UK market will be keenly watching the actions of US motor insurers
A dramatic fall in vehicle use as coronavirus lockdown measures kick in has led to two major US insurers refunding part of their motor customers’ premiums.
Allstate Corp said it would return 15% of premiums in April and May, amounting to $600m (£480m), and American Family announced a $50 (£40.54) premium refund per car.
Allstate chief executive Tom Wilson said there had been ”an unprecedented decline in driving”. He added that the refund was ”fair” because ”less driving means fewer accidents”.
American Family’s payout will cost it $200m, the firm said.
Its chief operating officer Telisa Yancy said American Family Insurance was doing this ”out of responsibility to our customers. They are driving less and experiencing fewer claims.”
”Because of these results, they deserve premium relief.”
Other US insurers are also looking at how a fall in driving could impact premiums.
These US insurer measures will be closely followed here in the UK, with a similar drop in traffic seen.
According to Cabinet Office data, as of 29 March, road use in the UK declined by 73% compared to pre-Covid-19 times.
KPMG insurance director James Hillon recently said the firm had seen claims decline by as much as half in the wake of the lockdown. But this is expected to be tempered by inflation caused by difficulty in sourcing parts and labour.
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