AM Best has reported that the recent increase in the UK’s personal injury discount rate (PIDR), which will rise from -0.25% to 0.50% effective January 11, 2025, is likely to benefit non-life insurers in the country. This adjustment will affect how lump-sum compensation for personal injury claims is calculated, as it influences the expected returns from investments on these settlements. Analysts note that a higher rate may lead policyholders to favor periodic payments over lump sums, thereby easing some competitive pressures within the UK insurance market. The change reflects a new multi-claimant model that considers a diverse range of claimant ages, although the introduction of multiple rates was deemed too complex for implementation.
