The change in the Ogden discount rate to -0.75% in 2017 has resulted in the like-for-like cost of Esure’s motor reinsurance programme renewal increasing by 33%, according to the firm’s full-year 2017 earnings release.
The UK motor specialist explains that it has reinsurance protection in place for both its home and motor business, both of which renewed on July 1st, 2017.
Esure has said that the like-for-like cost increase of its group motor reinsurance programme was 33%, which amounts to an increase of £10 per vehicle, and which is a direct result of the change in the Ogden discount rate from 2.5% to -0.75% in the UK.
The firm also explained that during its July renewal it also extended its motor reinsurance programme for six months, with it now ending on the 31st December, 2018.
The profitability of some UK motor insurers was hit hard by the change to the Ogden rate, with many not expecting the decline to be so severe.
In light of the challenges the sudden drop created, amendments to how the rate is set has been sought by the industry, while the House of Commons Justice Committee has called for greater clarity and evidence from the UK Government in response to intended amendments to the Ogden discount rate.
