The Ministry of Justice has not separately assessed the effect of changing the way the personal injury discount rate is set on the insurance premiums to be paid by businesses, as opposed to the effect on consumers and other buyers of insurance policies.
Nonetheless, the department expects that at any review of the discount rate under the approach set out in the Civil Liability Bill, which was introduced in the House of Lords on 20 March, the rate will be higher than would have been set under the present law had it remained in force at that time.
The department believes the change in the law will result in reductions in insurance premiums paid by businesses. This is because of the competitive nature of the insurance industry and the recent public commitment by insurers representing about three quarters of the UK’s motor and liability insurance market to pass on cost benefits arising from Government action to reform the rate.
I have placed a copy of the commitment in the House Library.