The UK’s largest motor insurance firms are set to make £1bn from the coronavirus shutdown, as a huge decline in the number of journeys being made has seen claims drop 50 per cent for some firms.
Under government regulations, car owners are required to keep their cars insured at all times, regardless of how much it is being used.
As a result, customers face being forced to continue paying premium rates for several months while the lockdown continues.
According to flexible car insurance founder Freddy Macnamara, “insurers need to come to the party and offer customers support and much needed flexibility to help them best manage the headwinds ahead.
““With 50 per cent fewer claims, car insurers could be making over £1bn in profits from the lockdown over three months. Consumers should open dialogue with their insurers if they’re struggling to meet monthly car insurance payments or feel their annual policy should be adjusted.
“Given annual policies were based on assumptions that are no longer correct, surely it’s only fair to readjust policies to factor in the current climate, as cars sit at home?”
Macnamara said that UK companies should follow the example of US insurers such as Allstat, which is giving $600m back to its customers in recognition of the situation.
Alongside the refunds, Allstat are also putting payment plans in place to protect customers who might be unable to pay.
American Family Mutual will also pay out a total of $200m to customers due to the plunge in claims being made.
Mcnamara said that UK customers who are working from home due to coronavirus and not using their cars should contact their insurance provider over a refund.
City A.M. has approached large motor insurance firms for comment.