’, ensuring claimants are put in neither a lesser or more advantageous position than any ordinarily prudent investor favouring a low-risk investment approach. The Government’s statement today, however, indicates that a rate of minus 0.25% leaves a claimant twice as likely to be over-compensated than under-compensated.
“The likely effect will be to drive up the cost of insurance for policyholders across the market.”
Director of Communications
International Underwriting Association
Tel: 0207 617 4449
Mobile: 07921 699 218
Notes to Editors:
About the IUA
The International Underwriting Association of London (IUA) represents international and wholesale insurance and reinsurance companies operating in or through London. It exists to promote and enhance the business environment for its members.
The IUA’s London Company Market Statistics Report shows that overall premium income for the company market in 2017 was £26.314bn. Gross premium written in London totalled £18.331bn while a further £7.984bn was identified as written in other locations but overseen by London operations.