Taken from an insurance company hand out concerning the personal injury discount rate (or Ogden discount rate)- something actuarial sounding which will affect everyone's car insurance premium soon! quote:- What is the personal injury discount rate? The personal injury discount rate (or Ogden discount rate) is a rating applied to the way that lump sum compensation is calculated for serious personal injury and fatal accident cases. It's based on the premise that someone who receives a lump sum award following a serious injury would have the opportunity to invest that lump sum and receive a return on that investment to provide them with an income to pay for their future care. The rate has been at 2.5% since 2001. This means that any award given would be discounted by 2.5% to allow for a return on investment. Other factors such as life expectancy and future costs of on-going care are also taken into account when calculating a payment. What has changed? On February 27 2017, Liz Truss, Secretary of State for Justice, announced findings of a review of the personal injury discount rate resulting in a change in the rate from 2.5% to -0.75%. This change comes into effect on 20 March 2017. The best way to explain the impact of this is with an example. Previously, the cost of providing care for a 25 year old man with a moderate brain injury for the rest of his life could have totalled £3.1m, based on life expectancy and applying the 2.5% discount rate. Under the new -0.75% rate, the cost on the same example would be £8m. How could it affect my car insurance? This change will have a massive impact on the insurance industry Insurers will have to increase capital reserves for past claims not yet paid, and the cost of future claims will go up considerably. In order to cover these costs, insurance companies will have to increase the price of your car insurance.