Why you need to be considering excess layers for customers

On 27th February 2017, the Lord Chancellor announced a cut in the discount rate, moving it from +2.5% to -0.75%. The discount rate reflects the level of investment return that a claimant can expect to achieve by investing of their award.

Claimants should absolutely get a fair settlement of claims following an injury, but the decision to change the discount rate so dramatically has big implications in terms of the cost and affordability of insurance. This change will apply to all claims settled on or after 20 March 2017 regardless of when the loss occurred. It will therefore have a significant impact on the cost of future settled claims and that will need to be reflected in future casualty and motor premiums.

This article provides some anonymised examples of real Zurich claims that illustrate how this change has impacted the value of the claim.