The international insurance comparison platform hello-safe.co.uk estimates that a £ 55 million amount of savings on payouts was realized by the UK car insurance companies in Wales during the Covid-19 lockdown. With the UK locked down from the 23rd of March, most Welshmen 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. However, as shown by the following graphics, with a 63% drop, Wales has been the region in the United Kingdom with the second lowest decrease in car-related claims (Scotland having a 51% car claims decrease rate).
Overall, insurance companies in Wales could have actually saved up to £55.3 millions thanks to the change in driving habits caused by lockdown measures. The Welsh metropolitan area accounting for the highest savings is Cardiff, with a £20.6 million reduction in payouts by the insurers. Swansea ranks number 2, with almost £13.6 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 Wales was locked down, the big insurance companies decided to reduce the premiums for their customers. That is why it has been observed in the country an average £46 annual price reduction on car premiums per customer. Indeed, the average annual premium was £575 as for March 2020, and has gone down to £528.8 at the beginning of June – which represents an 8% decrease in prices for the Welsh 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 £8.5 millions refunds sum for Welsh clients. 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, said : “It is interesting to observe that Wales is one of the regions where car claims have plummeted less in the UK during the lockdown. Nonetheless, we estimate that car insurers have saved £55.3 millions during this period. Now that the lockdown is over, 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. While some insurance companies have already made refunds, it has been observed a £46.3 average decrease in car premiums in Wales between March and June, which proves that the competition is hard between the major motor insurers”.
To consult the complete study : https://hello-safe.co.uk/media/car-insurers-savings-wales