According to Irish media outlets, some five insurers in Ireland intend to refund car drivers after Corona. AXA has stated it will pay out 33 euros each to their car insurance policyholders. The move will cost AXA about 20 million euros and follows the Admiral refund in the UK, which will see car – and van – owners receive a flat £25 per policy.
Zurich, FBD, RSA and Allianz are also going to automatically refund part of the policy premium, with the amounts varying. As car insurance in Ireland can cost over 1,400 euros for a modest sporty saloon, any cashback will be welcome.
Ben Carey-Evans, Insurance Analyst at GlobalData, comments:
“AXA Ireland has followed Admiral in offering motor insurance customers money back on their premiums, in the form of a flat fee for all. This is undoubtedly a positive step and rare good PR for insurers at the moment.
“However, if this trend continues, there is a risk younger drivers may start to feel hard-done-by. They are considered to be riskier by insurers and consequently pay higher premiums. Their extra risk is mitigated by reduced driving, but they will receive a lower percentage of their premiums back, compared to older generations.
“GlobalData’s 2019 UK Insurance Consumer Survey found that over one in five (21.6%) motor insurance policyholders switched their accounts at their last renewal. A further 41.3% researched prices, before renewing with the same insurer, meaning they were open to switching. Only 25.4% renewed automatically, which shows that these customers are always somewhat at risk.
“Currently, Admiral and AXA Ireland standout as positive examples. However, if and when other insurers follow suit as the lockdown continues, it may be best to consider offering refunds as a percentage of premiums, so everyone is getting a fair deal. A flat fee of around £30 may not be enough to encourage young drivers with premiums of in excess of £1,000 per year to renew their policies.”
Updated 28.04.2020; Motability announces £50 refunds
UK Drivers who use the Motability scheme will get a £50 refund in May. Many disabled drivers have complained on social media that they are locked down and still paying monthly lease agreement fees on disability cars. Those coming to the end of their Motability lease can extend it for six months with insurance added automatically.
There is bound to be pressure now on all major car insurers in the UK to offer some kind of refund on car insurance for April, as the majority of UK drivers have undertaken very few journeys, except for key workers. Although UK insurers have automatically extended their Business cover for those volunteering to deliver supplies during the Corona outbreak, and others have donated millions to various NHS related, and local charities, all helping vulnerable people, many policyholders feel they’re entitled to a refund.
Direct Line told Forbes earlier in April that as they don’t charge for MTAs (Mid Term Adjustments) drivers could adjust their annual mileage figure, and that would process a refund automatically. Those using telematics devices, apps, or black boxes should also see a reduction in their monthly premium, as the price is underpinned by the mileage – and the time of day in some cases.
When Admiral announced their refund on Twitter last week, one driver asked LV= if they would be doing the same, the repsonse from LV= Twitter feed was;
“We think it’s vital to focus on those struggling the most, which is why we’re concentrating our efforts on them and finding ways to reduce premiums by temporarily changing cover our customers have, not charging for admin or cancellations and waiving excesses on claims.”
The AA reminded Twitter users that it was a broker, not an insurer. Meanwhile Direct Line stated that they were doing their best to “find ways to support our customers.” As part of the Admiral thread, consumers asked big name insurer Aviva for cashback, and the company responded to the refund request;
“Customers who are driving less are able to review their annual mileage and make changes to this if they feel it will be significantly reduced. Customers who pay monthly may have their outstanding premium reduced, while annual customers. may receive a refund.”
Aviva CEO Colm Holmes issued a press statement this morning, underlining the company’s support for customers during the COVID-19 outbreak;
“In these difficult times, we know that some of our customers are experiencing financial hardship as a result of being unable to work or being furloughed due to the Covid-19 crisis, and we are taking action to help them. We are providing support to those customers with home and motor policies, by deferring their monthly payments for up to three months. We are asking customers who are struggling to make their monthly payments to get in touch online via our website.
“Helping with deferred payments is one of the ways we think insurers can support customers during these difficult times. We are also offering customers who are NHS workers additional support such as free breakdown cover, enhanced home insurance for personal belongings and free courtesy cars. Aviva has been supporting its customers and communities for over 320 years and today that support has never been more important.”
IE mag will update this story as it develops.
The thing is, now that consumers are seeing Irish drivers – and US drivers – all receive partial refunds on their car insurance, there will be an increasing clamour for cashback. At present, Martin Lewis and Which? seem preoccupied with travel insurance and holidays being cancelled, airlines going bust etc. But if the public mood and mainstream media focus shifts and then high profile consumer champions get on board, IE predicts some type of gesture will become necessary to avoid brand reputation damage.
Admiral have been the first. Don’t let your insurance brand be the last.