Car insurance claims have crashed during lockdown, AA Insurance says

Thursday, 16 April 2020

Few car trips mean fewer crashes, and fewer car insurance claims.

Lockdown has led to a sharp drop in car accidents and a matching drop in claims, AA Insurance said.

The insurer expected the reduction in car insurance claims to boost its financial results, and pledged $2 million for a hardship fund for policyholders whose incomes had dropped as a result of the fight against Covid-19.

'AA Insurance is experiencing a drop in the level of car insurance claims made during March and April, following the Covid-19 Level 4 restrictions which have meant New Zealanders are staying home and driving less,' said chief executive Chris Curtin.

'This is likely to have a favourable impact on AA Insurance's results, however, the extent of this will not be clear until financial year end.'

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But, he said: 'AA Insurance believes that in extraordinary times such as these, we need to do more to support our customers, many of whom are feeling more financially vulnerable as they deal with job losses, reduced incomes and businesses with uncertain futures.'

So AA Insurance had created a $2m fund to help vulnerable customers in genuine hardship.

'Secondly, we intend to freeze premium increases in this current situation across our personal car, home and contents products,' Curtin said.

'Thirdly, when we have a clearer picture of the impact of lockdown and the other restricted alert levels on our claim costs, we will look at fairly and equitably recognising this through premium reductions for our car insurance customers.'

'This is about fairness and doing the right thing by our customers and the communities we live in,' he said.

'We are mindful people are driving less which is reflected in fewer claims being made. We do not intend to take advantage of this at the expense of our customers.'

AA Insurance would continue to absorb operating expenses, as well as any impact on its investment portfolios, to ensure customers saw the full benefit of the reduction in claims, particularly car insurance claims, he said.

Customers experiencing financial hardship should contact AA Insurance.

'The $2m hardship fund means we can formalise what we are already doing to look after customers, but each situation is different and it's important for us to work through this with customers individually,' Curtin said.