…is the estimated amount of savings on payouts realized by the UK car insurance companies in the West Midlands 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
West Midlands big numbers
76% 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 76% drop in car-related claims, the West Midlands are the second region in the UK where those claims have decreased the most, just behind the Greater London area (82%).
Overall, insurance companies in the West Midlands could have actually saved up to £125.4 millions thanks to the change in driving habits caused by lockdown measures.
- The West Midlands metropolitan area accounting for the highest savings is Birmingham, with a £53.5 million reduction in payouts by the insurers. The city of Coventry ranks number 2, with almost £14.5 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 the West Midlands were 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 £57 annual price reduction on car premiums per customer. Indeed, the average annual premium was £710 as for March 2020, and has gone down to £653 at the beginning of June – which represents an 8% decrease in prices for the West Midlands 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 £16 millions refunds sum for the clients from the West Midlands. 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
“With the second highest claims decrease rate in the UK (76%), the West Midlands have been a region where car insurers made great savings. For example, in a small county like Shropshire, those savings accounts for about £3.5 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 £57 average decrease in car premiums in the West Midlands 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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