In a business environment otherwise typified by an almost preternatural degree of orderliness, predictability and certainty, the future of the so-called Ogden rate sticks out like a throbbing purple thumb of quantum-grade unknowability.
Despite recently income Justice Secretary David “D-Lidz” Lidington unveiling exciting new proposals on how a new rate might be calculated, to replace the not-entirely-uncontroversial minus 750% rate set by recently outgone Justice Secretary Lizzy Truss, nobody seems to know what’s going to happen next, or indeed when it might happen.
The net result of all this uncertainty, apparently, is that motor rates have been rollercoastering and yo-yoing all over the place, brokers have been getting headaches, and insurers are frankly somewhat brassed off. Aren’t governments – Conservative governments, in particular – supposed to be helping insurers make money?
You’d have to wonder when, far from leaping into action to fix La Truss’s crazy rate slashing, D-Lidz has been faffing about putting forth fresh proposals about how the rate might be set in future, twiddling his thumbs, and over-scrupulously declining to use the special supra-legal powers his predecessor was happy to employ to kick the rate safely back to somewhere positive.
Mark Blower Dyke chairman of brokers Bee Wiper says D-Lidz needs to grab the bull by the horns, grasp the nettle and take his courage in both hands. If Lizzy T can move the Ogden rate, he can surely move it back without waiting for legislation.
“It wasn’t an act of law to change it,” Blower Dyke argues, so D-Lidz” could change it tomorrow.” If he waits for legislation around a new methodology for setting the rate to be “thrashed out” insurers, brokers and decent ordinary policyholders might have to wait until the end of the year before sanity is restored.
AXA claims bloke Dave Williams is confident, however, that some semblance of sound mental health will eventually return to the land of Ogden and suggests insurers could already be thinking about factoring this prospect into their pricing.
As to where the rate will settle when the re-set finally materialises Dave told top insurance title Insurance Ache (from whom we nicked this story) that he’s “hoping for 1%”.
He’s pretty sure it will be plus something, he says, adding that “I would like to think it will be 1%”, although obviously “it will relate to interest rates forecast.”
Ideally it would be at least 1%, probably 1%, Dave says he “cannot see it being less than half a percent.” Probably 1%, he reckons on balance. Or something in that general ball park.
But definitely a positive number. Somewhere around the 1% mark, in all likelihood.
That’s as may be, we say here at Bankstone News; but in the meantime it’s anyone’s guess what’s around the Ogden corner, and, unless J-Sec D-Lidz pulls his finger out, likely to remain that way for some time to come.
If you’ve been affected by any of the issues raised in this article you might like to read the following article on the topic of living with uncertainty.
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