How would you summarise the recent decision to slash the personal injury discount rate? “Crazy,” has been the word most widely touted after it was quoted roundly in the media following comments from the Association of British Insurers. However, now we have a new word to add – “eccentric”.
That was the term used by Admiral group chief executive David Stevens on the back of revealing tumbling profits for the car insurer.
The Cardiff-based group warned that price hikes are likely to follow after the decision to slash the Ogden rate – noting it had taken “pre-emptive” action in December and that there would be “more to follow.”
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It suggests it took around a £150 million hit from the discount rate change in its results released today, with a further £65 million anticipated in coming years. Overall its pre-tax profits slumped by 25% to stand at £284.3 million.
Speaking about the rate cut, Stevens described it as an “eccentric government decision” while colleague and chairman Alastair Lyons expressed support for a “fundamental review of the basis on which the Ogden rate is set.”
Despite the profit slump, however, the company still plans to dish out a share windfall to staff – around 9,000 employees will pick up free shares worth £3,600.
Meanwhile, the company’s Confused.com business boasted a more enjoyable period – reporting profits of £3 million compared to a £7 million loss during 2015.
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