ABI reveals impact of COVID on car insurance claims and total payouts

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ABI reveals impact of COVID on car insurance claims and total payouts

Motor & Fleet

By Mia Wallace

While the number of motor insurance claims settled by insurers in 2020 fell by 19%, the average personal injury claim rose by 13%, according to figures published today by the Association of British Insurers (ABI). The association noted that the fall in motor insurance claims reflects figures from the Government showing a 14% fall in road traffic in the year to June 2020.

For whole year 2020, the number of claims settled fell by 19% to 2.1 million. Meanwhile, total payouts were also down but less significantly, decreasing 6% to £8.3 billion which highlights the impact of average personal injury payouts rising to £12,100, an increase of 13% from 2019. During 2020, the average price of private comprehensive motor insurance was £465, remaining at a four-year low.

Looking at Q4 2020, the ABI highlighted that the number of claims settled fell by 13% on the previous quarter to 468,000, in keeping with the usual reduction of claims in Q4 due to the Christmas break.

Discussing the findings, Laura Hughes, ABI’s manager, general insurance, noted that the pandemic has forced many motorists to change their driving habits and the impact of lockdowns has been shown in the fall in the number of motor claims. Insurers have given additional support to their customers during the pandemic, she said, including options such as reduced mileage and flexible premium payment.

“It is good to see that throughout an uncertain year, motorists continued to get the best deals from a competitive motor insurance market,” she said. “As we edge back to some form of normality, cost pressures remain, such as increasing vehicle repair costs, reflecting ever more complex vehicle technology. With the average personal injury claim rising last year, the advent of the whiplash claims portal in May should help control whiplash costs, while ensuring that proportionate compensation is paid to genuinely injured claimants.”

Commenting on the ABI’s findings, James Blackham, CEO and co-founder of By Miles, said that despite the significant reduction in claims due to changed driving habits, not all insurers have been swift enough at providing their customers with refunds. With total payouts falling by 6%, he stated that the data suggests insurers have saved almost £530 million, while only one in five drivers have received a refund. 

“Many areas of society and business are taking the opportunity to build back better post-COVID, and car insurance should be no different. If you’re driving less, you’re far less likely to make a claim, so it’s only fair that you should be paying less,” he said. “The industry needs to welcome a more flexible model, with drivers paying for their services only when they use them. Current systems are too rigid and have left drivers out of pocket.” 

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