…is the estimated amount of savings on payouts realized by the UK car insurance companies in North West England during Covid-19 lockdown, as drivers stayed home between 23 March and 31 May.
Claims drop during lockdown
Cost of claims in a “normal” 77-days period
Car insurers’ savings during lockdown
North West England big numbers
64% drop in car-related claims
With the UK locked down from the 23rd of March, most English citizens were forced to stay at home. As a consequence, daily commutes came to a halt, meaning fewer people on the roads, and a lower probability of accidents occurring. With a 64% drop in car-related claims, North West England is one of the regions of the UK where those claims have decreased the less, together with Scotland (51% decrease), Wales (63%) and Yorkshire and the Humber (63%).
Overall, insurance companies in North West England could have actually saved up to £130.6
millions thanks to the change in driving habits caused by lockdown measures.
- The North West England metropolitan area accounting for the highest savings is Manchester, with a £50.8 million reduction in payouts by the insurers. The city of Liverpool ranks number 2, with £16.2 million saved by the insurers.
- Usually, motor insurers put aside ⅔ of premiums to cover road accidents. However, the reduction in the number of accidents has cut that proportion significantly. One big car insurance player expects it will save as much as half the funds it expected to have to pay out for personal injury claims in 2020.
Will customers receive their money back?
With the savings made while North West England was locked down, the big insurance companies decided to reduce the premiums for their customers. That is why it has been observed in the region an average £54.8 annual price reduction on car premiums per customer. Indeed, the average annual premium was £682 as for March 2020, and has gone down to £627.2 at the beginning of June – which represents an 8% decrease in prices for the North West England drivers.
Admiral was the first car insurance company in the UK to announce a £180 million spending including a fixed £25 refund to each of its car and van insurance customers – which could represent a £19.8 millions refunds sum for the clients from North West England. Others are planning on refunding only customers that were affected by the pandemic, such as the unemployed or people placed on a government furlough scheme by their employer.
Antoine Fruchard, insurance expert and CEO at hello-safe.co.uk
“Although North West England is one of the region where car claims have decreased the less, we could observe that the car insurance industry saved there a lot of money during the lockdown. For example, in the only small county of Cumbria, those savings accounts formore than £9 million during the whole period, which is a lot. Now that the lockdown is over, the number of cars on the road could soon be back at pre-Covid levels. It is likely that customers will question why they continued to pay such high insurance premiums while they weren’t able to drive. While some insurance companies have already made refunds, it has been observed a £54.8 average decrease in car premiums in North West England between March and June, which proves that the competition is hard between the major motor insurers”.
We based our study on public information provided by reliable data-providers – such as the ABI, Which, Willis Tower Watson and Money Wise – and 18 European insurance partners who provided us anonymously with claims for the period from the 23rd of March to the 31st May. 545,560 policy holders from all the UK regions have been taken into account. For further information on our editorial guidelines please click here.
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