Insurance Premium Fall Fails to Match Claims Plunge

Motor insurance companies reduced premiums by just 1% in 2020, despite a 19% drop in the number of settled claims.

As the UK went through numerous national lockdowns – specifically restricting travel in and out of areas, and indeed preventing people from leaving their home for anything other than essential reasons – so the number of journeys made reduced massively.

According to a study by Tom Tom, there was an average year-on-year drop of 24% in congestion levels on UK roads when comparing 2019 with Covid-affected 2020.

Statistics released by the Association of British Insurers showed the average price paid by drivers for new comprehensive car insurance fell by a single percent, despite loud protestations from providers that a major reason for costly premiums was due to personal injury claims.

Although there was an increase in average payouts for personal injury, the total amount paid out collectively by insurers still fell by 6%.

An ABI representative has suggested there is no guarantee that premium costs will come down regardless of upcoming, wide-reaching whiplash reforms, which will diminish the costs associated with the personal injury claim process, despite insurance industry claims that motorists will see a £35 reduction in premiums.

Laura Hughes, the ABI general insurance manager, told the Law Gazette; “As we edge back to some form of normality, cost pressures remain, such as increasing vehicle repair costs, reflecting ever more complex vehicle technology.”

It remains to be seen whether those savings post reforms will be passed on to the general public.

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