13 Apr 2020
Posted in Insurance
COVID-19 to hit UK motor insurance market by up to £100m in new premiums, says GlobalData
New car registrations were down in excess of 40% in March 2020, when compared with the same period last year, which leading data and analytics company GlobalData estimates will result in a loss of £98m in new premiums.
According to the Society for Motor Manufacturers and Traders, the number of new car registrations in March 2020 was 200,000 fewer than in March 2019. Given that the UK is in the earlier stages of social distancing measures compared to other countries, this indicates a challenging future for the UK motor insurance market. Pay-per-mile insurers will also suffer as customers are encouraged not to take journeys unless they have to.
GlobalData senior insurance analyst, Daniel Pearce, commented: “The fall in new vehicle registrations will also have a significant impact on the composition of the motor parc in the UK in terms of the prevalence of vehicle safety technology. With many safety features incorporated as standard on new vehicles, the fall in their numbers will slow the rollout of such technology.”
GlobalData’s UK Insurance Consumer Survey indicates that vehicle safety features such as anti-collision alerts, automatic emergency braking, and lane departure warning systems increased in popularity by 5.9 percentage points (pp), 4.2pp, and 7.1pp, respectively, between 2018 and 2019. Such a significant reduction in new vehicle registrations in 2020 means that the popularity of this technology will grow at a far slower rate in 2020.
Pearce concludes: “However, this could help mitigate the impact on total market gross written premiums, offsetting the declining demand for policies due to higher premiums as an increasing number of older vehicles remain on the UK’s roads.”