2021 UK car insurance industry watch covers the most important news stories, trends, research, opinion and developments for 2021.
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Motor insurance pricing drops 5% in three months – Pearson Ham
‘Cashing in’ could be a potential strategy for insurers ahead of the FCA’s pricing remedies coming into force? Insurance Times
Source: Insurance Times, July 2021
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Drivers who don’t wear a seatbelt may face penalty points and ban
Drivers face having penalty points added to their licence for failing to wear a seatbelt amid growing concern over the number of people who go without. Motorists could receive at least three points and a possible driving ban under reforms to stop them and their passengers flouting road safety laws. The penalty may apply even if the driver has a seat belt on but a passenger does not.
The change will be considered as part of a road safety plan to be published this year. At present drivers can be given only a £100 fine — rising to £500 in the courts — for the offence. Many can opt to take an online seatbelt awareness course instead, which costs £53.
Source: The Times, July 2021
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The Impact of COVID-19 on Car Insurance in the UK?
The Association of Consumer Support Organisations (ACSO) has established that UK motor insurers have saved billions of pounds thanks to fewer claims made by motorists during the COVID-19 pandemic. This equates to a windfall of £118 per policy, or £3.3 billion in total!
This prompts the inevitable question of whether, and if so how much of this has been passed back to the policy holder in lower car insurance premiums? My initial thoughts would be that very little has made it’s way back into the pocket of the motorist!
Association of British Insurers (ABI) figures (see below for further COVID-19 ABI information) suggest the number of motor claims settled fell by nearly 20% in 2020. Meanwhile, prices were reduced by only £25 in the last 18 months. Mileage, accidents and thefts all fell during 2020, by 25%, 23%, and 21%, respectively, according to the report, yet premiums fell by only 9%.
This enabled motor insurers to boost their profits from underwriting motor insurance by £3.3 billion, “but the hard-pressed motorist has barely benefitted,” commented Matthew Maxwell Scott, executive director of claimant-focused trade group ACSO. “Insurers need to give consumers a break and commit to a substantial and immediate cut in car insurance prices.”
ACSO wants motor insurers to be far more transparent about pricing, given that motor insurance is a compulsory and essential purchase. He added: “There may be a number of reasons why insurers charge what they do. But if claims numbers drop precipitously and there’s very little fall in prices then somebody is doing rather well out of a very regrettable set of circumstances.”
“Insurers are dragging their feet on paying out claims for business interruption, and now it appears from our research that they are keeping under wraps the true extent of their pandemic profits from car insurance too.”
The following information is correct as of 18 October 2021.
The insurance and long-term savings industry has worked hard to support customers and the wider community across the UK throughout the pandemic. Insurers know it has been an incredibly difficult time for many people. Their main priority has been to ensure customers continue to have claims paid, to provide clear and up-to-date information as well as doing everything in their power to keep their operations running as fully as possible.
Following the first national lockdown in March 2020, the industry pro-actively agreed a series of pledges to support and assist customers across a range of insurance lines including home, motor, travel, pet insurance, health and protection. Insurers have also offered policy extensions and been flexible with customers wherever possible during this unprecedented period.
As restrictions have changed, the customer pledges have been kept under review and amended accordingly.
Source: www.claimsmag.co.uk, October 2021
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January 2022 Price Changes Coming for UK Car Insurance
Renowned financial commentator and entrepreneur Martin Lewis (Founder of the website Money Saving Expert), has reiterated his warning to all drivers ahead of a likely January price change for many motorists. From January 2022 UK car insurers will be banned from charging existing customers more than new ones under a tactic also known as ‘price walking’. That means new and existing customers will both pay the same rates – eliminating any extra charges for sticking with the same company.
Drivers are being encouraged to check their car insurance documents now ahead of new price walking rules from January – which could affect how much you pay each month. Next year, a new insurance crackdown comes into force, banning firms from charging loyal customers more at renewal. The new rules mean the end of the so-called loyalty premium.
Martin Lewis explains in the latest MoneySavingExpert newsletter: “My best guess is firms won’t just cut renewal prices to match those for newbies – rates will meet nearer the middle. This will mean savings from switching will likely relatively reduce. It was possible insurers would have already made price changes knowing this was coming. Yet I’ve heard many are waiting until December to see what their competitors do.”
It said these measures will save consumers £4.2billion over 10 years.
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