In the United Kingdom, average car insurance premiums could rise by between £75 and £1000 annually, based on a new formula for calculating compensation payments for those who suffer long-term injuries the Ministry of Justice announced. The change is effective March 20th.
CAUSE I'M THE TAXMAN
Accident victims in the UK are paid compensation in a single lump sum. Someone who receives that lump sum can increase that amount by investing it for a cash return. As a result, the UK system allows the initial payout to be discounted. For the past 16 years, the discount was set at 2.5% - making the initial payout that much smaller. This week, the Ministry of Justice reduced the discount rate from 2.5% to minus 0.75%. The reduced rate will result in more money for the victim, but a higher cost for insurers.
The Association of British Insurers (ABI) warns that claims costs will soar, resulting in increased motor and liability premiums for millions of drivers and businesses across the UK. Some 36 million individual and business motor insurance policies could be affected in order to balance the claim costs.
YOU SAY YOU GOT A REAL SOLUTION
In related news, legislation introduced to the UK Parliament, the Vehicle Technology and Aviation Billprescribes liability for accidents involving automated vehicles. The bill addresses circumstances where owners have made "unauthorized alterations" to the vehicle or failed to update its software. Under this measure, Insurers would be primarily responsible for paying out damages stemming from accidents caused by automated vehicles. And back here in the States, Tesla launched its own insurance product to support its automated vehicles. With the pace change as it is today, we'll keep you apprised of developments.
RECORD KEEPING RULE
Yesterday, a House Committee held a hearing on H.J. 83, a new resolution to repeal OSHA's December 2016 final rule clarifying employers' continuing obligation to make and maintain an accurate record of each recordable injury and illness. G.O.P. lawmakers are calling on the Occupational and Safety Health Administration (OSHA) to encourage a proactive approach to worker health and safety policies that balances the needs of employers of all sizes around the country.
SCRUBBING THE RECORD
This OSHA Resolution was filed against the backdrop of H.R. 998, the Searching for and Cutting Regulations that are Unnecessarily Burdensome (SCRUB) Act. The SCRUB Act would establish the Retrospective Regulatory Review Commission to review rules and sets of rules in accordance with specified criteria to determine if a rule or set of rules should be repealed to eliminate or reduce the costs of regulation to the economy. The commission would have nine members appointed by the president and confirmed by the U.S. Senate. We're keeping watch.
Making Our Way Around The Country
The New York Department of Financial Service's landmark cybersecurity regulation goes into effect today. The DFS regulation is extensive. It contains more than 20 sections addressing such subjects as cybersecurity programs and policies, the necessity of appointing a Chief Information Security Officer, encryption, and incident response plans. We'll keep an eye on the implementation and enforcement of the new DFS regulations.
This week, the Arizona House of Representatives unanimously passed H.B. 2417, a bill that enforces and establishes the legality of signatures in a blockchain. For those of us who still proudly use a three-ring binder for a checkbook, here's an excellent primer on blockchain. The Arizona legislature acknowledges the grounds gained through this electronic currency. The bill reads, "Smart contracts may exist in commerce. A contract relating to a transaction may not be deemed illegal or unenforceable solely because the contract contains a smart contract term." The bill now moves to the Arizona State Senate.
Yesterday, lawmakers in the Nebraska Legislature heard testimony on a "non-election of workers' compensation coverage" bill in the Cornhusker State. If enacted, Nebraska Legislative Bill 553, would allow employees to waive the benefits of the states' Workers' Compensation Act. That individual's employer would then be to subject to liability for workplace injuries under a civil action. We're following these developments in the legislature. Remember, Nebraska is the only state with a unicameral legislative chamber.
Lawmakers in Missouri have advanced a tort-reform measure that would fundamentally change the way punitive damages are evaluated and awarded in the "Show Me State." This week, H.B. 890, passed through its house committee and is headed for a full chamber vote. If passed, Missouri would keep its current "bi-furcated" trial system for cases involving punitive damages-one trial on liability and a second on damages. However, this bill would change Missouri law so the punitive damages would be decided by entirely separate juries.
Last night, President Trump made his first address to a joint session of the Congress. In a far ranging address, President Trump laid out his plan to deliver on his campaign agenda before a worldwide audience. We are tracking a number of issues in his agenda that touch issues close to the risk and insurance industry, particularly in the areas of rulemaking, a proposed curtailing of regulation and an anticipated repeal of the Affordable Care Act. It seems that the modern news cycle affords us a front row seat to the new administration's every move in the first months in office. But this week, we went back in Time to remember the First 100 Days.
About The Way
The Way is Gallagher Bassett's weekly governmental briefing on state and federal affairs that affect our industry. We thank you for starting your Wednesday morning with us. Please be sure to follow #GBTheWay for additional news and updates as we make our way throughout the country on the issues affecting our industry. For more information, please connect with GB on LinkedIn, follow us on Twitter, or contact the authors, Greg McKenna or Cari Miller, directly.