Page 18 - Insurance Times August 2020

International News

Australia’s motor insur- clined by 46.5% in July 2020 as com- UK insurers need to be
pared to June 2020. The decline was
ance market to contract in relatively lower at 28.9% for passenger transparent with income
2020 due to COVID-19 and sports utility vehicles. protection policies as key

The Australian motor insurance market Ms Mitra explains: “Motor insurers are cover is withdrawn
is forecast to contract by 4.4% in 2020 thereby expected to face further pres-
Insurers in the UK have temporarily
due to COVID-19, a sharp decline from sure. To drive premium growth, insur- withdrawn unemployment cover de-
3.6% growth in 2019, according to ers such as Allianz and Budget Direct spite COVID-19 sparking high demand
GlobalData, a leading data and are offering up to 15% discount on
for income protection products as fears
analytics company. comprehensive motor insurance for
of job losses have mounted. This will
new online policies.”
GlobalData has revised its forecast for lead to a sharp fall in premiums. The
Australia motor insurance market in Companies are also looking at product recent spike in the non-advisor columns
the aftermath of the COVID-19 out- innovations to increase sales. Short- means there is a risk of consumers not
break. As per the latest data, the mo- term car insurance and pay-as-you-go knowing exactly what they are cov-
tor insurance business is expected to models are being adopted by compa- ered for, according to GlobalData, a
register a compound annual growth nies to increase sales. leading data and analytics company.
rate (CAGR) of 1.6% over FY 2019– UbiCar, Real and Kogan are offering GlobalData anticipates that the indi-
2024, primarily due to the ongoing pay-as-you-go insurance policy, where vidual income protection market will
economic uncertainty and long-term
premiums are charged based on actual plunge by 26.5% in 2020, with new
downturn in the auto sector.
distance traveled, which is recorded business premiums set to fall to
Deblina Mitra, Insurance Analyst at via telematics device installed in the £48.2m, down from £65.5m in 2019.
GlobalData, comments: “Automobile car. Huddle is offering fixed-kilometer While demand for unemployment in-
sales in Australia declined by 7.8% dur- pay-as-you-go plans for comprehensive come protection policies soared at the
ing 2018–2019 due to tighter lending motor insurance. Further Poncho is outset of the pandemic, insurers
conditions and lower consumer spend- offering up to 30% in premium reduc- quickly stopped selling these products
ing. New vehicle sales in July 2020 de- tion due to lockdown restrictions which over an uncertain economy and the
clined by 19.2% year-on-year due to resulted in lower usage of car. prospect of high unemployment.
the economic impact of COVID-19. Ms Mitra concludes: “The recent sec- Beatriz Benito, Senior Insurance Ana-
These resulted in lower premium col-
ond wave of COVID-19 infections could lyst at GlobalData, comments: “It is
lections for motor Insurers.” further derail recovery process for mo- still possible to purchase income pro-
This impact will be more severe in the tor insurance industry. Although, recov- tection that provides long-term acci-
commercial segment. As per the Fed- ery in motor insurance industry is ex- dent and sickness cover. Some individu-
eral Chamber of Automotive Indus- pected to begin from 2021, the growth als may buy these policies being un-
tries, the commercial vehicle sales de- is expected to be a subdued one.” aware that they do not provide cover

18 The Insurance Times, August 2020