Don’t say I didn’t warn you this prophecy has come true…The Lord Chancellor has announced the revised Discount Rate at -0.75% . The Domesday scenario for insurance buyers and insurers has arrived . I am actually staggered at this decision and the enormity of the implications for insurance costs and affordability . There’s been a mistake I heard this morning on the TV . Well it certainly is I thought until I realised it was the incompetency of handing out envelopes and not a rationale review of fairness to personal injury claims .

Elizabeth Truss The Lord Chancellor .. remember her name folks ! “There will clearly be significant implications across the public and private sector. The government has committed to ensuring that the NHS Litigation Authority has appropriate funding to cover changes to hospitals’ clinical negligence costs.” Well as a gambling man I am betting there are some very worried people in the Health service as they get to grips with catastrophic PI claims and future loss.

She ain’t kidding !  The market pretty much worked at the rate going to 1% . Some observers ( me being one ) thought it might go negative but were convinced (me being one ) that sense would prevail and the various parts of the Treasury would do the maths. Wrong .

Insurers will be right now doing more maths . Some are well ahead of this decision and will be quick to act with rate rises and reserve strengthening . Let’s guess at current claims above £100k having overnight reserve increases of at least 10%. Let’s guess at what will happen to periodical payments. Let’s guess at double digit rate increases on motor. Let’s guess at some insurers exiting markets and maybe being financially unsound . Not all insurers are equally cautious around reserving .

It will all get figured out of course but right now this will rock the insurance market and is a huge shock to most . Back to waiting with baited breath .