What is the Ogden Discount Rate?
Last modified:Are you aware of the Ogden Discount Rate? It could lead to an increase in your vehicle insurance, so here’s what you need to know.

The Ogden Discount Rate (ODR) is the calculation insurance companies use to see how much they’ll need to pay out as compensation to those who have experienced life-changing injuries in a vehicle-related accident.
Also known as the personal injury discount rate, analysts had predicted the new rate would fall between 0% and 1%, the recent change has actually seen it move from –0.75% to –0.25%. So, what does that mean for the average insured motor vehicle driver?
How does the ODR affect me?
The higher the ODR, the less insurers have to pay out as a lump sum compensation payment – in some cases the pay-out can be almost double what it would have been before. So, with the rate remaining in the negative, and not shifting to the positive that had been predicted, some insurers will see a hit to their profits.
To account for the adjustment some insurers will be forced to up their motor insurance policy prices to cover the higher compensation payments – which means you might be paying more too.
What do the compensation payments cover?
The ODR is in place to help insurers calculate the lump sum payment that would be made to drivers, passengers or those involved in a motor vehicle accident that cause them to have life-changing injuries.
This could be things like paralysis, limb amputation or other injuries that may require them to stop working, make alterations to their home, move home altogether or pay for their care – and this can quite easily run into the millions.
When do the changes come into effect?
This rate change is looking to begin on August 5th of this year and will be reviewed again within the next five years. Although your monthly premium payments might not see a price hike immediately, you may notice a change when it comes to renewing your policy. According to Mohammad Khan, partner and head of general insurance at PwC, the average motor policy is likely to increase by around £15 to £25, however younger drivers could see an increase of around £50 to £75.
With The Association of British Insurers predicting sizable additional costs for insurers due to the change to the Ogden Discount rate, it’s likely motorists will notice these costs being passed on to consumers through higher car insurance premiums. However, every insurer is different so if concerned, it’s worth speaking with your insurer to clarify.