Car Insurers Under Fire As Claims Plummet During Lockdown

Car Insurers Under Fire As Claims Plummet During Lockdown

Car Insurers Under Fire As Claims Plummet During Lockdown

Car insurers are under fire as new data has revealed that there’s been a 48% drop in the number of claims made during lockdown…

Claims In Free-fall 

New data from the Association of British Insurers (ABI) has shown that motor insurance claims dropped by 48% in the second quarter. As a consequence, car insurance companies have saved around £1 billion. For perspective, there were 324,000 new claims recorded between April and June 2020; down from 678,000 the previous year. Critics have been quick to suggest that, despite these savings, little has been passed on to motorists.

James Blackham, chief executive of pay-per-mile insurance firm By Miles, has called on car insurers to share their savings. He said, “no cars on the roads over lockdown meant reduced risk and far fewer payouts. While we applaud the few who offered small refunds, no insurer is doing, or has done enough to pass on the savings gained in this period”.

Dan Hutson, head of motor insurance, at comparison site Comparethemarket, has pointed out how many families are under financial pressure. For instance, some 17% of households are worried about being able to pay their bills over the coming months. He said, “it is essential that insurers continue to pass on any savings that they receive onto their customers; many of which are struggling financially from the impact of the pandemic”.

What’s Being Done?

So far, a number of car insurance companies have offered their customers token refunds. Admiral, for instance, automatically gave its customers a £25 refund. This, it claims, was available to around 4.4 million of its customers. LV offered a similar gesture. However, dozens of other companies have offered nothing at all – despite having made enormous savings during the lockdown.

Speaking on behalf of ABI, Laura Hughes insisted that the industry was passing its savings on to customers. She said, “insurers have been passing on cost savings to their customers. However, cost pressures remain, such as rising vehicle repair costs, reflecting ever more complex vehicle technology and increased vehicle theft. With personal injury costs also continuing to rise, it is important that the whiplash reforms scheduled to be implemented in April 2021 are not delayed further”.

The consumer website Which? says all of the car insurance providers it contacted in the UK said they were offering refunds. However, most required customers to contact them; sometimes having to personally change details of their coverage. A cynic might suggest that some providers are deliberately concealing (or at least not advertising) the offers as to reduce take-up. Regardless, it’s worth drivers contacting their insurance providers to determine if they’re entitled to a refund.

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