Aon Reinsurance Solutions has released the key takeaways from its UK Motor Event, an annual seminar offering updates on trends in the UK motor re/insurance sector.
Data shows that PPO propensity has dropped by 40-50% compared to historic levels.
Following the new Ogden discount rates PPOs appear to have become larger, indicating that only the more extreme cases are settling on this basis.
The firm reports that PPOs are also increasingly confined to cases involving the very young and the elderly where the arguments in favour of a structured settlement are often most compelling.
Meanwhile, In the new Ogden discount rate environment, 2017 data indicates a majority of large claims are settling at an estimated discount at and above 1%, with very few settling at -0.75%.
Additionally, there appears to be a decrease in large loss claims inflation compared to historic levels of 5-7%, when the Ogden discount rate was a consistent 2.50%.
Large loss reserving continues to highlight larger and more prudent case reserves set earlier than ever by insurers, even when limited information is available.
Aon stated that this trend has been seen before, but there is compelling evidence that this position has further strengthened, with social media believed to be playing a part.
This trend has been highlighted in previous studies, but there is compelling evidence that this position has further strengthened. Social media is believed to play a part in this trend.
Head of UK Motor within Aon’s Reinsurance Solutions business, Richard Evans, said, “The Ogden discount rate has caused us to re-evaluate how we consider large motor insurance losses for the purposes of insurance and reinsurance, presenting many challenges in terms of pricing and reserving strategies.”
“Given the potential for further amendments to the Ogden methodology, this will remain high on insurers’ and reinsurers’ agenda.”
