Insurers in the US are refunding part of their customers’ car insurance premiums as coronavirus lockdown measures see a decline in vehicle use and therefore claims, but will the UK market follow suit? Four industry experts share their thoughts
Andrew Brown Allan, marketing director at Carrot
”The insurance sector is getting a good kicking from the media, but I think it’s important to avoid knee jerk reactions in the PR war and instead focus on resolving the issues.
”The public, whether personal or commercial, want a much clearer link between what they pay for and what they get. Much of the reputational damage to the insurance industry stems from a lack of clarity. Maybe insurers are technically right that businesses and individuals are not ‘on cover’ for Covid-19, but it begs the reasonable question: ‘What do I pay insurance for if not for this?’
”In motor, insurance that truly reflects an individual’s needs, such as pay-as-you go, or miles-based insurance, means the premium issue wouldn’t have occurred in the first place because customers would be able to understand and manage the link between use and cost. And, because these products are driven by tech, they’re super-flexible.
”For example, Carrot was able to offer all its customers extra rewards if they didn’t drive their cars during the coronavirus crisis, and our in-car technology gave us the data to prove it.
”Bunging twenty quid to the public won’t help our industry. In the medium-term, insurers can repair their reputation with customers by consigning old-style inflexible insurance to the past and instead offer 2020s-style products that are designed to fit their customers’ lives.”
Mike Brockman, chief executive at ThingCo
“It is not surprising that many policyholders feel aggrieved that their cars are sitting stationary during this stressful period whilst insurers are still collecting their premiums. This is a difficult situation for the market, but it would be wise to look at the longer term impact on consumer attitudes and behaviour.
“I believe consumers will remember how insurers treated them long after the lockdown has ended and that they will look to other ways of buying protection; certainly miles-based telematics provides them with a solution. With this technology, they can also save money by driving safely – it puts customers more in control of their costs, which will be crucial for many households.
“However, I think the main effect of the lockdown is that it has highlighted a flaw in conventional insurance products. This will prompt consumers of all ages and demographics to think in a different way about what they are buying and encourage them to be more responsive to new products coming onto the market, like usage based insurance”.
Tim Kelly, managing director and owner at MotorClaimGuru
”The FCA is proud to promote the ‘ethics’ that it wishes financial services firms to have under the Financial Services and Markets Act 2000. A section all financial services companies should be reminding themselves of in the current climate is ’principles of business’.
”The very first principle is ’acting with integrity’. The fifth is ’observing proper market conduct’ and the sixth is ’a firm must pay due regard to the interests of its customers and treat them fairly’ - all of which are sadly lacking in our insurance industry and specifically in how motorists are being treated.
”When a policyholder takes a policy out, the insurer will make the consumer aware of these obligations under the 2012 Consumer Insurance and Disclosure Act, or if it is a business taking out a policy, the 2015 Insurance Act. The latter in particular moved away from ‘good faith’ to the duty of disclosure. The policyholder is always reminded of their duty; if not adhered to, they may be penalised.
”Insurers in the event of a claim may argue ’proportionality’ as a result of a ’non disclosure’ and reduce a settlement as a result.
”I think it is only fair and reasonable that the same approach should be afforded in return to policyholders and ’proportionality’ is applied to the premium paid when the inherent risk on which the premium is applied has massively reduced.”
Matthew Maxwell Scott, executive director at the Association on Consumer Support Organisations
”While a small minority of insurers are living up to the industry’s reputation for avoiding paying out on claims, most are trying to do the right thing in exceptionally difficult circumstances. To put it another way, don’t be distracted by the snowflake celeb snivelling in their pyjamas when thousands of normal people are donating to Captain Tom Moore’s marvellous mission to walk 2.5km for the NHS.
”Asking insurers to return premium seems premature and will undermine future criticisms of them not settling genuine claims when times get hard. We all have to accept the rough with the smooth, given this situation is nobody’s fault and many people still need their vehicles for essential work or in case of emergency.
”That said, with accident rates plummeting, reserving for personal injury should be falling too. So let’s look forward to more competitive pricing when it comes to renewals. That seems a good way to reward customer loyalty, still a rather unfamiliar concept in UK motor insurance.
”And, even more importantly, let’s see insurers working positively with the claimant sector during the crisis and beyond to make sure that those who are hurt on our roads get treated properly and promptly.”
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