Car insurers saved almost £1.3 billion in payouts during the coronavirus (Covid-19) lockdown, according to comparison site Hello-Safe.
Hello-Safe analysed public information on claims from the Association of British Insurers, Which, Willis Tower Watson and Money Wise, as well as anonymous submissions from 18 European insurance partners, for the period of 23 March to 31 May, when the whole of the UK was in government-imposed lockdown to combat the spread of Covid-19.
During normal times, car insurers would have paid out almost £1.9 billion to cover claims.
But with a 69% average fall in claims during the lockdown period, car insurers only paid out a little under £570 million.
As a result of lockdown, Hello-Safe estimates that car insurers saved almost £1.3 billion.
These savings stem from UK drivers having to spend 77 days at home. Safe found a 69.4%
drop in car accidents compared to a ‘normal’ year, a 39.8% decrease in deaths by accident, and an 80.2% fall in required repairs, in comparison with the first three months of 2020.
Car insurers have responded by decreasing premiums. The average fell to £697, which is a drop of £56 since February 2020.
Some have 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 furloughed by their employer.
Antoine Fruchard, chief executive officer at Hello-Safe, said: “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.”