Motorists could see their car insurance costs drop by £ 27 a year due to the recent Covid-19 lockdowns.
Premiums are expected to drop up to 6% lower than last year as most adults in the UK have become accustomed to working from home and getting commutes out of their routine due to recent restrictions.
According to the latest results from EY UK Motor Insurance, the shortage of motorists in the UK has resulted in a significant decrease in the number of claims being made.
The news comes after a MoneySuperMarket investigation found the British were spending a total of £ 4.2 billion annually on car maintenance.
According to the Department of Transportation, the UK lockdowns resulted in a 20% decrease in vehicle use, which resulted in a 28% decrease in claims following the dramatic change in car use patterns.
Tony Sault, UK General Insurance Market Lead at EY, said: “The decline in claims last year meant insurers were able to pass savings on to their customers through reduced premiums in the first quarter of 2021.
“As commuting patterns may change once and for all, we expect the downward trend in car use and entitlement to continue – albeit not at the level seen during lockdown.
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“We also expect lower premium rates to continue for the remainder of this year as insurers price in these behavioral changes as well as the new whiplash damage rules and focus heavily on customer loyalty prior to the Financial Conduct Authority (FCA) pricing reform.
The EY report also shows that the UK auto insurance market posted the best underwriting profit on record last year.
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Rodney Bonnard, UK Insurance Leader at EY, said, “There has been a lot of disruption over the past year and the challenging market environment will continue, compounded by an increasingly softer market and increased regulatory requirements.
“In particular, FCA’s drive to deliver fair value to customers is welcome, but it requires significant work from insurers and bears the cost of making major changes in a tight timeframe.
“As before, it will be crucial for companies to make the necessary investments in innovation and digital transformation in order to master the challenges directly, not least in the fight for competitive advantages.”
