NI discount rate: new Bill passes second stage but further progress unclear for now

Although the Damages (Return on Investment) Bill passed its second stage in the Assembly at just after half past three this afternoon, the scheduling of its Committee stage remains unclear and contested. We have already written about the evident tension between the Justice Minister and the Committee that was all too clear in pre-legislative hearings and was again present in today’s debate.

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From business interruption to GI pricing…

Attending (virtually) the ABI annual conference early this week I had the distinct impression of  an industry that is ready to move on from the BII test litigation which has dominated debate in the sector for the last nine or so months. ABI Chair & Allianz CEO Jon Dye said that the lessons to be learned from the case were in the need for clarity on policy wordings and in managing customer expectation. But in one sense the spotlight still shines on BII, as illustrated by the call from the FCA for relevant claims now to be paid promptly and in its letter this week setting out very clear expectations of intermediaries involved in the claims process.

Following immediately after BII, the next regulatory tsunami hitting the industry will be the FCA’s remedies package on general insurance pricing. The pricing review was – rightly – among Jon Dye’s three key strategic priorities for the industry this year (the others being the climate challenge and the review of Solvency II). The final GI pricing review consultation closed on 25 January and a policy statement is due from the FCA in Q2 2021, i.e. in the coming weeks or months. Implementation of the final package of remedies will shake up ‘price walking’ once and for all, with tangible long-term effects on business models across all distribution channels.

Alistair Kinley, Director of Policy & Government Affairs

NI discount rate: further tension between Minister and Justice Committee over proposed legislation

At yesterday’s meeting of the Justice Committee of the NI Assembly it was reported that the Minister had obtained the agreement of the NI Executive to introduce the Damages (Return on Investment) Bill on 1 March. If passed at its second stage a week later it would then transfer to the Committee for scrutiny. The Minister proposed a ‘condensed’ Committee Stage of 21 days so that the legislation could be passed by the summer recess, which would enable a new rate to be set some time in the autumn. Her suggestion got fairly short shrift, meaning her timetable might be at some risk.

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