How the Pandemic has Affected Auto Insurance in the Country
It is no secret that every industry has been affected by the COVID pandemic and the auto insurance industry is no exception. The market has shrunk considerably with fewer motorists venturing out of the safety of their homes. Statistics show that auto insurance shopping has dipped to its lowest level in over a decade. The period from January to March had seen considerable growth in auto insurance shopping. Insurance Journal reports suggest that New York’s growth rate dropped from -6% before the pandemic to -31% during the pandemic. Auto insurance shopping also took a major hit among drivers aged 35 and below.
82 % of auto insurance companies are offering credits and refunds to its policyholders as the virus has driven them indoors. This is largely because there has been a drop in auto insurance claims over this period as lesser people are venturing outdoors. Insurers also seem to be doing their bit to help customers who have lost their jobs by waiving fees for late-payments and offering flexible plans. The miles driven by motorists has come down significantly during this period of the pandemic. This in turn means that these drivers are exposed to lesser risks than before. This period has led to a significant decrease in the number of claims and accidents. In fact, Tom Wilson, the CEO of Allstate had gone on record to say that the number of less severe accidents was at a historic low and that approximately $1 billion would be paid back to customers over three months (April, May, and June).
Increase in the Demand for UBI:
There has been a considerable increase in the demand for Usage-Based Insurance (UBI) in the last year, with an increase from 35% to 51%, as reported by tech consultancy firm Capgemini. Further, it projected that the UBI marked would increase to $125.7 billion by 2027. The most attractive prospect of UBI, for customers, remains the ability to personalize insurance according to one’s requirements. This brings in a more personalized engagement between the insurer and the insured.