London, 27th February 2017 – In response to today’s announcement by the Lord Chancellor to cut the Discount Rate used to calculate compensation awards for serious personal injuries, Mike Brockman, CEO of telematics insurance pioneer, Insure The Box said:
“The Lord Chancellor’s announcement is reckless, naïve and has no concern for the well-being of motorists and indeed claimants. To change the discount rate to such an extent all in one go, after such a long period of stability, and regardless of changing financial markets, shows that the Government’s processes are flawed.
“Once again, the youngest drivers – who have relatively more large claims and higher premiums – will be hit hardest by this change. We estimate the Government’s action could easily increase rates by 15% or more. This seems in stark contrast to the Prime Minister’s often-quoted goal of helping those who are just trying to work and earn for their families.
“This dramatic increase in the cost of claims is in addition to recent hikes in insurance tax. In less than two years, IPT will have doubled from 6% to 12%, disproportionately affecting younger drivers. And this latest change means insurance premiums will probably rise, which could see many young motorists priced out of driving altogether. Even worse – they could consider taking the risk of driving whilst uninsured.
“While telematics insurance can work to reduce motoring premiums using smart technology, these blunt Governmental changes work to push costs up for all. Along with other insurance businesses and industry bodies, we urge the Lord Chancellor to stop and think about the real consequences of this decision.”