LONDON, May 12 (Reuters) - The Association of British Insurers on Friday called for a dual-rate system for calculating lump sum payments in personal injury claims, to reflect different investment periods, saying the current system was “flawed”.
An unexpected change in the rate earlier this year by the government has pushed up the size of payments, denting the profits of British, European and U.S. insurers operating in the British motor insurance market.
“The current methodology used to calculate the discount rate is fundamentally flawed as it does not reflect the reality of how claimants invest their damages,” James Dalton, director of general insurance policy at the ABI, said in a statement.
“Retaining the status quo is not an option.”
The ABI was responding to a government consultation on the discount rate. (Reporting by Carolyn Cohn; editing by Simon Jessop)