What is the Odgen rate, and why is it changing?


"Our company is solicitor-led, using insight gained over decades of working in personal injury and medical negligence litigation"

Personal injury law firms, insurers and claimants recently hit some turbulent times with changes to the rates of compensation paid out to victims of life changing injuries.

The Ogden rate – also known as the discount rate - is used to calculate the amount awarded to people who have suffered from a serious injury. The discount rate was set at 2.5% in 2001 by the then Lord Chancellor; the rate based on the assumption that the person will invest their money safely.

In February 2017, the government cut the rate from 2.5% to - 0.75% following an order from the courts to update the figure in line with the market. The lower rate requires a larger lump sum payment, as it assumes a lower annual investment return.

However, the Odgen rate is now being reassessed after outcry from insurers, who say that the new rate has caused insurance premiums to rise. The rate is now expected to land somewhere between 0 and 1%, with the government is due to announce its decision later this year.

With this decision looming, valuing claims for loss of future earnings in some cases is a particular challenge that can often lead to under-compensation for victims. Research led by Dr Victoria Wass at Cardiff Business School has been the basis of new methodology to achieve greater accuracy and justice in awarding compensation fairly to claimants.

The research uses the UK’s largest household review, the Labour Force Survey, to examine the impact of adverse effects of disability on employment in the form of a disability-adjusted work life expectancy. As employment transitions are different for disabled people and often result in longer periods out of work, accounting for this negative employment impact gives a fairer and more consistent value to claims.

Dr Wass’ work has led to her becoming a member of the Ogden Working Party Group, who prepare the ‘Ogden tables’, used to calculate future loss of earnings and damages for serious injury cases.

David Stothard, managing director of MAPS Medical Reporting said: “We understand the importance of securing fair compensation for victims, especially when research clearly shows that employment transitions are longer for those who are disabled or recovering from a serious injury.

“MAPS Medical Reporting works with the best medical experts in the UK who will properly and fairly assess your client’s injuries, however complex their needs.

“Our company is solicitor-led, using insight gained over decades of working in personal injury and medical negligence litigation, so we understand the role of robust medical evidence when dealing with a serious injury claim and the part it plays in securing the correct amount of compensation.”

MAPS Medical Reporting provides fast access to reputable experts and high quality, specialist medical reports to expedite both treatment services for the victim and the claims process. Contact us to find out more about how we can support you.