The number of personal injury claims decreased significantly in 2020 due to country-wide lockdowns. With insurers paying less due to this drop, there are renewed calls for insurance customers to receive rebates to compensate them for the change in risk. Motor insurance has a real chance to improve customer satisfaction with rebates.
According to GlobalData’s 2020 UK Insurance Consumer Survey, only 16.1% of consumers received a rebate from their car insurance provider last year. But this figure may in fact be higher, given that many consumers did not report receiving a rebate despite their insurer issuing all its customers with blanket refunds. For example, only 42.0% of Admiral’s customers reported receiving a rebate in 2020, despite the provider offering a flat refund of £25 to all its customers. Likewise, only 4.1% of LV= customers reported receiving a rebate after the insurer issued refunds ranging from £20–50.
Insurers that do provide rebates should ensure that their customers are aware of them. This has clear implications on customer satisfaction. 43.9% of those that reported receiving a rebate are classed as promoters of their insurance provider, compared to 27.7% for those that did not receive one. The average net promoter score for those receiving a rebate was 31.3, compared to 3.3 for those that did not receive one.
With the lockdown continuing and no firm date set for the easing of restrictions, there are renewed calls for further rebates. According to data from the Compensation Recovery Unit, the number of personal injury claims due to motor accidents decreased by 46% in 2020. According to data from the Association of British Insurers (ABI), the average cost of a personal injury motor claim is £10,676, with this claim type being the most expensive faced by insurers. Therefore, a fall in the number of personal injury claims by almost 50% would represent huge savings for them. However, ABI data shows motor insurance premiums fell by only 1% in 2020.
Insurers may come under fire from customers who did not see a reduction in their premiums when most of them are driving less. This should prompt more switching at renewal from disgruntled customers, as well as incumbent insurers losing market share to newer insurers that specialize in usage-based insurance for low-mileage drivers. Those insurers that do give further rebates should clearly communicate this to their policyholders to avoid this fate.