Car insurance premiums could plummet in the UK thanks to a government U-turn on the Ogden Rate calculation earlier this year.
In March 2017, Justice Secretary Liz Truss changed the Ogden Rate, which is used to calculate compensation payments for those with life-changing injuries, from 2.5 per cent to -0.75 per cent.
This change negatively impacted both insurers and insured drivers.
Following the change, record payments were dished out and motorists’ policies increased on average by £75.
It was expected that policy price increases would continue to climb up to £500 for young people in 2018.
However, this could be about to change following confirmation from the Ministry of Justice that the rules will be revised again.
The revisions could see drivers’ policy prices slashed to make way for a “fairer” system.
It is expected this rate will be revised to one per cent.
Head of RAC Insurance, Martin Dyson said to The Sun: “This is good news for motorists as the price of car insurance has risen by around 10 per cent in the last year with the Government’s change to the discount rate being a significant factor.
“This led to insurers having to make larger compensation payments which in turn the industry then had to fund in the only way it could by increasing premiums.
“The way the rate is to be set going forwards should be fair to those receiving compensation payments while also helping to ensure car insurance premiums are as affordable as possible.”
Huw Evans, director general of the Association of British Insurers, added: “This is a welcome reform proposal to deliver a personal injury discount rate that is fairer for claimants, customers and taxpayers alike.
“If implemented it will help relieve some of the cost pressures on motor and liability insurance in a way that can only benefit customers.”
These proposals have not been confirmed yet but could be introduced in 2018.
David Lidington, lord chancellor and justice secretary, said: “We want to introduce a new framework based on how claimants actually invest, as well as making sure the rate is reviewed fairly and regularly.”