Sutton Winson

New Compensation Reforms

08 March 2017

You may have recently heard in the press about Government reforms to increase compensation for members of the public or employees who suffer life changing injuries. These will have an impact on insurers’ rating models and potentially your business insurance premiums. 

Ogden tables or Discount rates 

For claimants who are due to be awarded regular compensation payments for the rest of their working life, the Government have reduced the so called ‘discount rate’ from 2.5% to minus 0.75%. This is important because if a 25-30 year old were to suffer permanent injury, their compensation would effectively be doubled. Insurers such as Direct Line have stated that these reforms will halve their profits as they are forced to increase their claims reserves.

The reforms take effect from 20th March 2017 and will affect your Motor, Employers & Public Liability premiums. This comes shortly before an increase of the Insurance Premium Tax from 10% to 12% on 1st June 2017.

Our advice

We recommend that you take one or more of the following actions to reduce the impact of any possible premium increases. Your Broker should be contacting you or we would be happy to guide you further:

1. Consider Increasing Own Damage Motor Policy Excess or self-insuring Own Damage. Insurers will offer you a discount if you elect to take on a higher excess for your own damage or self-insure this. We will help you to understand what that means for you.

2. Review your Risk Management processes and procedures and take action to reduce risk, which can help with insurer renewal negotiations in various ways. For example:

a. Driving courses and awareness training for drivers
b. Fleet risk management audits that benchmark you against best practice
c. Telematics boxes and cameras for cars and commercial vehicles
d. Excess contributions from employees for fault claims & rewards for claim free driving
e. Online training for employees such as our own Virtual Risk Manager Platform. Speak to our specialist Health & Safety Team who can help you review and identify areas for improvements
f. Review the strength of your claims defensibility procedures and highlight areas for improving. This has proved invaluable in reducing the number of claims and their values.

 For more information please contact Marc by emailing [email protected]