Car insurance premiums set to drop due to Covid-19
10 June 2021, 17:38
Car insurance premiums are expected to drop by six per cent this year after Covid-19 changed how drivers use their vehicles.
Drivers will be able to save £27 on their policies, EY’s latest UK Motor Insurance Results have shown.
The lockdowns resulted in a 20 per cent drop in vehicles being used and a 28 per cent drop in claims.
However, whiplash reforms - part of the Civil Liability Act 2018 – have also affected premiums for 2021, bringing prices down even more.
They came into effect at the end of May, with the aim to reduce legal claim costs as well as overall levels of compensation.
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The Financial Conduct Authority (FCA) announced pricing reforms this year too, so insurers are likely to maintain lower prices to keep customers.
It is estimated that they will make losses, in terms of Net Combined Ratio (NCR), across both 2021 and 2022 as the country continues to come out of the pandemic.
UK Insurance Leader at EY, Rodney Bonnard, said: "There has been a great deal of disruption over the past year and the challenging market environment is set to continue, compounded by an increasingly soft market and a ramp up of regulatory requirements.
"In particular, while the drive by the FCA to deliver fair value to customers is welcome, it will require insurers to carry out significant work and bear the costs of implementing major changes in a tight time frame.
"As ever, making the necessary investments in innovation and digital transformation will prove crucial for firms to deal with the challenges head-on, not least as they battle for competitive advantage."
