Car insurance companies have raked in almost £1.3 billion in savings as claims fell dramatically between March 23 and May 31, research from insurance analytics firm Hello-safe.co.uk (Safe) has revealed.
Data shows that insurers would have paid up to £1.8 billion in claims under normal circumstances, but instead spent just £569 million with the lockdown in full swing.
During the 77-day period, average claims dropped almost 70% as stay-at-home orders meant people were travelling less, decreasing the probability of accidents.
The research also found that repairs sent by car insurance firms to garages declined by just over four-fifths compared to first quarter numbers.
Insurance companies in Greater London made the highest savings at £204 million. Total claims in the city usually top £249 million but registered a whooping 82% drop to just £44,000 during the lockdown.
Firms in South East England recorded a 74% slide in claims, saving up to £190 million, while North West England insurers saved almost £130 million as claims dropped 64%.
In Northern Ireland, insurance companies generated £37.7 million in saved revenue because of reduced claims, the least in the country.
According to the study, firms saved the most money from customers in the over-86 demographic, which often saw the highest claims. The lockdown was imposed partly to protect the age group as they were most vulnerable to COVID-19 infection.
Safe chief executive Antoine Fruchard said, given the amount of money insurance companies have saved, it is right for these firms to pass on savings to their customers.
“Now that the lockdown is easing in the United Kingdom, consumers may expect a decrease in their car premiums,” he told Express.co.uk. “Indeed, car insurers have already started to take action, with an 8% average decrease in car premiums observed in the country.”
“However, considering that an 80% decline has happened on car-related claims during the lockdown, there is still a big gap on which the car insurance holders would probably like to have answers,” he added.
In May, London-based car insurance firm By Miles predicted that the lockdown would bring more than £1 billion in savings to insurers. It also urged insurance companies to pass over these savings to customers in the form of refunds.
So far, only a few companies have heeded the call.
Admiral was the first to announce a £180million scheme, which aims to pay back £25 to each of its car and van insurance customers.
Liverpool Victoria (LV) followed with a £50 refund but this will depend on clients’ financial security rather than a standard payment to all customers.