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Why Admiral are wrong on the discount rate

If the costs of claims really are increasing, then drivers must accept higher premiums as a price for motoring, writes Jonathan Wheeler

29 August 2017

The reduction in the discount rate has been described as “unnecessarily extreme” and “eccentric” by the chiefs of Admiral Insurance. The government is consulting on a further change, and Admiral is agitating for an increase. This is special pleading on behalf of the insurance industry; we need to step back and take a wider view.

The reduction in the rate may well have an effect on insurers’ bottom line. If the value of some claims will significantly increase, then the stock industry response is to shrug and say that premiums will have to rise. Do not be fooled into thinking that Admiral is a lobbyist for their put-upon customers; all motor insurers benefit from operating in a captive market because if anyone wants to drive a car, they must have insurance.

The real issue here is that Admiral and others have benefitted from a system wh...

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