Lockdown leads to significant fall in motor claims

A drop in car journeys during lockdown resulted in a significant fall in claims during Q2 2020, according to the Association of British Insurers (ABI).

Insurers received 324,000 new claims in Q2 2020, a fall of 48% on the 678,000 made in the previous quarter.

The value of claims settled during the period, which includes existing claims from previous quarters, also fell but at a much slower rate than the number of new claims, the ABI found. A little over £2 billion was paid out, down 5% on Q1 2020.

Average claim values increased significantly, rising 27% on the previous quarter to £4,600—the largest quarter to quarter rise on record—while the value of both the average theft and accidental damage claim rose by 14%.

At the same time, the average value of personal injury claims notified increased by 34% to £19,500.

Laura Hughes, manager of general insurance at the ABI, said that despite lockdown driving down the number of claims and insurers passing on savings, with the average price paid for comprehensive motor insurance currently standing at a four-year low of £460, “cost pressures remain, such as rising vehicle repair costs, reflecting ever more complex vehicle technology and increased vehicle theft”.

Hughes continued: “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.”

Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations (ACSO), said the ABI’s figures are in line with official government data from lockdown and policyholders will welcome a further reduction in their car insurance premiums as a result of insurer savings.

Commenting on the increases in average claim values during lockdown, Maxwell Scott said: “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.”

Mark Dugdale