UK car insurance claims fall sharply due to COVID-19 lockdowns

Suban Abdulla
·2-min read
Total payouts fell by 6% to £8.3bn, compared with the previous year. Photo: Getty
Total payouts fell by 6% to £8.3bn, compared with the previous year. Photo: Getty

Car insurance claims in the UK plunged by 19% in 2020 as the coronavirus pandemic and lockdowns forced drivers to stay at home and left roads empty.

There was a sharp drop in the number of claims made, 2.1 million claims were settled last year, but the cost of each claim was higher than in 2019, according to new figures from the Association of British Insurers (ABI).

The ABI put the rise of the average payout for each claim down to higher personal injury and repair costs. The average claim was £4,000 — up from £3,400.

During 2020 the average price paid for private comprehensive motor insurance was £465, this remained at a four-year low.

Total payouts fell by 6% to £8.3bn ($11.6bn), compared with the previous year. However, the average price paid by drivers for new comprehensive car insurance, declined by just 1%.

Last year, the number of claims settled fell by 13% on the previous quarter to 468,000.

The ABI, which represents the UK's insurance and long-term savings industry, said that the number of claims "usually falls in this quarter" as there are fewer vehicles on the roads over the Christmas break.

While some insurers in the UK allowed its customers to claim back money on premiums to take to take into account the lower number of miles driven, very few of motor insurers sent out blanket refunds to all customers, as was customary in the US.

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Laura Hughes, ABI's manager for General Insurance, said: "The pandemic has forced many motorists to change their driving habits. Predictably, lockdowns have led to far fewer vehicles on the roads, reflected in the fall in the number of motor claims. During the pandemic insurers have given additional support to their customers, including options for reduced mileage and help for those struggling to pay their premiums by instalments. It is good to see that throughout an uncertain year, motorists continued to get the best deals from a competitive motor insurance market.

"As we edge back to some form of normality, cost pressures remain, such as increasing vehicle repair costs, reflecting ever more complex vehicle technology. With the average personal injury claim rising last year, the advent of the whiplash claims portal in May should help control whiplash costs, while ensuring that proportionate compensation is paid to genuinely injured claimants."

Britain's car insurance market — the largest in Europe and the fourth largest in the world — plays a major role in the UK economy adding £29.1bn a year and employs more than 310,000 people.

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