Finance
Is the car insurance industry benefiting from Coronavirus?
By Mark Rigby, CEO of Insurance Revolution,
The world as we know it has changed dramatically over the last 3 months due to the coronavirus, and the car insurance industry, like all industries has felt its effects. A huge number of businesses have been hit hard and struggling financially but there is hope for those with flexible business models.
From talking to colleagues in the industry, it seems that those who have managed to pivot their business, and act flexibly have so far managed to ride the coronavirus crest successfully. From my own experience, our brokerage has not only managed to successfully move all staff out of our offices and working from home within 2 weeks but we have found success in the rising number of fast food delivery and courier insurance requests whilst standard car insurance quotes have dropped. The takeaway delivery industry is thriving, with people unable to leave their homes and restaurants being closed, more people are opting to have food delivered to them. It is not just food people are getting delivered to their homes, its electronics, clothes, as well as birthday cards and presents being delivered to family and friends meaning courier insurance enquiries have also increased.
But is the car insurance industry benefiting from Coronavirus? The short answer is both yes and no. There are certain sectors of the motor insurance industry that are clearly benefiting, but others I speak to are not with many having furloughed staff for longer than anticipated. We are now starting to see the lasting effects the Covid-19 pandemic will have on businesses and people’s lives and just the other day, Markerstudy, a key player in the UK car insurance market, announced the redundancy of 478 staff.
Although the upside to lockdowns and isolation for insurers is a substantial decrease in the amount being paid out on claims, however the general public are keeping tabs on businesses that have behaved poorly during this time of struggle. They are taking note of how businesses treat their staff and customers, with some people threatening to boycott the companies they believe behaved the worst. Some brokers and insurers have mentioned an increase in complaints around cancellations and charges as many people do not understand why they should have to pay for car insurance when they are not using their car, not realising that insurance covers the vehicles against fire, theft and vandalism not just bumps and crashes.
As a result, some insurers have taken the step of improving their reputation by refunding clients £25, due to money saved in claims with less people on the roads. While this is a decent gesture there is a question of whether this will be enough to keep them in the hearts and minds of the customer.
As mentioned earlier, those with a flexible approach may be the winners. As more people have adapted to working at home, the general feeling is that many employees wish to stay there in the future. With less commuting in addition to a government emphasis on cycling and walking meaning lower mileage on vehicles, only time will tell if drivers opt for more pay as you go car insurance policies rather than the traditional method of paying for thousands of miles upfront.
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