As Premextra went to press, the year’s biggest insurance claims story finally reached a denouement. Lord Changellor David Lidington promised a partial reversal of the discount rate change brought in on 28th February, much to the delight of insurers.
Shares in a number of listed motor insurers rallied after the promise of a move for the discount rate back to between zero and one per cent. The previous cut to minus 0.75 per cent, from 2.5 per cent had resulted in unprecedented scenes as this hitherto technical subject suddenly became a matter for primetime discussion on the BBC Breakfast sofa.
The scale of the cut was for many in the industry difficult to comprehend, given that a more modest reduction had always been expected following a lengthy review process. However, -0.75% became a figure with which newspaper columnists attempted to elicit sympathy from the public like never before.
“Don’t laugh, but insurers deserve an easier ride” declared Anthony Hilton in the Evening Standard. Meanwhile pages of newspaper copy began looking more like schedules of loss tables as the new Ogden Rate’s impact was mapped out with one example after another.
For some of the tabloids, a complex story like this with politicians apparently dipping their fingers in our pockets is the perfect excuse to shout from the rooftops at the injustice of it all. Enter the Daily Express which right on cue labelled the ‘So Called’ discount rate ‘Crazy’ before letting The Sun get in on the act, bemoaning it for ‘driving up costs for millions’, with only ‘a tiny silver lining…if you’re a victim of a crash you could expect more cash from a lump sum payout up front’.
Meanwhile, back in the real world…
The Law Society Gazette’s reaction was to move the debate back to an elephant in the room. The cost of claims to the NHS and the impact a -0.75% discount rate could have was of course one of the strongest cards defendants had in their armoury. John Hyde’s editorial as the new discount rate review was announced on 7th September highlighted his concerns that ‘the narrative is changing’, with more challenging times ahead for those managing clinical negligence claims.