Widespread home working arrangements will bring motor claims down

While many insurance companies are taking a hit from the coronavirus outbreak, motor insurers are set to benefit from a fall in claims as home working becomes commonplace.

GlobalData’s 2019 UK Insurance Consumer Survey finds that a substantial proportion of policyholders (17.3%) made a motor claim in 2019. Accidental damage to an individual’s own vehicle was the main reason for these, accounting for roughly a third of all personal motor insurance claims. However, measures to slow down the spread of the virus will result in fewer car accidents and will ultimately bring motor claims down.

Efforts to curtail the spread of the virus have included city lockdowns, travel restrictions, and working-from-home arrangements across numerous countries worldwide. Home working, in particular, will have a more profound effect in motor insurance. As more companies around the world ask their employees to work from home rather than at their premises or office, car mileage is set to fall. There will also be fewer drivers on the road, in turn minimizing the risk of car accidents. Self-isolation and other quarantine measures will also reduce road traffic.

Often, insurance providers base their premiums on mileage estimates. However, as drivers’ mileage falls as a result of working-from-home arrangements, the impact of the coronavirus outbreak will be felt more on returns than claims in motor insurance.

The situation of motor insurers is comparatively unique. In other business lines, such as travel insurance, the coronavirus pandemic has resulted in an increase in claims. In response to this, several providers have temporarily discontinued some of their products.

As measures to flatten the spread of coronavirus continue to tighten around the globe, more and more individuals will become house-bound, further reducing the number of drivers on the roads. If governments keep these restrictive measures in place for a prolonged period of time, then it will be a silver lining for motor insurers.