The discount rate, mandated by the Ministry of Justice and the reference to which insurers discount compensation on personal injury claims, is to be adjusted from 2.5 per cent to minus 0.75 per cent.Read more: Liz Truss’ decision could cost the insurance sector billionsThe insurance sector has lobbied the government hard against a large downward adjustment with the Association of British Insurers (ABI) going to court to challenge the move.A lower discount rate increases the up front value of claims.The ABI lambasted the news, with director general Huw Evans labelling it “crazy”. He added: Monday 27 February 2017 9:10 am Ad Unmute by Taboolaby TaboolaSponsored LinksSponsored LinksPromoted LinksPromoted LinksYou May LikeWorld of sportTop 20 Healthiest Cities in America in 2021World of sportUndo yourhelthcare.comThis Is Why Your Perfume Says More About Your Personality Than You Think yourhelthcare.comUndoRoof Replacement Services | Search AdsRoof Restoration Service Cost In Scottsdale May Surprise YouRoof Replacement Services | Search AdsUndoRest WowHere’s Why These Crossbred Animals Aren’t Supposed To ExistRest WowUndoBridesBlushSee What These Harry Potter Stars Look Like Out Of CostumeBridesBlushUndoFitness EngageDrink Lemon Water Every Day for 7 Days And Here’s What HappensFitness EngageUndoHealth Tips10 Healthy drinks for a perfect night’s sleepHealth TipsUndobest5 garlic remedies to treat acne problems | bestalloverbestUndoSimbalyHe Was One of the Most Handsome Men Back in the 60s, This Is Him NowSimbalyUndo It is also a massive own goal that lands the NHS with a likely £1bn hike in compensation bills when it needs it the least. Admiral said it expected total financial impact of the change at between £140m and £175m, it estimated the impact on its profits of between £70m to £100m. This, the insurer said, would not impact its expected dividend payout of 51.5p per share. Oliver Gill whatsapp The UK’s insurers were left reeling this morning after the government announced changes to a key insurance sector discount rate, costing them hundreds of millions of pounds.Direct Line said annual profits for 2016 would be cut by up to £230m, while motor insurer Admiral estimated it will take a hit of up £100m and is to delay the publication of its annual results. Read more: Ageas stumped by UK malaiseMany in the insurance sector have already provided for a downward move in the discount rate, which has been at 2.5 per cent since 2001.But, said the ABI, there was likely to be a devastating impact on consumers.”Claims costs will soar, making it inevitable that there will be an increase in motor and liability premiums for millions of drivers and businesses across the UK. We estimate that up to 36m individual and business motor insurance policies could be affected in order to over-compensate a few thousand claimants a year,” said Evans. To make such a significant change to the rate using a broken formula is reckless in the extreme, and shows an utter disregard for the impact this will have on consumers, businesses and the wider operation of the insurance market. 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