Motor insurance premiums could fall by as much as 10% this year due to the coronavirus pandemic.
The cost of home insurance is also expected to fall by between 4-8%, according to new research by multinational professional consultancy Pricewaterhouse Coopers (PwC).
With lockdown forcing people to stay at home, the number of crashes on Britain’s roads has roughly halved, saving insurers money on related claims.
The Department for Transport’s latest data shows that, by June 2020, the number of road traffic accidents had fallen by 14% compared to the year before, and the number of casualties by 16%.
PwC expects insurers’ savings to be reflected in customers’ premiums this year, as companies scramble to win customers and stay buoyant through the economic turbulence caused by COVID-19. As such, PwC expects motoring premiums to fall by 5-10%.
The consulting giant also speculated that home insurance customers would make savings due to an overall decrease in the number of claims on such policies.
With nearly a quarter of the workforce working from home full-time, would-be burglars have been forced to slow down- meaning the number of break-ins has fallen off a cliff edge, and so too, the number of theft claims.
According to PwC, there was a modest increase in the number of claims for burst pipes over the winter period, but insurers are still in the black on balance.
For 2021, due to the economic impact of the pandemic and competition in the home and motor market, we are forecasting insurance premiums to drop by 5% – 10% for those who shop around for motor insurance and 4% – 8% for those who shop around for home insurance”.said PwC’s General Insurance Leader (UK), Mohammed Khan.
A looming shake-up in insurance regulations will also lower prices for customers who are due to renew their policies this year.
Traditionally, customers who renew without switching providers have been subject to arbitrary increases in their premiums.
But reforms led by the UK’s Financial Conduct Authority will put an end to so-called ‘price walking’ at the end of the year, meaning loyal customers could benefit from a double-drop in their insurance premiums by renewing instead of switching.
However, PwC warned that insurers are likely to pass on the cost of the reforms to new customers- who have historically been lured into switching providers with heavily discounted premiums.
If the reforms on market pricing are introduced in 2021, the cost of the reduction in renewal premiums for customers who have stayed with an insurer for a number of years may be borne by those customers who use price comparison websites.said Mr. Khan.
New customers in ‘high-risk’ groups could see the steepest increase in the cost of their premiums:
For example, some young drivers who try to take advantage of the discounts offered by taking out a new insurance policy could see their premiums rise steeply by more than £200.said Mr. Khan.