ABI motor insurance figures reveal drop in settled claims

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Motor insurers settled fewer claims in 2020 as a result of the impact of lockdown on road usage, according to the Association of British Insurers (ABI).

Total payouts also fell, but at a much lower rate. During 2020, the average personal injury payout rose 13% on the previous year to £12,100

During the same period, the average price paid for private comprehensive motor insurance remained at a four-year low.

In Q4 2020, the number of claims settled fell 13% on the previous quarter to 468,000. The number of claims usually falls in this quarter with fewer vehicles on the roads over the Christmas break, according to the ABI.

Overall, in 2020, the number of claims settled, at 2.1 million, fell 19%. Total payouts, at £8.3 billion, reduced by 6% on the previous year.

The ABI says these figures reflect the impact of national lockdowns on road usage. Current estimates show a 14% fall in road traffic in the year to June 2020.

The overall average value of a claim paid was £4,000, up from £3,400 in 2019. This 17% rise over 2019 reflected rises in average personal injury and vehicle repair claims.

During 2020, the average price paid for private comprehensive motor insurance was £465, remaining at a four-year low.

Laura Hughes, manager of general insurance at the ABI, said: “The pandemic has forced many motorists to change their driving habits. Predictably, lockdowns have led to far fewer vehicles on the roads, reflected in the fall in the number of motor claims.”

“During the pandemic insurers have given additional support to their customers, including options for reduced mileage and help for those struggling to pay their premiums by instalments. It is good to see that throughout an uncertain year, motorists continued to get the best deals from a competitive motor insurance market.”

Hughes added: “As we edge back to some form of normality, cost pressures remain, such as increasing vehicle repair costs, reflecting ever more complex vehicle technology. With the average personal injury claim rising last year, the advent of the whiplash claims portal in May should help control whiplash costs, while ensuring that proportionate compensation is paid to genuinely injured claimants.”

Commenting on the figures, Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations (ACSO), said: “The ABI’s commentary on the impact of the drop in motor claims on car insurance premiums is troubling.”

“The ABI’s own figures show that settled motor claims fell by nearly 20 per cent last year, handing insurers billions in savings. Yet average premiums were down a miserly 1 per cent.”

“The admission that ‘cost pressures remain’ implies that policyholders may not see the further £35 in savings that ministers promised would be the dividend from the whiplash reforms for honest motorists.”

Maxwell Scott continued: “In changing the law, the government has removed important civil justice rights from consumers. Insurers must fulfil their end of the bargain by passing any savings on from reduced claims volumes. If Admiral was able to hand back £110m to its customers during the pandemic, it begs the question: why did no other insurer follow suit?”

“The ABI is happy to explain why premiums go up, and has spent the last several years justifying the whiplash reforms by promising they will help cut premiums.”

“Now the reforms are on the statute books, and claims have fallen sharply for the past three years, we need a straight answer. This time, will Britain’s hard-pressed motorists receive the savings they are due?”

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Mark Dugdale is the editor of Claims Media. Mark welcomes articles, letters or feedback from readers and can be reached via mark.dugdale@barkerbrooks.co.uk