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Law360, London (May 12, 2021, 2:07 PM BST ) Allianz Holdings PLC said on Wednesday that it expects a growth in demand for travel and breakdown insurance in the next quarter as the U.K. prepares to lift lockdown restrictions on vacations.
The U.K. division of the German insurance giant said that although it has seen a rise in operating profits in the first three months of the year its premium income was down as fewer people travelled abroad or stayed at home instead.
The unit's first-quarter operating profit for its property and casualty business rose to £91.8 million ($130 million), up from £16.2 million in the same period of 2020. But gross written premium, a measure of how much income is derived from sales, fell from £1 billion to £917 million.
"The first quarter saw a reduction in travel insurance premiums due to ongoing restrictions caused by the pandemic and reduced road use led to a decrease in premiums for breakdown business," Allianz said in a statement. "As a result of these difficult trading conditions, we have been careful not to pursue revenue at all costs as our focus remains on delivering sustainable profitable growth over the longer term."
But the insurer said that it expected premiums to pick up in the next quarter, "with more people on the roads and the planned resumption of foreign travel."
The U.K. is set to partially lift restrictions from Monday, allowing holidays abroad for the first time since the second national lockdown started in January. Domestic travel has been similarly affected by lockdown restrictions, with personal injury claims from motor accidents down 31%, according to government figures.
But that has also started to change, with the lifting on March 29 of a stay-at-home order that prevented people from making non-essential trips. All other COVID-19 restrictions will be lifted from June 21 unless there is a third wave of the virus, the government has said.
Motor insurance premiums have tumbled in cost with the lower road use. According to figures from Willis Towers Watson in April, the average cost of comprehensive motor insurance fell by 14% in the first quarter of the year from the same period of 2020.
Allianz said on Wednesday that the drop has also resulted in it making less premium income, blaming a "particularly competitive motor insurance market which has seen insurers competing aggressively for a reduced number of switching customers."
--Editing by Ed Harris.
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