The first change to insurance made by the Treasury since 2001 will hit Haulage companies hard. Gauntlet, a company which specialises in haulage and van insurance as well as risk management, is strongly recommending that hauliers take protective action against the financial hit the new changes will make.
The changes to insurance are coming from the Discount Rate, which previously saw big payouts by insurance lessened by the availability to access investments. Being able to invest the settlement means the sum can be less than the amount of the claim on the basis that the interest generated by the sum will make up the total claim amount. It was previously set that it was feasible for claimants to get an interest rate of 2.5%. However, with the falling interest rates of the last few years it has become more unlikely that such investments exist anymore. To update this information, the Treasury has announced that the Discount Rate is closer to -0.75%. This change to the Discount Rate will be changed on March 20th. This will lead to the insurance company having to pay out larger lump sums for accidents and will lead to an increase in premiums across the board of insurance companies. These changes will be applicable to past claim, meaning insurance companies will have to use a large amount of their profits to amend older claims. As this change affects all insurance companies, all drivers will see an increase in premiums. Hauliers are being urged to take part in risk management. This risk management process that will help hauliers afford the hike in insurance costs will include minimizing their claims and lowering their risks. This in general is a way to lower yearly premiums from insurance companies. Being proactive will save money on their insurance before the price jump as well as make motor service companies more safe.