Ogden rate set to reach 0.5% in January 2025 following review

The Rt Hon Shabana Mahmood MP, Lord Chancellor, has announced today that the Personal Injury Discount (Ogden) Rate will increase to 0.5%, effective from 11 January 2025.

For those unaware, the Ogden rate is a figure which courts must consider when awarding compensation for financial losses in the form of a lump sum in personal injury cases in England and Wales. The lower the rate, the larger the sum insurers have to pay on personal injury claims.

The decision to increase the rate follows a review that began on July 15, 2024, and considered evidence from two Calls for Evidence, consultations with statutory consultees, input from HM Treasury, an independent expert panel, and advice from officials.

Such reviews are reportedly mandated at least once every five years, with the last occurring in July of 2019, when the UK’s Ministry of Justice shifted the Ogden Rate to -0.25%.

At the time, this was considered a blow to motor insurers, who had banked on a rate change to between 0% and 1%, after the Lord Chancellor reduced the rate from 2.5%, where it had been consistently since 2001, to -0.75% in March 2017.

With the new changes however, opinions have brightened, as Jon Dye, Director of Underwriting, Motor, at QBE Insurance, stated, “We welcome the Personal Injury Discount Rate review and today’s announcement to align the rate with more recent economic conditions and the rates recently introduced in Scotland and Northern Ireland.”

Dye continued, “Whilst this rate is still likely to result in some claimants being over-compensated, this movement is positive news for consumers and business and will help negate the continued upward pressure on the cost of serious bodily injury claims, including increasing care cost at c+9-12%.”

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