LONDON (Reuters) – British motor insurers should repay all or some of their premiums to customers because of a steep drop in car use and claims due to the coronavirus lockdown, a group of lawmakers said.
The lawmakers said car insurers had reported an almost 50% drop in claims during the lockdown and the British government had said driving was down by 75%, with insurers calculated to make one billion pounds profit from the drop in claims.
“We do not need to restate all of the financial challenges faced by families during these desperately difficult times,” the cross-party group of 27 members of parliament – mainly from opposition parties – said in a letter to Britain’s finance minister Rishi Sunak dated April 18 and seen by Reuters.
“For this reason, we, MPs from all political parties, would suggest to you that HM Treasury take action to ensure that UK insurance companies repay some, or where appropriate all, of premiums to customers.”
“We encourage all insurance companies to do everything they can to support policy holders,” the Treasury said in an emailed statement.
“We are working closely with the sector and the regulators on what more can be done”.
Major U.S. motor insurers are offering credit to auto and motorcycle policy holders following a decline in driving, as most Americans stay at home under widespread orders to help contain the spread of the novel coronavirus.
In Britain, insurer Admiral (ADML.L) said on Tuesday it would give back 110 million pounds – or 25 pounds per vehicle – to car and van policyholders due to the lockdown.
Hastings (HSTG.L) said it had passed on a number of benefits to customers, including price reductions and fee waivers, as well as financial support for those customers suffering difficulties meeting payments.
The Association of British Insurers said insurers were being as flexible as possible, for instance in extending cover for people using their cars for voluntary work.
“Even if you do not drive during lockdown, you will still need to be protected against theft, vandalism and damage”, it added.