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TMCNet:  A.M. BestTV: Ogden Rate Changes Will Hurt Results But Boost Premiums, Says A.M. Best Analyst

[April 10, 2017]

A.M. BestTV: Ogden Rate Changes Will Hurt Results But Boost Premiums, Says A.M. Best Analyst

In this A.M.BestTV episode, Myles Gould, senior financial analyst, A.M. Best, said recent statistical changes that raise payouts for injury claims in the United Kingdom will affect non-life insurers, but are not expected to trigger rating changes. Click on http://www.ambest.com/v.asp?v=ogden417 to view the entire program.

The U.K. non-life insurance industry Ogden rate, which calculates the lump sum payments for personal injury claims, was recently cut to-0.75% from 2.5%.

"For U.K. insurers, A.M. Best expects to see an impact on earnings and capitalization in the immediate future," said Gould. "In addition, over the medium term it is likely that there will be deterioration in the performance of those lines that are affected as a result of higher claims settlements from increased levels of compensation payout for bodily injury."

Gould also said he expects to see an increase in premium rates, as insurers try to offset the deterioration in their company's performance.

The industry Gould believes will be the most severely impacted is the U.K. motor book. However, he sees other liability classes that encounter bodily injury claims also affected.

To read the Best's Briefing, titled, "Reserve Strengthening to Follow U.K. Personal Injury Discount Rate Change," go to http://www3.ambest.com/bestweek/purchase.asp?record_code=259155.

Recent episodes of A.M.BestTV include:

  • Hammering Out the New Risks of Construction: Legal and insurance panelists examine emerging liability issues, such as how new standards are affecting the sector, and where insurers will see the next exposures: http://www.ambest.com/v.asp?v=construction317.
  • Willis' Angelini: Asian Insurers Pursue Mergers &Acquisitions Via Multiple Strategies: Kevin Angelini, head of strategy, Asia-Pacific, Willis Towers Watson, said insurers in Japan were relatively early to making international acquisitions, but that insurers in China and elsewhere are pursuing different strategies to acquire companies and capabilities: http://www.ambest.com/v.asp?v=angelini417.
  • Data Drought Limiting Cyber Coverage Growth: A report from the Deloitte (News - Alert) Center for Financial Services says the growth of cyber coverage is limited on both sides, as prospective insureds are not fully aware of their exposures and insurers have limited information with which to underwrite risks: http://www.ambest.com/v.asp?v=deloitte317.
  • Insurers Face a Host of Risks, Led by the 'Risk of Inertia': Attendees to the Philly I-Day 2017 conference in Philadelphia, PA, cited technology changes, along with cyber, climate and health risks as issues the insurance industry needs to address: http://www.ambest.com/v.asp?v=phillyiday317.

A.M.BestTV covers exclusive A.M. Best information and reports, targeted topics and key developments in the (re)insurance industry every Monday, Wednesday and Friday. Sign up for alerts of episodes at http://www.ambest.com/multimedia/ambtvsignup.html. View A.M.BestTV episodes at http://www.ambest.tv.

A.M. Best is the world's oldest and most authoritative insurance rating and information source. For more information, visit www.ambest.com.

Copyright © 2017 by A.M. Best Company, Inc. and/or its subsidiaries. ALL RIGHTS RESERVED.


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