Comparethemarket sees ‘substantial fall’ in car insurance claims
Car insurance claims fell by 26% year-on-year in 2020, as lockdowns and social distancing restrictions forced a reduction in the number of journeys being taken.
This is according to statistics from online comparison site comparethemarket, which revealed that April 2020, the first full month of the first lockdown, saw the steepest drop. Claims reported for incidents occurring in April 2020 fell 63% compared with the month before and decreased by 69% year-on-year.
Claims over the winter months, which historically see a spike due to increased Christmas traffic and tricky weather and road conditions, were also down. Claims reported as occurring during the second lockdown, in November 2020, dropped 30% compared to the same month in 2019. In December, claims also fell 28% year-on-year.
The decline in claims reported is likely to continue this year as motorists are set to make fewer journeys than they would outside of the pandemic. The latest mileage data from drivers on pay-by-mile policies with By Miles shows the average mileage driven daily fell by 51% in January 2021 during the latest lockdown, compared to January last year.
Enquiry data also revealed the proportion of drivers keeping their vehicle at home during the day, rather than at an office or factory car park, increased to 68% at the end of 2020 – up from 63% at the end of 2019.
The average premium for motorists who drive fewer than 6,000 miles per year dropped to £776 at the end of 2020 from £846 at the end of 2019. However, lower mileage drivers could make a further saving of up to £169 by switching to pay-by-mile insurance. Pay-by-mile policies are designed to be cheaper for lower mileage drivers because these motorists use their cars less often so are much less likely to have an accident and make a claim.
The total amount By Miles members paid for their insurance over the course of 2020 fell 25%, directly in line with the reduction in their mileage. That means each policyholder saved an average of £44 from the price they had been quoted at the start of the year.
Dan Hutson, head of motor at comparethemarket, said: “Last year saw a significant fall in claims, particularly in the months when social distancing restrictions were strictest. This trend is likely to continue in 2021 as restrictions remain in place for a significant part of the year. Even after the pandemic, we anticipate seeing fewer claims as people use their car less for commuting by regularly work from home.
“With falling premiums, insurers seem to be passing on some of the savings from the drop in claims. However, these savings will only be available to drivers who shop around for the best deal when their policy comes up for renewal. For lower mileage drivers, pay-by-mile policies could be the most cost-effective option. These flexible policies may also benefit motorists who are unsure about how often they will use their cars this year as payments will be based on the miles they actually drive.”
