Why Lockdown should lead to lower premiums

06.05.2020

Like much of Europe, to prevent the spread of Covid-19, the UK has been locked down for six weeks. With people now only leaving the house for the weekly shop, car usage has dropped by 75%, with mid-April having traffic levels comparable to 1955. Unsurprisingly, car insurance companies have benefitted from this, with one insurer reporting a 70% reduction in claims for April, with few accidents, insurance companies are looking at significant profits while the lockdown period continues. Should this mean lower premiums for drivers? We believe that it should and encourage our users to shop around.

For the few drivers that are still on the roads, the morning commute looks very different. The majority of the UK workforce are either working from home or furloughed, meaning that their job cannot be done effectively in the current environment, so their employer has granted them leave, with the government covering 80% of their wages. According to The Institute for Fiscal Studies (IFS), only 20% of the UK workforce are considered key workers, which means that they are the only ones that should be commuting.

When you consider that the majority of UK key workers (healthcare staff, supermarket workers, delivery drivers) tend to work outside the 9–5, the picture is even more evident. There aren’t enough cars on the UK roads to justify the current high cost of premiums.

Insurance companies base their premiums on a risk factor, which takes into consideration a variety of factors. Age, sex, and past driving record, but two of the most significant factors are. What the car is used for. (IE commuting, shopping, visiting friends & family.) and your predicted yearly mileage. So if six weeks ago a driver was using their car every day for a 20 km commute to work and now only uses it to drive to the supermarket once a week, it’s a fair assumption to say that their risk factor is much lower than it was when they were quoted for their premium.

So should I expect a refund then?

Currently, car insurers are not obligated to give refunds. However, some have already opted to; Hastings has passed on price reductions and extra benefits, including breakdown cover for NHS and care workers. While Admiral has confirmed a £25.00 refund will be automatically credited to all of their customers by the end of May. The average cost of an Admiral monthly premium. So if you’re insured with either Admiral or Hastings, check the links to see how you can benefit.

I’ve been furloughed. What should I do?

Even if you’re with one of the providers that aren’t automatically offering refunds to customers, it doesn’t mean you can’t argue for one. If you haven’t been commuting for six weeks, and like most people are only using the car for the shops, get in touch with your provider. Point out that some companies have already lowered their premiums and argue that they should do it too. It’ll be easier to argue now than when the lockdown ends

I’m a key worker, and I’m driving just as much.

Even if you’re still driving into work every day, there’s no reason you can’t argue for lower premiums, you’re still commuting, but it’s 75% quieter, so your chances of colliding with another car are much lower. Also, as a key-worker, check to see if you’re eligible for any benefits. Some insurers, again including Admiral and Hasting, are offering extra help to key workers during the lockdown, including price reductions and free breakdown cover.

What about when the lockdown ends?

Like much of Europe, the UK is discussing easing some lockdown restrictions, but nobody expects that life will return immediately to normal. To avoid a second wave of infections, chances are, people will be working from home, at least occasionally, for the foreseeable future. So bear that in mind when you’re looking to reduce your policy; for most people, your risk profile will be significantly reduced.

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