Ogden rate

On February 27, 2017, the Lord Chancellor, Liz Truss, announced that the discount rate for personal injury damages in England and Wales would move on March 20 from 2.5% to -0.75%. The 2.5% had stood since 2001. The rate turns a claimant's future losses, care and lost earnings, into a single lump sum. The Ogden tables of the Government Actuary's Department give, by age and sex, the multiplier to apply to the annual loss at each rate. The Damages Act 1996 gives the choice to the Lord Chancellor. The method inherited from Wells v Wells (House of Lords, 1998) assumed a claimant investing risk free in index-linked bonds: when real yields on index-linked gilts went negative, the rate followed. The Civil Liability Act 2018 replaced that benchmark with a cautious but diversified portfolio, hence -0.25% from August 2019, then +0.5% since January 11, 2025. Scotland and Northern Ireland set their own rates through their own procedures. For a UK motor insurer, the rate is a reserving assumption nobody in the company controls. The 2017 cut made every large open bodily injury claim more expensive at a stroke, and several listed companies announced an exceptional charge within weeks. On the reinsurance side, the multiplier pushes claims straight through motor XL retentions, and a stability clause indexed on wages does nothing against a change in the rate. The topic came up at every motor renewal that followed. The periodical payment order (PPO) sidesteps the question by avoiding the lump sum. Not to be confused with the French capitalization table, which has no official rate.