Discount Rate change = grumpy insurers = premiums up

[arry]

https://www.telegraph.co.uk/business/2017/02/27/uk-insurers-hit-back-crazy-personal-injury-rate-change-share/

Surprised Mr Borg hasn't jumped in with this one already.

Basically, any insurance companies writing classes with long tail bodily injury exposures (motor, predominantly), are about to have the asses well and truly torn out of them which will only lead to one thing; rates up.

When dealing with bodily injury claims, reserves are set based on a set of actuarial tables called the Ogden Tables. Within these there are a number of columns that outline what's known as the Discount Rate.

So, once you've worked out how long future care will be needed for, then when your injured party is likely to die, you work out from the Ogden Table what your total cost multiplier will be and the Discount Rate is used.

The MoJ have gone totes spastic and changed that rate from 2.25% to -0.75% which is an absolutely huge shift which will add a huge £££ increase to the cost of longer term care requiring claims.

The best of it, well this applies to claims that are SETTLED after 20th March this year. That means insurers will have to cover a good number of years of retrospective losses - as the claims they've already reserved for will now need to be re-reserved, and will invariably now carry a much higher £ amount number against them.

The laughs a minute MoJ has also picked -0.75% which there isn't actually a column for within the table -0.5% or -1.0% no problem, but in the middle just doesn't work, it's not linear #Trollinfosho'

It's all kicking off nicely with share prices of insurers crashing around their ears and the champagne fund being told to go on the wrong kind of ice right now.

What does it all mean? Well, in short - expect premium hikes, and sizable ones. Cheers Govt

[Pete.]

Does that mean that I don't dare challenge my renewal quote even though I think it's a bit high?
____________________
a.k.a 'Geri'

132.9mph off and walked away. Gear is good, gear is good, gear is very very good

[arry]

[Pete.]

So this is already in effect, not imminent? If so I'll get on the phone as my renewal's a bit spastic this year.
____________________
a.k.a 'Geri'

132.9mph off and walked away. Gear is good, gear is good, gear is very very good

[arry]

[Rogerborg]

Eh, I'm saving my Full Beaker for Vnuk being pencilled into the statutes.

https://68.media.tumblr.com/4590e29248123380da547bed564cc856/tumblr_inline_oe62rylYa71su0t3d_500.gif

Is it an option for insurers to pay compo for ongoing spazzcare in instalments rather than a lump sum up front?

Which would also give them an ongoing opportunity to spot scammers who miraculously recover outside the courtroom.
____________________
Biking is 1/20th as dangerous as horse riding.
GONE: HN125-8, LF-250B, GPz 305, GPZ 500S, Burgman 400 // RIDING: F650GS (800 twin), Royal Enfield Bullet Electra 500 AVL, Ninja 250R because racebike

[Andy_Pagin]

Arry,
I wonder how this will effect companies in run-off? We manage a fair bit of business in the London market Asbestos/Pollution/Health-hazard arena, a fair whack of it's BI. (I just write the computer systems, don't have much of an understanding of the business at that depth).
____________________
They're coming to take me away, ho-ho, hee-hee, ha-haaa, hey-hey,
the men in white coats are coming to take me away.
Yamaha Vity -> YBR125 -> FZS600 Fazer -> FZ1-S Fazer

[arry]

[arry]

[Nobby the Bastard]

Is this a bit like when insrance companies were told that they couldn't assess risk based on gender and they all started warning that premiums were going to go up?
____________________
trevor saxe-coburg-gotha:"Remember this simple rule - scooters are for men who like to feel the breeze on their huge, flapping cunt lips."
Sprint ST 1050

[arry]

[Nobby the Bastard]

So, 3% increase in the discount on £1M supposed to last 20 years? Thats £50k a year

For the first year, you'd need another £1500 extra.
For the second year, you'd need £1500 plus 3% (£45)
For the thrid year you'd need £1545 plus 3%

etc

etc.

I can't see how this will increase the total payment made by a quarter, which is what would be needed to justify increasing premiums by that amount.

After all they could always just reduce their profits.

https://www.aviva.com/media/news/item/aviva-plc-2016-interim-results-announcement-17651/
____________________
trevor saxe-coburg-gotha:"Remember this simple rule - scooters are for men who like to feel the breeze on their huge, flapping cunt lips."
Sprint ST 1050

[M.C]

[dave05]

insurance has us by the balls anyway £25 change of vehicle £25 if you cancel £££££££ for anything just winds me up

[arry]

[arry]

[Nobby the Bastard]

[arry]

[Nobby the Bastard]

[arry]

Not sure I follow....

[Nobby the Bastard]

Lets put it this way, I know for some balance sheets (nuclear decomissioning) that are a bit more long term than the insurance industry. They haven't increased to the same rate despite the same discounting rate change.


Anyway, assuming that £4M will fund before but will need to be £10M now, is almost tripling.
____________________
trevor saxe-coburg-gotha:"Remember this simple rule - scooters are for men who like to feel the breeze on their huge, flapping cunt lips."
Sprint ST 1050

[Nobby the Bastard]

Well, today was the day when i had to calculate the change to the discount on my £2 million early retirement provision as the treasury had decreased the discount rate by 2%.

Although my provision is relatively short term at 5 years, I was absolutely horrified about the amount I had to increase it. The shareholders will insist on wages being forced down to maintain their profits.

After all £19k is going to make such a difference....
____________________
trevor saxe-coburg-gotha:"Remember this simple rule - scooters are for men who like to feel the breeze on their huge, flapping cunt lips."
Sprint ST 1050

[Andy_Pagin]

Looks like the impact on our particular run-off clients will be minimal, the vast majority of their assureds are in the USA, and from what I've been told it's the jurisdiction of the assured that's the key factor, not that of the underwriters.
Might even be a little renaissance for the run-off business if a few motor insurers can't meet the inflated reserves required and keel over.
____________________
They're coming to take me away, ho-ho, hee-hee, ha-haaa, hey-hey,
the men in white coats are coming to take me away.
Yamaha Vity -> YBR125 -> FZS600 Fazer -> FZ1-S Fazer

[Rogerborg]

Any news on underwriters closing their books to high risks? Bennetts are suggesting it may happen, at least short term.
____________________
Biking is 1/20th as dangerous as horse riding.
GONE: HN125-8, LF-250B, GPz 305, GPZ 500S, Burgman 400 // RIDING: F650GS (800 twin), Royal Enfield Bullet Electra 500 AVL, Ninja 250R because racebike

[arry]