Car Insurance: 1.3 Billion Pounds Saved by Providers During Covid-19 Lockdown

£1,289,596,480

…is the estimated amount of savings on payouts realized by the UK car insurance companies during Covid-19 lockdown, as drivers stayed home between 23rd of March and 31st of May.

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Claims drop during lockdown

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Cost of claims in a “normal” 77-days period

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Car insurers’ savings during lockdown

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Overall numbers as for the United Kingdom
Total claims amount that should have paid car insurers in a “normal year” £1,859,003,616
Average claims number decline across the UK during the lockdown69%
Actual amount paid by car insurers during the lockdown£569,407,136
Estimated savings made by car insurers during the lockdown£1,289,596,480
Car insurers’ savings in the UK during lockdown

69,4% drop in car accidents

With the UK locked down from the 23rd of March, most Brits were forced to stay at home for a whole 77 days. As a consequence, daily commutes came to a halt, meaning fewer people on the roads, and a lower probability of accidents occurring. That’s confirmed by the numbers :

69,4%
drop in car accidents
 

…during the lockdown compared to a normal “year”

39,8%
decrease in deaths by
accident

…due to low traffic on the British roads

80,2%
decrease in repairs

…sent by motor insurers to UK garages, in comparison with the first three months of the year

How much did car insurers save during the Covid-19 lockdown ?

Overall, insurance companies could have saved up to £1.289 billion thanks to the change in driving habits caused by the lockdown measures.

  • Greater London accounts for the highest savings, with an 82% drop in the number of car accidents. That corresponds to a £204,4 million reduction in the sums to be paid out by 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.

Highest savings on over 86 years old premiums

screenshot from 2020 08 18 22 59 06

As the graph shows, the average motor accident claim value is highest for people aged over 86. Since people from this age range were the most concerned with Covid-19 lockdown measures, with most of them ‘shielding’, they were far less likely to be seen on the road in April and May. As a consequence, the number of car accidents involving people in this age group drastically dropped, as did the sum spent by insurance companies on such coverage.

Will companies refund their customers ?

The change in driving habits during lockdown also modified the risk assumptions used by insurance companies to calculate insurance premiums. Because of the reduction in traffic, British drivers were less at risk than expected at the beginning of the year and thus represented a lower cost to insurers. As a result, the average premium fell to £697 – that’s an average £56 drop since February 2020.

Other insurers already implemented refund schemes. Admiral was the first to announce a £180 million programme including a fixed £25 refund to each of its car and van insurance customers. It was quickly followed by LV, which decided to refund up to £50. Other insurance companies are planning to refund only customers that were specifically affected by the pandemic, such as those who lost their jobs or were placed on a government furlough scheme by their employer. 

Whoever they’re insured with, people can save money on their car insurance by withdrawing unnecessary cover. In addition, if they’re not driving as much as they used to because they’re teleworking, they can reduce their mileage, which will bring down the premium. 

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Antoine Fruchard, insurance expert and CEO at Hello-Safe.co.uk

With most people stuck at home, their cars have inevitably stayed in the garage. Now that the lockdown is over and people are going out again, the number of cars on the road could soon be back at pre-Covid levels.”However, it is likely that customers will question why they continued to pay such high insurance premiums while they weren’t able to drive. It will be interesting to see if all the insurance companies will make refunds. Competition between them may be increasing in the coming months, and that means customers should see a slight drop in car insurance premiums”.

Our methodology

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 of 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.

About Hello-Safe.co.uk

hello-safe.co.uk is a comparison platform which is shaking up the insurance market – giving you access to the best UK insurance deals in less than 30 seconds. Safe is supported and financed by Blue, an Insuretech Venture Capital firm. Blue already owns two leaders in the French insurance comparison market, Réassurez-moi and Coover. These platforms help more than 10 million people with their insurance every year. We have developed a unique comparison technology that gives access to cover details and quotes without customers having to give their phone number or email address. This engine is the result of four years of hard work.

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