ARE THERE ANY INSURANCE DISCOUNTS FOR DRIVERS DURING LOCK-DOWN?

Research shows that UK insurance companies had a 9.8% Net Combined Ratio (NCR) in 2020. The increased profitability is due to the strict Covid-19 lockdowns in the country. UK insurance market recorded a mammoth underwriting profit in 2020 due to a reduction in insurance claims.

Although the costs fell by 12%, NCR for 2020 had a 7.2% improvement compared to 2019’s figures. Covid-19 has a significant impact on people worldwide. It has affected people in terms of health, business, and economy, including the insurance industry. Are there any insurance discounts for drivers during the lockdown? Find out in this post!

Insurance Policies and Discounts in the UK during Covid-19

UK drivers criticize insurance companies for no providing discounts or refunds during the Covid-19 pandemic. The criticism is from drivers who drive fewer miles due to the lockdown. Insurance companies in the US, Canada, and European countries offer general premium discounts and refunds.

The offerings are due to the reduced number of accidents during the lockdown. Experts say that premiums will relatively remain low until strict lockdown policies are lifted. However, the situation is different in the UK.

UK insurance companies are concerned that they would receive many claims once the government lifts the lockdown. Drivers would return to the roads in significant numbers, increasing the number of claims. As a result, insurance companies will face a shortfall for a long time.

Mid-Terms Policy Adjustments

UK drivers continue to ask their insurance companies to decrease the annual mileage figure on their policies. Although this would lead to a partial premium refund, insurance companies say they would charge a mid-term adjustment (MTA) fee, ranging from £25-50.

Direct Line is one of the most popular insurance company in the UK. Recently, the company announced that they would not charge for MTAs. It means their customers can reduce premium rates at no additional fee or cost if they drive fewer miles.

According to the company, those who can drive fewer miles on the roads than the original estimated figure in their policy, they can contact the company for discounts or refunds. However, Direct Line requires its customers to reduce the mileage to 1,000 per year.

Direct Line and other insurance companies in the UK have not quantified the discount size because it depends on the insurance policy and the car. However, a reduction in premium rates is directly proportional to every 1,000 miles taken off the annual mileage. For instance, if you drive 5,000 miles less per year, you will receive five times more discount.

Moreover, Aviva is another famous car insurance company in the UK that has not established a discount policy for its customers during the lockdown. According to Aviva, the company calculates premiums to cover expected costs for one year of the customer’s policy. If someone can’t pay their monthly premiums, he or she should contact the company for further discussion.

Final Words

Car insurance companies in Europe and North America has made substantial efforts to provide discounts to their customers. However, UK companies are reluctant to the change, meaning not many insurers will give discounts or reduce premiums during the lockdown.