Car Insurers Need to Recognise Lower Risks During Lockdowns

James Blackham, CEO of UK’s only pay-by-mile car insurance provider By Miles, renews refunds call as insurers’ profits rise

“At the start of the first national lockdown, we predicted that insurers would enjoy increased profits as UK drivers obeyed the Government’s request and used their vehicles less – reducing the chances of an accident. According to the Association of British Insurers, claims nearly halved in the first lockdown between April and June 2020 (a reduction of 48%). Now, with the latest tiered lockdown measures put in place over the last few months, and the full lockdown requirement introduced this year, insurers stand to profit even more (and some sources have estimated the profits could already be as high as £4.4 billion).

“Since the new lockdown measures came into force on the 5th January, we’ve already seen daily mileage decrease, with driving on our policies halved year-on-year (daily mileage was 52% down compared with the first working week of January 2020). Millions of UK drivers have already overpaid for car insurance policies they’re not using, with the young and the eldery being hit particularly hard. The industry must take measures to make sure these people are getting a fair deal.

“During the first lockdown, Admiral set a precedent, both for themselves and other insurers, by offering automatic refunds of £25 to each customer based on reducing driving levels. It doesn’t make sense that a rebate was offered once, but not for the subsequent lockdowns in late 2020 or considered for the current lockdown. It shouldn’t be a lottery. We believe it’s only fair that insurers consider refunding drivers who are following the rules of the current lockdown to help stop the spread of the Coronavirus.

“We project that the actual refund for the three months of strict lockdown in 2020 should have been £65*. This isn’t even taking the later regional lockdowns into account, or the reduction in driving for much longer over the course of the year due to the rise in home working and reduced commuting. Our own research suggests the UK has seen a fall of 550 million miles per week in driving levels, since the first lockdown in 2020.  

We’re urging all insurers to be proactive and treat customers fairly with refunds. We know people driving less means fewer accidents and we know that insurers are enjoying increased profits from the savings. Those savings should absolutely be passed on to the public to prevent drivers from overpaying for insurance, and to support motorists at a financially difficult time.  

“The Coronavirus pandemic has also highlighted the benefit of flexible policies which allow for the strange times we’re living through. For example, as we offer a flexible pay-by-mile policy, the total amount our members paid for insurance over the course of 2020 fell 25%, directly in line with the reduction in their mileage.”

*Based on insurance costs from the Confused Price Index

About alastair walker 5381 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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