Changes to how the Lord Chancellor calculates the compensation paid to accident victims has come under scrutiny in recent months and classic car cover could get cheaper if proposed changes to the “discount rate” (also know as the “Odgen rate,”) get enacted into law.
Since March, motorists (including classic car owners) have faced steadily rising premiums following the decision by then-Lord Chancellor and Justice Secretary Liz Truss to curtail the discount rate. The Ogden rate changed from 2.5 per cent to minus 0.75 per cent on Monday, March 20; fearing increasing costs, brokers passed the extra costs on to customers.
Following pressure from the insurance industry, the Ministry of Justice has proposed to alter the Ogden rate again. Having listened to concerns from the Association of British Insurers (ABI), incumbent Lord Chancellor and Justice Secretary David Lidington unveiled new discount rate proposals.
Plans are currently under consultation for a new discount rate of between 0 and 1 per cent as part of a new Bill which would, review, on a three year basis, how the discount rate would be calculated. Were the draft legislation successful, The Guardian reported that rates could “remain stable, or even fall.”
The AA was worried that the discount rate cut would encourage more uninsured driving; other professional bodies prefer not to be drawn until the Lord Chancellor agrees on a new discount rate