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Law360, London (April 21, 2020, 11:28 AM BST ) Britain's largest motor insurer, Admiral, said on Tuesday it will give £110 million ($135 million) back to customers because fewer people are using cars during the country-wide lockdown.
Admiral is paying the rebate after similar measures were introduced by U.S. insurers and amid calls for similar measures in the U.K. and Ireland. (AP)
"This is an unprecedented time, when people across the country are driving significantly less than before the lockdown, and we expect this to lead to a fall in the number of claims we are seeing," Cristina Nestares, chief executive of U.K. insurance at Admiral, said.
"We want to give the money we would have used to pay these claims back to our loyal customers in this difficult time," she added.
U.S. insurer Allstate said at the start of the month that it would give customers a 15% discount on monthly premiums for April and May, equivalent to $600 million. American Family Mutual said it would offer a one-off payment, equivalent to $200 million.
Ireland's finance minister Paschal Donohoe called on insurers on Friday to issue "some type of refund" for motor customers. Insurance Ireland, the country's insurance lobby, said it would put the suggestion to its members.
Insurtech company By Miles claims that, according to its data, there has been a 69% drop in average miles driven across the U.K. since the start of the lockdown. Motor insurers stand to gain £1 billion from the fall in vehicle use, the company added.
The Association of British Insurers has however so far ignored calls for an industry-wide initiative on refunding motor premiums. "Any premium adjustments or refunds will be a matter for individual insurers," a spokesman told Law360 at the start of the month.
Broker Willis Towers Watson said on Monday in its quarterly price index that, although claims are likely to be less frequent, the cost of individual claims is likely to rise.
"There is widespread recognition of claim frequency reductions whilst lockdown measures persist, and acknowledgement that these may be off set to some degree by severity increases," Graham Wright, a personal lines pricing expert at Willis Towers, said.
--Editing by Ed Harris.
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