Why have insurers only been reserving (setting aside money) for a rate of between 0 and 1%?

In September 2017, The Ministry of Justice announced measures to change the way compensation payments were calculated, and the Lord Chancellor said: “While it is difficult to provide an estimate, based on currently available information if the new system were to be applied today the rate might be in the region of 0% to 1%.” The MoJ could have updated this guidance to the market at any point in the last two years but didn’t do so, meaning insurers now have to make up the difference between what the Government previously advised and what it has ended up doing.