Essential workers will be allowed to commute without paying additional premiums

Motor insurance margins are likely to be significantly higher for Aviva as a result of coronavirus quarantines, according to new research from financial firm Jefferies.

Its Return or Retain report looked at the various impacts of coronavirus on different business areas at Aviva; for motor insurance, Jefferies said that with a large proportion of the European population mainly confined to their homes, the risk of road traffic accidents has dropped. 

Meanwhile the industry has recently announced that essential workers compelled to drive to work, as opposed to using public transport, will be allowed to commute without paying additional premiums – this cost is trivial compared to the potential underwriting benefits of driving less overall.

In other lines of business, travel cancellation insurance saw a minor impact. The ABI estimated that the industry cost for travel claims will be £275m - Jefferies implies that Aviva has an 11% share. 

Business interruption (BI) claims in the UK written by Aviva are an extension to property contracts, therefore they depend on damage to the underwritten property. As such, only a relatively small proportion of polices will result in a valid claim

Aviva also writes non-property related business interruption through three brokers, with a total book estimated at £100m of premium. This is forecast to cost Aviva £20m, presuming there was a rise of 20 percentage points in the travel insurance combined ratio and a 0.2 percentage points increase for the non-life combined ratio.

Read more…Aviva to invest in digitalising broker channels 

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Colm holmes