ABI welcomes consultation
The Association of British Insurers (ABI) claims the new discount rate consultation is an important step towards a system that works for claimants, consumers, businesses and taxpayers.
Commenting on today’s publication of the Discount Rate consultation, Huw Evans, director general of the ABI, said, ‘This consultation document is an important step forward in helping get a fair, modern way to set the Discount Rate which works for claimants, consumers, businesses and taxpayers.
‘Only a month after the setting of an absurdly low rate, the government has moved swiftly to consider reform and we need to see this urgency maintained with a firm commitment to legislate in the Prisons & Courts Bill currently before Parliament.
‘As the only major economy in the world with a negative rate, the UK will face significantly increased insurance and taxpayer costs until the system is reformed and a new rate can be set.’
The statement comes as Elizabeth Truss, secretary of state for justice, has launched a six week consultation on the discount rate. The consultation will examine how the discount rate should be set in the future and Truss has invited ‘those with evidence and expertise’ from the financial industry to take part.
The discount rate, a calculation used by the courts to determine how much insurance companies should pay out to customers in cases of life-changing injury, has been lowered from 2.5% to -0.75% – a move which many claim will cost the insurance industry millions and increase premiums.