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[ronnyd]

Read today that the Government have changed the compensation criteria which could raise premiums by £75. Sorry, don,t do linkys.   Anyone else have anymore on this?

[Viral_Jim]

My understanding is that its to do with big-sum compensation claims eg. loss of limb, paralysis etc.

In these cases there's a formula to assess the payout (£100k for a leg, 75k for an arm, that kind of thing). Those formulae used to take into account the interest that an injured party would earn on the money over their lifetime. So if you got a £1m award, the court would actually award you £900k today and assume that you would earn the other £100k in interest.

Now, with bond rates so low the Gov't have adjusted the formulae to make insurers pay more cash up front (say £975k of your £1m not £900k). So this creates a bigger upfront cost to the insurer and consequently to us.

The £75/person figure though, probably plucked from thin air 

[Sir Tigger KC]

Lots of faux outrage from the insurance companies on this.  Fancy having to put premiums up and make more profits! Disgusting! 

[Viral_Jim]

Lots of faux outrage from the insurance companies on this.  Fancy having to put premiums up and make more profits! Disgusting! 

Oddly, motor insurance books are not as profitable as the general public would like to believe. I worked as an auditor on a number of the "big insurers" based in London and got to see the profit numbers on a book by book basis.

A number of them were actually scaling back their motor insurance and holiday insurance books because they were just not worth it for them. By the time you factor in regulatory costs, false claims etc etc, many of them were only in those lines of business to maintain their presence in the public conscious.

Life insurance, home insurance and specialist cover, now that's a different story!