On demand insurtechs encourage incumbents to give back premium as it is predicted providers could save £1bn as claims plummet amid lockdown. On demand motor providers have called on incumbents to reduce premiums amid the current lockdown which is in place to diminish the spread of coronavirus.
Insurtechs Cuvva and By Miles both separately urged traditional insurers to consider changes to premium to reflect that policyholders are using their vehicles less while social distancing measures are in force. Cuvva noted that government figures show vehicle use is down two thirds and some providers,
USA According to a CNN report insurers in the USA have already returned $800m of premium to customers as a result of the lockdown. “Insurers need to come to the party and offer customers support and much needed flexibility to help them best manage the headwinds ahead,” said Freddy Macnamara, founder of Cuvva, the car insurance provider.
Changes Pay-by-miles car insurer By Miles is also calling for UK insurers to do the same saying that many drivers are paying for services they are not using during a financially uncertain time. James Blackham, founder and CEO of By Miles, commented: “People in the UK are currently living through an unprecedented moment in history and are having to adapt to the government’s advice to stay at home. Everyone is forced to make changes in this situation – and that should include car insurers. “We’re challenging traditional car insurers to recalculate their rates and make insurance fair under these extraordinary circumstances. As people are driving far fewer miles while in lockdown, the number of insurance claims due to accidents also decreases – and those savings should be passed on to the public.”
Decrease Data from Cuvva suggested that consumers are mainly using their vehicles to go grocery shopping or to help friends, family and those in their network that are elderly or unwell.By Miles’ customer index data [accurate as of 5 April 2020] showed a 69% decrease in daily average miles driven nationwide since lockdown, or a 72% decrease daily miles driven within London due to the government’s advice to only make essential journeys Macnamara added: “With 50% fewer claims, car insurers could be making over £1bn in profits from the lockdown over three months. Consumers should open dialogue with their insurers if they’re struggling to meet monthly car insurance payments or feel their annual policy should be adjusted. “Arrangements need to be made in the interim, especially for families that are struggling financially. Insurers can pause payments, while consumers get back on their feet. Given annual policies were based on assumptions that are no longer correct, surely it’s only fair to re-adjust policies to factor in the current climate, as cars sit at home?”
Benefit Blackham continued: “At the moment, this situation is only benefitting car insurers who stand to make in excess of £1bn from this reduction in claims and it’s important that drivers know this.
“Members of the Association of British Insurers (ABI) have pledged support for people affected by the Covid-19 pandemic, but for as long as traditional insurers continue to charge a fixed amount regardless of how many miles someone drives – motorists will continue to be overcharged.
Policyholders must be able to request a premium reduction or extra months added onto their policy – anything else isn’t treating customers fairly
Trade response An ABI spokesperson pointed out that the initiative in the USA was action taken by specific insurers and not government mandated.
He commented: “Here, the ABI’s motor commitments show that UK motor insurers are already doing the right thing and are going above and beyond their contractual duties by extending cover at no extra cost to all NHS volunteers and key workers who need to drive to different places.
“Any premium adjustments or refunds will be a matter for individual insurers. It needs to be remembered that even if not used (unless subject to SORN) the vehicle still needs to be insured, and that, even in lockdown, most drivers are still likely to have use their vehicles for reasons allowed under current govt restrictions.”
This article is care of www.insuranceage.co.uk