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Review of rate to calculate compensation for personal injuries to start on March 19

FILE PHOTO: A man enters The Ministry of Justice in London June 19, 2007. REUTERS/James Boardman

(Reuters) - The first review of the rate used to calculate compensation for personal injuries will start on March 19, Britain's Ministry of Justice said on Tuesday, following an outcry from auto insurers over a drop in rates due to a change in rule.

The review, under the Damages Act 1996 as amended by the Civil Liability Act 2018, requires that the Lord Chancellor conduct the review and determine whether the rate should be changed or kept unchanged before Aug. 5.

Motor insurance prices in 2018 were pushed down by changes in the Ogden rate, used to calculate compensation for personal injuries, and the Civil Liability Bill, which includes reforms likely to reduce claims for whiplash injuries.

Vehicle insurers' profits were dented when Britain in 2017 unexpectedly cut https://uk.reuters.com/article/uk-britain-insurance-discount-rate/uk-to-change-personal-injury-payment-rate-in-boost-for-insurers-idUKKCN1BI15H the so-called Ogden discount rate to minus 0.75 percent from 2.5 percent previously.

A lower rate requires insurers to make larger lump sum payments on personal injury claims, as it assumes lower annual investment returns for that amount. The rate is currently linked to the yield on index-linked gilts.

An outcry from insurers led to a government consultation on how the rate is calculated.

The Ministry of Justice said in March last year that it would change the Ogden discount rate to lower costs for insurers and motor premiums for drivers.

Companies such as Admiral, Direct Line and esure and Hastings provide motor insurance in Britain's insurance sector.

(Reporting by Noor Zainab Hussain in Bengaluru; Editing by Anil D'Silva)