The number of motor insurance claims notified to insurers in the second quarter of 2020 fell by nearly half, but their value leapt by 31%, according to the Association of British Insurers (ABI).
The fact that there were 324,000 new claims between April and June, a fall of 48% on the 678,000 received in the previous quarter, was no surprise given the impact of lockdown – and even sharper than that recorded by the Compensation Recovery Unit.
The value of claims settled during the period – including existing claims from previous quarters – fell far more slowly, down 5% on the previous quarter to £2.1bn.
The value of the average claim paid jumped 27% on the previous quarter to £4,600, which the ABI said was the largest quarter-to-quarter rise on record. The value of both the average theft and accidental damage claim rose by 14%.
The average value of personal injury claims notified leapt by 34% to £19,500.
The ABI said the average price paid for comprehensive motor insurance is currently £460, a four-year low.
Laura Hughes, the ABI’s general insurance manager, said: “Lockdown naturally led to far fewer vehicles on the roads, which is reflected in the fall in the number of motor claims. With the average price of motor insurance currently at a four-year low, insurers have been passing on cost savings to their customers.
“However, cost pressures remain, such as rising vehicle repair costs, reflecting ever more complex vehicle technology and increased vehicle theft. With personal injury costs also continuing to rise, it is important that the whiplash reforms scheduled to be implemented in April 2021 are not delayed further.”
Matthew Maxwell Scott, executive director of the Association of Consumer Support Organisations, said customers looked forward to a further reduction in their car insurance premiums as a result of “the significant savings made by insurers during the lockdown”.
He suggested that the rise in the value of claims made during the quarter was not surprising, “as, with fewer cars on the road, accidents are likely to have taken place at higher speeds and the injuries suffered much more severe”.
But he took issue with the argument that it followed the government’s whiplash reforms must not be delayed any further.
“First, a £19,500 claim is a serious injury. Whiplash claim values are generally way below this sum, so there is no correlation between any increase in individual claims costs and the whiplash reforms. It is regrettable that this distinction hasn’t been made.
“While we are broadly supportive of many of the aims of the new portal, this is only if it does the right thing by injured people by making it easy for them to seek redress. There is little point rushing to meet an arbitrary deadline if it creates significant and avoidable consumer detriment.”
Meanwhile, the quarterly civil justice statistics recorded that the number of personal injury claims issued dropped to 16,000 in the quarter, 42% lower than the same quarter in 2019.