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Summary
- According to the Association of British Insurers, the average price paid by motorists in the UK for their motor insurance was at a four-year low in 2020.
- The demand for motor insurance has gone down as new car registrations have also gone down drastically.
The motor insurance premiums paid by Britons on an average seems to have gone down substantially during the year 2020. The pandemic-induced lockdowns have forced the Britons to stay indoors to mitigate the risk of spreading infections. Vehicular traffic dropped significantly as Britons are using their vehicles only when it is necessary.
Also, a lot of people are keeping a hold on cash and avoiding unnecessary expenses as they are not sure of the uncertainties around the economy. The pandemic has stayed here for much longer than anticipated and has led to a lot of job losses. People are, therefore, procrastinating unnecessary expenses.
Also read: Lloyd’s to stop new insurance cover for fossil fuel projects
Thus, the demand for vehicles has significantly gone down, which has led to dip in demand for motor insurance. According to the Association of British Insurers, the average price paid by motorists in the UK for their motor insurance during 2020 was lowest in the last four-years.
The average price paid for the comprehensive cover was down by 1 per cent to £465 in 2020, which was the lowest since 2016. From a consumer’s perspective, best deals in motor insurance were offered by the insurers in 2020. As the UK started rolling out the vaccines during the fourth quarter of 2020, the average price of motor insurance moved upwards towards £468.
The insurance industry has been under the pump due to claims related to coronavirus insurance pay-outs. The pandemic brought several businesses to a sudden halt. These businesses turned to insurers for business interruption insurance claims. The insurers were reluctant to pay these claims as the pandemic caused the unprecedented crisis.
(Image Source - © Kalkine Group 2020)
The Supreme Court finally ordered the insurers to settle claims worth more than £1 billion. UK watchdog Financial Conduct Authority has said that it would be closely monitoring the settlement process of insurers as small businesses are facing an existential crisis.
Motor insurances are often bundled with newly registered cars. Unfortunately, the new car registrations have also gone down drastically due to the pandemic. According to the Society of Motor Manufacturers and Traders, the car manufacturing output in the UK was down by nearly 30 per cent in 2020 to 920,928 units, the lowest in three decades.
These figures reflect the catastrophe caused by the pandemic on the automotive sector in the UK. The lower demand due to the lockdowns and restrictions along with pressure on reducing carbon footprint has weighed down heavily on the sector. Moreover, car manufacturers still fear supply chain disruptions in the wake of Brexit.
