Insurance FAQs

What's the Ogden personal injury discount rate?

The personal injury discount rate (or Ogden rate) is used when calculating compensation if someone suffers a serious injury or fatal accident.

It's based on the idea that someone awarded a payment following a claim could invest that money and receive a return on their investment. This would provide them with an income to pay for future care.

Put simply, the rate is used to work out the amount a claimant could expect to earn in interest and deducts it from the insurance payout.

It’s a way of trying to make sure your compensation is a fair reflection of the amount you were awarded.


Who sets the Ogden rate and what does it mean if it’s less than zero?

The UK government are responsible for setting the Ogden rate. The Ministry of Justice set the rate for England and Wales while Scotland sets its own rate.

When the Ogden rate is less than zero (for example -0.25%) it actually means claimants receive an addition to their payout, rather than a deduction (or “discount”).

Basically, the higher the Ogden rate is, the lower the compensation will be.

The reverse is also true. When the Ogden rate’s low, compensation is higher. This will be reflected in car insurance prices since higher payouts lead to higher premiums to cover the cost.

The discount rate takes into account things like inflation, tax and the cost of living – since investments can increase or decrease in value over time.

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