UK car insurers stand to lose almost £100m in new premiums as vehicle registrations plummet during the coronavirus pandemic, new analysis suggests.
Figures from the Society of Motor Manufacturers and Traders show that new car registrations fell by 44% in March compared to the same period last year.
This is a steeper decline than the one recorded during the last financial crash, and the fewest number of registrations in March since the late 1990s.
In total, 203,370 fewer cars were sold last month than in March 2019 as showrooms closed in line with government advice to contain the spread of coronavirus.
Analytics company GlobalData estimates that car insurers will lose £98m in new premiums during the pandemic, with pay-per-mile insurers also suffering as customers are told not to travel.
GlobalData senior insurance analyst, Daniel Pearce, said: “The fall in new vehicle registrations will also have a significant impact on the composition of the motor parc in the UK in terms of the prevalence of vehicle safety technology.
“With many safety features incorporated as standard on new vehicles, the fall in their numbers will slow the roll-out of such technology.”
Despite the loss in potential new premiums, separate research has indicated that car insurers stand to make significant gains from a fall in claims.
Data from car insurer By Miles shows that there has been a 69% decrease in daily average miles driven in the UK since the government advised people to only make essential journeys last month.
CEO James Blackham said that UK car insurers could make in excess of £1bn due to a reduction in claims, and urged them to follow the lead of several major US firms by offering refunds.
“We’re challenging traditional car insurers to recalculate their rates and make insurance fair under these extraordinary circumstances,” he continued.
“As people are driving far fewer miles while in lockdown, the number of insurance claims due to accidents also decreases, and those savings should be passed on to the public.”