Tower Insurance has announced that it will be refunding customers $7.2 million in premiums, due to the lower cost of car claims during the COVID-19 lockdown period.
In a statement, Tower CEO Richard Harding said that all customers will be refunded part of the car insurance premiums they paid during the level three and four lockdown, specifically from March 24 to May 13. He estimated the refund at around 40% to 45% for most customers.
“We had planned to make refunds by the end of May, but because we also saw lower claims during the level three lockdown, it’s taken us a little longer to calculate, so refunds will now be paid from late June,” Harding said.
The CEO urged insurers to be transparent about how they are dealing with the windfall gain caused by lower claims during the COVID-19 lockdown. This, he said, means being open about whether they will refund customers.
According to Tower, the total cost of the refund is offset by the reduced claims cost, and will result in a neutral financial impact to the company.
The refunds will be calculated based on individual customers’ premiums paid, excluding taxes, fees and levies. These will be prorated for customers who cancelled or joined Tower during the lockdown period.
