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article imageEconomy: Decline in consumer and business auto insurance

By Tim Sandle     Aug 17, 2020 in Business
How has the coronavirus pandemic affected automobile insurance? Data from Deloitte Center for Financial Services’ indicates a decline. The insights on the impact of COVID-19 on personal and commercial auto insurance are significant.
Deloitte data suggests that COVID-19 could result in a decline of 6.2 percent in personal automobile insurance premiums written, and 3.5 percent for commercial automobile in 2020. The data relates to the U.S. economy.
According to the report, personal and commercial automobile insurance carriers should expect to see a steady decline in premiums written for the next several quarters (and perhaps even for years). This not only spells bad news for the industry, in terms of expected revenue it indicates that a number of vehicles are likely to be driven without insurance premiums being in place.
The report includes forecasts from Deloitte on the potential impact of the COVID-19 pandemic and the ensuing economic slowdown on net written premiums of key property-casualty lines in the next few years. The future predictions do not make pleasant reading for those in the automobile insurance trade.
One of the factors preventing the figures from being even worse is auto-renewal, which occurs when people have provided insurance companies with their credit card or bank account details. This practice can result in consumers and businesses receiving worse deals at renewal time.
One of the key findings in the report is a predicted single-digit rate decrease for the next several quarters, which would keep personal auto premiums considerably below pre-pandemic levels until 2023. For commercial auto premiums, an overall decline in commerce will likely keep them below pre-pandemic levels until at least 2022. These figures will no doubt change the longer the coronavirus pandemic continues.
The data also indicates that personal automobile net written premiums have dropped by as much as 11.4 percent quarter-on-quarter in Q2 2020. These policies are expected to decline 1.3 percent quarter-on-quarter from Q1 2021 to Q1 2022. Furthermore, commercial auto net written premiums could slide 1.4 percent quarter-on-quarter for all of 2020 due to the economic slowdown, while remaining flat in 2021.
The report provides advice for automobile insurance carriers in terms of risk mitigation.
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