Motor insurers accused of ‘sidestepping’ customer refunds issue

Industry expected to save hundreds of millions in reduced claims, study finds

A virtually empty M50 in Dublin at the height of lockdown last year. Insurance Ireland says traffic volumes have been higher  since the initial lockdown. Photograph: Tom Honan

A virtually empty M50 in Dublin at the height of lockdown last year. Insurance Ireland says traffic volumes have been higher since the initial lockdown. Photograph: Tom Honan

 

Motor insurers have been accused of “sidestepping” the issue of refunds to customers affected by the pandemic.

Covid-19 travel restrictions mean the industry is expected to save hundreds of millions of euro in reduced claims – up to €290 million for 2020 alone, according to a study from insurance comparison platform HelloSafe.

However, calls for insurers to pass on some of the savings to customers in the form of a rebate on existing premiums has met with only a limited response.

During the first lockdown last year, six insurers offered customers €30-€40 vouchers in recognition of the restrictions and the reduced traffic volumes.

However, this was criticised as too little and, despite two further lockdowns, including the current one, the industry has not offered any additional compensation.

“There is no question but that the level of travel restrictions are severe, they are clear, they are being strictly enforced and travel is curtailed across the country,” Consumer Association of Ireland (CAI) chief executive Dermott Jewell said.

“It follows therefore that refunds – of some form – should be issued by all providers and without any further delay or attempted sidestepping of the issue,” he said.

Mr Jewell said the rebates should be a percentage of the premium, based on the instances of lockdown.

“Refunding is important as it does not bind the consumer to a future contract but rather simply reflects the fact that driving is reduced as opposed to the overall risk,” he said.

To date, the industry here has refunded customers a figure that represents 3-4 per cent of annual turnover.

Consumer advocates and politicians claim the figure should be closer to 20 per cent, reflecting a Central Bank estimate that underwriting costs would be 20 per cent lower this year as a result of reduced traffic volumes.

‘Flexibility’

Insurance Ireland, the umbrella group for insurers, however, said the industry had adopted a wide range of forbearance measures for both personal and business customers and had shown flexibility in response to the crisis.

“On the issue of rebates, our members refunded €56 million in premiums to Irish customers during the first lockdown,” a spokeswoman said.

“Ireland led the way on this in Europe. We were the only country to offer any rebate on a cross-industry basis,” she said.

She also said the first lockdown was extremely restrictive and traffic volumes had been higher in the subsequent lockdowns.

The spokeswoman highlighted recent Central Statistics Office price data, which showed the cost of motor premiums fell by 6 per cent last year.

Last April, six insurers – Axa, FBD, Zurich, Allianz, Liberty and RSA – bowed to pressure for a refund, offering customers €30-€40 vouchers in respect of eight weeks of lockdown. Two other insurers, Aviva and AIG, did not enter the agreement.

The renewed call for compensation comes as judges voted in support of new guidelines aimed at reducing general damages awards for some personal injuries.

The Judicial Council voted at the weekend to adopt the guidelines, prepared by the council’s Personal Injuries Guidelines Committee (PIGC).

The primary focus of the guidelines was to ensure awards for lesser injuries were proportionate.