30% reduction in 2020 road traffic puts pressure on insurers to reduce premiums, says consumer body

• CRU data shows an uptick in motor claims but the long-term trend is still downwards.
• Data includes the first month of figures after the launch of the Official Injury Claim portal.
• Employer liability (EL), public liability (PL) and clinical negligence claims all drop in the last three months, although clinical negligence claims are up on same period last year.

The Covid pandemic saw a 27 per cent drop in UK vehicle mileage, according to the latest government data. The figures, published on 8 July, show that between March 2020 and March 2021, car traffic decreased by 31 per cent, van traffic by 14 per cent and lorry traffic 7 per cent.

The figures come at the same time as the publication of the latest Compensation Recovery Unit (CRU) injury claims data for the period April 2021 – June 2021, which show that road traffic accident (RTA) injury claims ticked up by just under 7,000 compared to the same period last year.

However, Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations (ACSO), said at the current rate, RTA injury claims for the whole of 2021 will be sharply down against the long-term average, and even down on the unprecedented drop in motor claims during the height of the pandemic in 2020, which fell below 500,000 for the first time.

The huge decline in mileage and continued reduction on RTA claims has not been mirrored by a similar fall in the price of motor insurance, said Maxwell Scott, who suggested insurers need to come clean about the profits they are making from changing consumer habits and falling motor claims.

The Association of British Insurers (ABI) motor premium tracker shows that while car drivers paid slightly less over the period, the average price of cover fell by only 7 per cent to £436 for a comprehensive motor policy. Meanwhile, van insurance fell by just 2 per cent to an average premium of £1,055.

“While we wouldn’t expect premium prices to fall exactly in line with road use or claims numbers, the huge discrepancy means insurers are profiting from the pandemic,” said Maxwell Scott. He added that this was despite the price war between insurers as they fight for market share before the introduction of the FCA’s new pricing regime at the end of 2021.

A recent study from insurance research experts Consumer Intelligence warned that the motor market is likely to harden – insurer jargon for premiums getting more expensive – once the new regime is in place.

Maxwell Scott continued: “We don’t think there is any justification for insurers to ramp up prices. So far, only Admiral has done the right thing and returned any premium to policyholders.

“Now the government data has laid bare the huge drop in vehicle use last year as well as in the number of injury claims, we urge other insurers to follow Admiral’s lead, cut the cost of car and van insurance for UK motorists and treat their customers fairly.

“One of the excuses for high premiums trotted out in the past was the cost of minor injury claims. With the government’s whiplash reforms now up and running and claims numbers falling, the insurance industry should immediately make good its promise of cutting average premiums by £35 in return for the changes.

“With the insurance industry’s reputation damaged further by the business interruption insurance scandal, the last thing it needs is to be seen to hike prices when consumers have been using their vehicles so much less. Yet that is exactly what could happen.

“As the government is encouraging people to continue working from home if they can, road use is unlikely to return to pre-pandemic levels any time soon. Premiums should be coming down to reflect this.”

The latest CRU data, obtained by ACSO via a Freedom of Information (FOI) request, also showed further falls in employers’ and public liability claims. Maxwell Scott added: “The reduction means there is no need for the government to change the rules for these types of claims. Further reform is unnecessary with claims falling across the board.”

Volume of personal injury claims recorded by the Compensation Recovery Unit (CRU)