06 May 2020
Posted in Insurance
Despite cars rarely being used, UK motor insurance GWP to witness marginal increase in 2020, says GlobalData
Despite majority of the UK customers not using cars and therefore being unlikely to renew policies, there will be a very slight growth of 0.4% in gross written premium (GWP) to £19.54bn in 2020, according to GlobalData, a leading data and analytics company.
Yasha Kuruvilla, Insurance Analyst at GlobalData, explains: “There will be a slight growth in the motor market because any cars parked on public roads have to be insured. If car owners take those vehicles off the road onto private property then they would have to submit a SORN and then cancel insurance and would need to re-tax their vehicle once they are back on the road.
“Given that this is a hassle and that cars are generally one of the most valuable assets a person holds, we don’t think a lot of people will take this route, so existing policies will remain in place. Once the lock-down is lifted we expect to see some new policies come into place from regular business as usual.”
Claims are likely to see a significant decrease due to a sharp fall in road traffic accidents due to the lockdown. While this will mean insurers may be more profitable in this line, many insurers will be experiencing losses in other lines so may use this profit to help balance books, as opposed to lowering motor premiums.
Kuruvilla concludes: “However, Admiral has offered customers some refunds over the next few months. Admiral is the leading insurer in the UK, according to GlobalData’s 2019 UK Insurance Survey and this could be an influential move. Insurers offering discounts and refunds were not considered in our forecasts, so this could further reduce expected growth, if other insurers follow Admiral’s lead.
“Mainstream insurers risk losing customers on traditional policies if they give nothing back. Customers will be more open to usage-based policies if other insurers do not offer any form of refund or discount. They will still have to pay a small base fee in these policies, but will make savings on not using their cars.”