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    The British Insurance Brokers' Association (BIBA) is the UK 's leading general insurance organisation representing the interests of insurance brokers, intermediaries and their customers.  BIBA membership includes 1,700 regulated firms. BIBA brokers handle around half the value of all UK home, contents, motor, travel, commercial and industrial insurance policies. Insurance brokers make a direct and indirect contribution of 1% to UK GDP.  

    BIBA is the voice of the industry advising members, the regulators, consumer bodies and other stakeholders on key insurance issues.  BIBA provides unique schemes and facilities, technical advice, guidance on regulation and business support and is helping to raise, and maintain, industry standards. 

BIBA responds to the Justice Select Committee’s Pre-Legislative Scrutiny of the Discount Rate draft clause


Today, the Justice Select Committee have published their pre-legislative scrutiny of the draft clause the Government intend to use to amend the Personal Injury Discount Rate for catastrophic claimant awards.

In response to this, Graeme Trudgill, Executive Director of the British insurance Brokers’ Association (BIBA) said:

“We welcome the Committee’s scrutiny of this vital piece of draft legislation.”

“Currently, a Discount Rate -0.75% suggests that claimants lose money from investments, rather than them attracting an investment income. This is clearly not the case and underlines why this legislation is urgently needed.

“The Committee has indicated it would like to see more evidence of how claimants invest their damage awards if the Government wants to maintain the objective of 100% compensation – something which is fundamental to the principle of indemnity in insurance.

“While more evidence may be useful to provide confidence that claimants will not be under-compensated, we feel that the Government already has much evidence to demonstrate that in the real-world, claimants do not lose money from their investments. Any further delay would exacerbate the wider social impacts that a change to a negative rate value has already had.

“The Government Actuary Department (GAD) has provided analysis from 1,000 investment scenarios and found the claimant was over-compensated in 95% of the cases.

“In our evidence to the Committee, we emphasised the impact that a minus discount rate has upon our members’ customers namely significantly increasing premiums, particularly for young drivers. Following the rate change, there has been a 10% increase in the rate of uninsured driving claims.

“Furthermore, standard liability limits of cover which were arranged when the discount rate was 2.5%, may now be insufficient – putting firms, specifically small businesses, at risk of underinsurance and bankruptcy should a significant liability claim arise. We suggest customers who are concerned should speak to their insurance broker to review their limits.

“We look forward to Government identifying a suitable Bill to take these clauses forward at the soonest opportunity.”

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