New Motor Insurance Report
03 Feb 2021
Motor Insurance Market Declines by 8% because of COVID-19
In 2019, IRN Research estimate the motor insurance market generated gross written premiums (GWP) of just over £14 billion, a rise of around 2% over 2018. Given the impact of COVID-19 on the market, IRN expect GWP to decline by 8% in 2020. Key factors behind this decline were premium rebates given to customers by some leading insurers; premium rate reductions reflecting reduced claims frequency; reduced demand for car insurance in the lockdowns.
COVID-19 Reshapes the Motor Insurance Market
COVID-19 has been the most significant influence on the UK economy and society over 2020/21. It has caused a significant reshaping of consumer driving habits and the associated car insurance market. Its key effects have been
- A significant drop in motor insurance claims (fewer accidents and thefts) and an increased demand for PAYG insurance.
- A reduction in premium costs
- Decline in driving tests and decline in car purchases – reducing insurance demand from new drivers and the demand for higher value insurance from existing driving upgrading to more expensive cars.
- Increase pressure on family finances – causing a decline in car purchases and demand for cheaper insurance
- Increase use of IT/online systems to purchase, administer and manage policies and a general acceleration in the use of InsurTech systems by insurers, such as fully digital systems to assess accident damage and repair costs, accident liability and claims diagnosis.
The Motor Insurance Report
The above findings come from IRN Research report Motor Insurance Market Data Report 2021.
This report looks at the consumer (or personal lines) motor insurance market, where motor insurance is defined as insurance which covers individuals against the cost of repairing or replacing a vehicle and costs that arise due to injuries caused to other people and damage to their vehicles. Depending on the policy purchased, insurance may also cover the contents included within the vehicle.
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