09 Dec 2020
Posted in Insurance
COVID-19 causes commercial motor insurance cancellation but presents business opportunities for insurers, says GlobalData
Small and medium-sized enterprises (SMEs) in the UK have been cancelling insurance policies because of the COVID-19 pandemic, and the motor lines have been the worst affected, but this may provide opportunities in 2021, according to GlobalData, a leading data and analytics company.
GlobalData’s 2020 UK SME Insurance Survey shows that out of the 20 products medium-sized businesses were asked about, the six most cancelled types of policy this year because of COVID-19 were all vehicle-based ones. The highest proportion was for single van insurance, which saw 14.7% of policies cancelled for this reason. While other commercial lines saw more cancellations for this reason for SMEs overall, the medium-size category is particularly relevant as it is where the biggest contracts are. Therefore, providers of these products would have seen significant losses in 2020.
Ben Carey-Evans, Insurance Analyst at GlobalData, comments: “A positive outcome from this is that a lot of these would have been temporary cancellations rather than permanent as businesses were unable to travel, and delivery fleets were more difficult during a year of lockdown and restrictions. Of course, online shopping has surged, and many delivery-type businesses are significantly up, so these insurers who have lost this high level of business may also have picked up new customers or upsold contracts.
“It also means commercial motor insurers will need to be proactive in winning back customers next year as normality slowly returns. It also presents an opportunity to insurers to win business, as there will be a significant proportion of the market looking for new insurers. With SMEs’ budgets squeezed, the key is likely to be in the value proposition of policies, but much can be said for offering flexibility as well, as uncertainty over future lockdowns and continuing restrictions remains.”