The Ogden Rate – How this could affect the cost of your insurance.


From 20 March 2017 the Government changed the way personal injury compensation pay-outs are calculated, a move that is positive for the claimant but now means every insurance company needs to have more money set aside for claims.

The ‘Ogden Discount Rate’, a calculation used to determine lump sum compensation amounts, will be changing from 2.5% to -0.75%

The news came as a shock to the insurance industry, which had widely expected the rate to fall by around 1%, and is expected to cost many of the large insurers into the millions.

Insurers are very likely to pass these added costs on to customers in the shape of higher premiums. The groups most affected will be young drivers and over 70’s where personal injury costs are highest. On average there may be increases of between 8% and 10% however the increases may be higher for the younger and older age groups.


What is the Ogden Discount Rate?

The Ogden Discount Rate is a calculation used by the courts to determine how much insurance companies should pay out to customers in cases of life-changing injury.

When victims of life-changing injuries accept lump sum compensation payments, the actual amount they receive is adjusted according to the interest they can expect to earn by investing it.


Why is it costing insurers more?

By reducing the rate, the amount of money that insurers need to set aside, demonstrating that they can make these payments in event of a claim, has now greatly increased.

The table below shows an examples of how the cost of a personal injury claim will be affected.



 @ 2.5% Ogden rate

@ -0.75% Ogden rate

AgeGenderClaim sizeClaim sizeClaim size
27F£6,500,000£13,949,421 +115%
30F£12,000,000£22,997,255 +92%
10M£10,000,000£26,512,997 +165%
70M£1,100,000£1,388,607 +26%



If you would like more information then please contact your local branch.