The Ogden rate is used by courts to determine how much insurance companies should pay out to customers who suffer from a life-changing injury.
LV= has increased its reserves by £139m to fund the reduction in the Ogden Rate, its yearly results show.
The Ogden Rate is used by courts to determine how much insurance companies should pay out to customers who suffer from a life-changing injury.
It was cut from 2.5% to -0.75% on 27 February, with the outcome being those who suffer from serious injuries will receive significantly higher payments.
LV= split its operating profit into pre and post-Ogden. Before the change it made £159m but after it only made £20m, down from £107m in 2015.
Richard Rowney, LV= group chief executive, said: “The reduction in the Ogden discount rate has had a significant one-off impact on the group’s financial results as we have increased our reserves by £139m to reflect higher claims costs.
“We’ve long argued that the methodology used to set the new rate is obsolete and will work with government to ensure a fair outcome for all and that car insurance premiums aren’t unjustly hit.”
The mutual saw its general insurance profit rise from £72m in 2015 to £113m in 2016 and its life and pensions profit increase from £41m in 2015 to £45m in 2016.
