Motor insurance premiums to fall in Scotland and Northern Ireland - PwC comments on update to personal injury discount rate

  • Press Release
  • 26 Sep 2024
  • PwC expects motor insurance premiums in Scotland and Northern Ireland to decrease - with drivers seeing an average saving of £60 (10%) in Scotland and £90 (15%) in Northern Ireland

  • Rate change puts downward pressure on pricing in the market and could see motor insurance premiums drop in other areas of the UK, potentially by between 1% and 2.5% - which could be a £50 reduction for some young drivers.  

Motor insurance premiums for Scottish and Northern Irish drivers are due to fall after the Government Actuary today announced the results of her review into the personal injury discount rate for Scotland and Northern Ireland. The rate will change from -0.75% to +0.5% in Scotland, and from -1.5% to +0.5% in Northern Ireland. 

The statutory interest rate, reviewed and set by the devolved governments once every five years, is calculated based on the investment returns a claimant could generate from investing a compensation payment over a lifetime. The interest rate environment has changed dramatically since 2019, meaning claimants should see the same returns now from investing a smaller lump sum as they would have done five years ago with a larger sum. 

The rate impacts expected losses for insurance companies and, therefore, the level at which they set premiums for their wider customer base. Actuaries from PwC estimate premiums will decrease by an average of £60 for drivers in Scotland and £90 for Northern Irish drivers. 

PwC predicts that drivers across the rest of the UK could also start to see their premium prices drop, as some motor insurers may use the new Scotland and Northern Ireland rate as an indication of what is to come across the rest of the UK, with a new rate in England and Wales expected by January 2025. English and Welsh customers of insurers who choose to price some of this in immediately could see their premiums decrease in price from 1%-2.5%. 

Mohammad Khan, head of general insurance, PwC UK said:

“Scottish and Northern Irish drivers will be happy to see their premiums fall, and drivers under the age of thirty - who typically have the most expensive policies - should benefit from the most significant savings. This could also be good news for drivers elsewhere in the UK - the motor insurance market is so competitive that some insurers will see this change in Scotland and Northern Ireland as an opportunity to be more competitive and lower prices elsewhere in the UK, preempting a rate change in England and Wales expected early next year.” 

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