Changes to Ogden will move rates for some, says UnipolRe underwriting manager

Changes to the rate used in the UK to calculate how much insurers should pay out in compensation to people who have suffered life-changing injuries will continue to have an impact on rates in the upcoming renewal, Simon Wigzell, underwriting manager of UnipolRe, told Baden-Baden Today.

The Ogden discount rate was changed from minus 0.75 percent to minus 0.25 percent in July a decision that Huw Evans, director general of the Association of British Insurers (ABI), has called “a crazy decision”. The change was an improvement for the industry, but insurers had believed the increase would be closer to 1 percent.

This means that insurers will have to pay significantly more in compensation than they were expecting meaning in turn that insurance premiums will also go up, and many insurers will need to strengthen their reserves. It is the latest in a line of shock changes to the rate by the UK government none of which has been favourable to insurers.

Wigzell said that, after what has been a relatively benign year in Europe for big losses, this will play an important part in renewal negotiations especially for companies with exposure to the UK motor market.

“There have been a few minor cat losses in Europe and there remains plenty of capacity around. In that context, the Ogden rate will be a talking point,” he said.

“We are expecting a relatively flat renewal on a risk-adjusted basis, but this could have an effect on some accounts.”

Wigzell stressed that there remain several months to go, and further losses could yet occur that could move the market in Europe.

The other talking point in Baden-Baden will be the ongoing negotiations around the UK’s departure from the EU and what the implications might be for the industry. Wigzell stressed that as it is based in Dublin, part of the EU, and conducts only B2B business into the UK, UnipolRe will be unaffected, but he noted that other insurers might be more concerned.