As the discount rate affects the level of claims settlements Insurers will potentially have to make, any changes will inevitably affect insurance premiums. The lower the discount rate the higher settlements will be leading to increased premiums.
The exact change will vary from insurer to insurer, but when the change to the rate was announced in 2017, Huw Evans, Director-General of the Association of British Insurers, said it would be inevitable that “there will be an increase in motor and liability premiums for millions of drivers and businesses across the UK”.
It’s impossible to say exactly what the impact on premiums is, as there are always other factors in play, such as changes to insurance premium tax, cost of repairs, availability of parts and labour. The 2017 change to the discount rate had a big impact on premiums as insurers were forced to hold far higher reserves to reflect the potential settlement in the event of a victim making a successful claim.