Car insurance customers ‘let down’ by ‘broken’ sector as just a few firms offer refunds

Car insurance customers ‘let down’ by ‘broken’ sector as just a few firms offer refunds


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Nine out of the UK’s top 10 providers are not automatically offering discounts despite firms saving money due to a fall in claims. The lack of discounts means up to 28 million drives are paying for insurance unnecessarily in a major money drain this winter.

Of the major providers, only Admiral and LV offer some kind of financial refund for their customers.

Admiral is still offering all drivers an automatic £25 refund in a tidal return of £110million across all customers.

LV has set aside £30million for a refund scheme but customers must prove they have suffered financially as a result of the pandemic to get a portion of this.

Other big firms have no plans in place for refunds to drivers but do offer customers the option to sign up for a payment deferral.

However, this has been directed through guidance by the Financial Conduct Authority (FCA) rather than from the individual firms themselves.

Freddy Macnamara, spokesperson for car insurance experts at Cuvva said road users were being “let down” by the broken insurance sector.

He warned that insurance providers needed to “improve on its transparency” and help drivers struggling due to the pandemic.

Mr Macnamara said: “Despite the lessons learned during the first lockdown when car usage dropped by 75 percent and insurers saw a decline in claims by half, yet again we can see customers are being let down by a broken insurance sector.

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“This is probably best symbolised by some of the insurance industry’s major players reinstating their dividend schemes and prioritising their shareholders, rather than paying back and supporting their customers.

“Earlier this year, we recognised that the COVID-19 pandemic would unfairly penalise many drivers who had to insure their cars yet were unable to use them regularly in order to comply with national guidance.

“As the ramifications of the global pandemic continues to have a substantial financial impact on the UK consumer, this industry must improve on its transparency, and give motorists their
money back.”

Direct Line has warned drivers will not be eligible for a premium refund if their policy started on or after 1 August 2020.

However, they say that drivers after this date would be able to make changes to their estimated annual mileage.

This means many different road users will be under unique policies and it would be best to contact a provider to talk through the options if you are struggling financially.

Car insurance firms profited from a staggering £1.3billion over the first lockdown in a figure equating to £40 per motorist.

This was due to a 70 percent drop in car accidents between March and May as drivers policy monthly policy revenues kept rolling in.

By Miles CEO James Blackham has also backed calls for further refunds to be offered to drivers under the second lockdown.

Just days ago, he said: “Ahead of the second national lockdown of the year, we’re calling on car insurers to do the right thing by their customers by proactively offering refunds to account for the reduction in claims over the next month.”

He added: “It’s simple – If you are driving less, you’re far less likely to make a claim.

“We saw a few insurers offer automatic refunds to all customers to account for changes in driving habits earlier in the year – these insurers should be doing so again, and others should follow suit.”

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