The Ogden Rate is a Government set rate used when a personal injury claim occurs, and a lump sum is paid in compensation for a life changing injury.
What this means for you and your business
The Discount Rate hadn’t been adjusted since 2001 and interest rates have fallen since the Discount Rate was last adjusted, which means that less investment income is available today.
The Government wants to ensure that claimants receive the appropriate amount of compensation for the remainder of their lives.
The amount of the award is adjusted to compensate for the amount of interest a claimant can expect to earn by investing this lump sum. The courts apply the rate to any future losses the claimant may have, including continuing care needs and potential loss of earnings.
Therefore, to ensure that the claimant is still fairly compensated the settlement needs to be higher – the lower the Discount Rate, the higher the compensation needs to be.
Insurers use complex calculations to determine the sum awarded to claims involving life changing injuries.
The new Discount Rate will apply to all claims settled in England and Wales on or after 20 March 2017 regardless of when the incident happened or when it was reported to insurers.
The current statutory minimum requirement for Employers’ Liability cover is £5,000,000 although, the normal market indemnity limit is £10,000,000. However, there is no statutory requirement for a business to have Public Liability insurance but it is just as important.
Third party motor liability is a compulsory insurance and the cover for bodily injury is unlimited, so additional cover is not required for this class of insurance.
Are your current liability limits high enough to protect your business?
You should look carefully at your insurance policy and consider whether you are comfortable with the current limits of cover. In relation to these Government changes it is advisable to speak to Forum Insurance on 020 8909 2899 to ensure you have the right level of cover.
Crowded places are – and will remain – attractive targets for international and “home-grown” terrorists and so an important element of any counter-terrorist strategy is to create safer places and buildings that are less vulnerable to a terrorist attack. This is especially so for leisure, hospitality, retail industries.
Cost of terrorism
Companies still significantly underestimate their potential exposure to the related risks and losses, especially to the increasing indirect risks from terrorism elsewhere. For example, the Paris attacks in November 2015 paralysed Brussels’ tourism and retail sectors some 320 kilometres away and had a lasting impact on the city’s commerce.
Many UK companies are unaware – or have underestimated – the financial losses that could occur if a key supplier or business partner (in the UK or internationally) were unable to operate for a significant period of time.
The human and financial cost of terrorism is growing rapidly. The Institute of Economics and Peace has estimated that the direct cost of terrorism to the global economy in 2014 was $52.9 billion – a ten-fold increase since 2000 – and the indirect costs at $105 billion.
Companies can’t predict all possible threats to their business. However, by working through a range of potential scenarios and consequences it is possible to make informed judgements and set appropriate priorities.
The following process is an effective way for companies to think about improving the management of these risks:
Step one: identify the threats.Understanding terrorists’ intentions and capabilities, what they might do and how they might act, is a crucial first step to assessing potential threats.
Step two: decide what you need to do to.Priorities should fall under the following categories: people, physical assets, information and process (supply chains and the operational process required to support the business).
Step three: identify measures to reduce risk.Companies should introduce new proportionate measures that: deter would-be terrorists; aid detection of intrusion; and delay any attempts at intrusion.
Step four: continually review your security measures.Security and contingency plans should be rehearsed and reviewed on a regular basis to ensure they remain accurate, workable and up-to-date.
Since the IRA attack on the Baltic Exchange in London in 1993, the UK established a mutual government reinsurer, Pool Re, to provide a backstop to insurers that offer terrorism cover on business property and business interruption policies. This has worked well and despite £600 million of claims from 13 separate incidents there has been no use of public money.
However, the increasingly interconnected nature of global commerce means that UK organisations are not only exposed to events in the domestic market but many also have international exposures through the global reach of their business activities. Companies can also be impacted via a change in consumer behaviour in the aftermath of a terrorist attack.
New threats and new risks require new insurance solutions and one insurer is now offering a contingent Loss of Attraction cover, for example.
As always if you have any questions regarding your business insurance please contact Forum Insurance on 020 8909 2899