Car insurers are facing growing pressure to refund drivers because of the coronavirus crisis amid estimates that firms are set to make an extra £1 billion in profit from a slump in claims.
Admiral this week became the first big British insurance company to refund all customers after the Covid-19 lockdown led to a drop in the number of drivers on the roads. Other groups now face mounting calls to follow suit. Some insurance companies in the US have already refunded premiums.
It emerged this week that a group of 27 cross-party MPs wrote to Rishi Sunak, the chancellor, asking the government to intervene to ensure British motorists receive similar refunds. They suggested the Treasury “take action to ensure that UK insurance companies repay some, or where appropriate all, of premiums to customers”.
James Daley, of the consumer group Fairer Finance, said insurers should repay customers who request a refund and could show they would be driving less. “If a customer rang up their motor insurer and told them they were going to drive double the amount of miles in the year, the insurer would want to put their price up,” he said. “There’s absolutely no reason why it shouldn’t be the same principle in the reverse.”
Admiral are the first insurer to make premium refunds in UK
Insurer Admiral said on Tuesday (21/4) it will return 110 million pounds to car and van policyholders who have heeded government advice to stay home and drive less during Britain’s coronavirus lockdown.
The company said a refund of £25 pounds will be given to all customers for each car and van covered as at April 20, which amounts to a total of 4.4 million vehicles. Admiral said it was giving its customers the refund to reflect that there have been fewer cars on the road since Britain’s lockdown began on March 23 and it expected this to result in fewer claims. The refund will automatically be credited to customers by end-May.
“Admiral’s intention is to return estimated savings to its customers rather than benefit from reduced driving during the lockdown,” the company said in a statement. Separately, the company said it would also set aside an additional 80 million pounds to support National Health Service (NHS) staff and reduce prices for customers facing financial hardship as a result of the pandemic.
The company is also waiving excess fees for NHS or emergency service workers and guaranteeing cover for customers using their vehicle to transport people, deliver medical supplies and equipment, or items to people who are self-isolating. The combined initiatives in total are equivalent to roughly a month’s premium income, or a third of its 2019 profits. (Source: Reuter’s 21/4)