Motor insurers in New Zealand are expected to save around NZ$100 million as the country sees a huge decrease in driving caused by the COVID-19 lockdown.
As a result, Consumer New Zealand has urged insurers to follow the lead of their US-based counterparts, which have reduced motor insurance premiums by between 15% and 25%, Radio New Zealand reported.
The 10 largest insurers in the US, who have a combined market share of around 70%, are rebating around US$7.5 billion (NZ$12 billion) in premiums in the next few weeks.
“Obviously, insurers will be seeing a marked drop in claims because most of us are at home and not driving anywhere near as much as we used to,” Consumer New Zealand head of research Jessica Wilson told RNZ.
“That means insurance companies’ costs have gone down. It also means the risk assumptions they use to calculate the premiums that we pay have changed.”
Meanwhile, Insurance Council chief executive Tim Grafton said that the huge decrease in driving doesn’t mean that all motor risks are gone, as laid-up vehicles can still be damaged and stolen. And, of course, vehicles are still being used by essential service employees, as well as during trips to buy supplies.
According to Wilson, insurers’ premium reductions should extend to home and contents, as there is a lesser risk of burglary during the lockdown. Some risks, on the other hand, are heightened during this period, as more people at home may lead to more broken things and the increased electrical load may increase risk of fire.
Aside from claims coming to a standstill, new business is also taking a hit.
“No-one is buying cars or houses at the moment. So there’s no new business coming in in that respect,” Grafton said.