Reinsurance cost rise 33% for Esure due to Ogden change
UK insurer Esure has seen its reinsurance costs rising by 33 percent during renewal in 2017 due to the UK’s Ogden personal injury discount rate change.
In February 2017 the Lord Chancellor decided to change the Ogden discount rate to -0.75 percent from 2.5 percent. The overall cost to insurers and reinsurers of the UK’s change in the personal injury Ogden discount rate was estimated at £3.5 billion across all lines of business, by advisory firm EY.
In September 2017, the UK government revealed a proposal for the Ogden discount rate implying a real rate of 0 percent to 1 percent.
Esure group’s motor reinsurance programme was renewed on July 1, 2017 and subsequently extended for six months to the end of 2018.
The like-for-like cost increase of the programme was 33 percent, equating to an increase of £10 per vehicle, as a consequence of the change in the Ogden discount rate in February 2017. The home reinsurance programme was renewed with no material changes.
Currently, the group has in place excess of loss reinsurance programmes for its motor and home underwriting activities. Motor and home reinsurance treaties are in place covering all years in which the group has underwritten policies in each line of business.
Esure offers insurance products to over two million drivers, homeowners, pet owners and holiday makers across the UK.
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