October 27, 2021

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Only a fifth of motorists got a premium refund from their insurer

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Only one in five drivers received any premium refund from their car insurer as a result of the coronavirus restrictions, new research has revealed.

This is despite half of motorists drastically reducing their mileage because of lockdowns and a rise in people working from home, according to data from Which?.

It found that 49 per cent of car insurance customers saw a major decrease in their annual mileage, but only a fraction told their insurer or saw any premium refund as a result.

The survey also revealed that just 21 per cent of car insurance customers have seen some of their premium repaid.

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Many motorists used their car far less in 2020, staying at home due to the Covid-19 lockdown

Which? surveyed more than 2,300 people with either car, home or private medical insurance about the impact that Covid-19 had on their cover.

The data found that motorists were most likely to feel their policy had lost value.

Some drivers felt they were paying over the odds for their cover, given how little they drove during lockdown. One customer said: ‘I did 40 miles from March to July.’

The survey also revealed how 14 per cent of car and home insurance customers have struggled with their premiums in the pandemic, as did 29 per cent of private medical insurance customers.

While most struggling consumers said they had received some kind of financial support from their car insurer, up to 25 per cent received no support whatsoever – in some cases potentially because the message didn’t reach them that help was available.

Insurers have made payments to at least some of their customers, with some also claiming to be passing savings back in other ways.

In spring 2020, more than 20 major US insurers announced plans to refund what customers had overpaid.

However, Admiral is the only UK insurer that proactively rebated all of its customers – sending each £25.

Which? said it is concerned the Financial Conduct Authority no longer requires insurers to proactively contact potentially vulnerable customers who miss a payment.

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Refund: Admiral was the only car insurer in the UK to give each of its customers back £25

It is calling for insurers to do more to support customers struggling financially as a result of the pandemic by taking every step they can to engage with and help those who need it most.

Harry Rose, editor of Which? Magazine, said: ‘While insurers could not have predicted the unprecedented impact of coronavirus, customers will not appreciate it if they feel firms are benefiting at their expense – or if they are being left without support at a time of need.

‘Our research shows that many insurance customers are struggling with their premiums as a result of the pandemic, but up to a quarter of these people have received no support whatsoever.

‘The FCA rightly proposed guidance for firms to support customers struggling due to coronavirus, but it’s concerning that the regulator is no longer requiring insurers to proactively contact those who miss a payment. 

‘Customers missing payments are likely to be vulnerable, and firms should be doing everything they can to engage with and support those who need it most.’

The Association of British Insurers said its Motor Premium Tracker shows the average cost of comprehensive motor insurance is at a four year low of £460.

It added that data from ABI members shows that during the first national lockdown, the value of the average claim paid rose by 27 per cent, despite fewer claims. 

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The ABI said the average cost of comprehensive motor insurance is at a four year low of £460

An ABI spokesperson said: ‘In the first three quarters of 2020, there has been a 25 per cent fall in motor claims notified compared to the same period in 2019, but underlying cost pressures remain, such as increasing cost of vehicle repair.

‘During lockdown, it is true that many motorists have used their vehicles less. However, drivers are legally obligated to have insurance for when they do drive as well as to protect against the risks of theft and damage.

‘Insurers have, and continue to give extra support to motorists given the exceptional circumstances, including automatically covering those using their vehicle for community volunteering, commuting to work, as well as helping those worried about being able to continue paying their premiums by instalments. 

‘Any premium adjustments or refunds will be a matter for individual insurers.’

However, some insurers believe the industry must take measures to make sure those driving less are getting a fair deal.

James Blackham, chief executive of By Miles, an insurer where customers pay by the mile, added: ‘At the start of the first national lockdown, we predicted that insurers would enjoy increased profits as UK drivers obeyed the Government’s request and used their vehicles less – reducing the chances of an accident.

‘Since the new lockdown measures came into force on 5 January, we’ve already seen daily mileage decrease, with driving on our policies halved year-on-year.

‘We believe it’s only fair that insurers consider refunding drivers who are following the rules of the current lockdown to help stop the spread of the coronavirus. 

‘We’re urging all insurers to be proactive and treat customers fairly with refunds. We know people driving less means fewer accidents and we know that insurers are enjoying increased profits from the savings. 

‘Those savings should absolutely be passed on to the public to prevent drivers from overpaying for insurance, and to support motorists at a financially difficult time.’

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