ABI records 48% decline in motor claims between 2020’s Q1 and Q2

Trade body the ABI has reported that new motor insurance claims fell by 48% in the second quarter of 2020, reflecting the national lockdown regime that was implemented to mitigate the spread of Covid-19.

Across April, May and June, the ABI recorded 324,000 new motor insurance claims compared to 678,000 claims that were reported within 2020’s first quarter.

The value of claims being settled during Q2 this year, excluding existing claims from previous quarters, fell by 5% versus Q1 – a total of £2.1bn was paid out during this period.

However, the value of the average claim paid jumped up by 27% between Q1 and Q2, reaching £4,600 – this is the largest quarter to quarter rise on the ABI’s record.

The value of average theft and accidental damage claims also rose by 14% each between the first and second quarters of the year, while the average value of personal injury claims notified increased by 34%, to £19,500.

The average price paid for comprehensive motor insurance is currently at a four-year low, amounting to £460, added the ABI.

Laura Hughes, the ABI’s manager for general insurance, said: “Lockdown naturally led to far fewer vehicles on the roads, which is reflected in the fall in the number of motor claims.

“With the average price of motor insurance currently at a four-year low, insurers have been passing on cost savings to their customers. However, cost pressures remain, such as rising vehicle repair costs, reflecting ever more complex vehicle technology and increased vehicle theft.

“With personal injury costs also continuing to rise, it is important that the whiplash reforms scheduled to be implemented in April 2021 are not delayed further.” 

Commenting on the figures, Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations (ACSO), said: “ACSO welcomes further evidence from the ABI that claims numbers have fallen, which is in line with the official government data released by the Compensation Recovery Unit showing a near 40% fall between April and June. Customers will welcome a further reduction in their car insurance premiums as a result of the significant savings made by insurers during the lockdown.

“It is not surprising that the average value of personal injury claims increased by 34%, as with fewer cars on the road, accidents are likely to have taken place at higher speeds and the injuries suffered much more severe.

“We do, however, take issue with the ABI’s argument that, because the average value of personal injury claims has risen to an average £19,500, that it follows the government’s whiplash reforms must not be delayed any further. First, a £19,500 claim is a serious injury. Whiplash claim values are generally way below this sum, so there is no correlation between any increase in individual claims costs and the whiplash reforms. It is regrettable that this distinction hasn’t been made.

“While we are broadly supportive of many of the aims of the new portal, this is only if it does the right thing by injured people by making it easy for them to seek redress. There is little point rushing to meet an arbitrary deadline if it creates significant and avoidable consumer detriment.”