July 15, 2020 / 11:17 PM / 19 days ago

UK car insurance premiums in second quarter show largest quarterly drop since 2018

FILE PHOTO: A view shows morning rush hour traffic, as the spread of the coronavirus disease (COVID-19) continues, in central London, Britain July 6, 2020. REUTERS/John Sibley

(Reuters) - The cost of a comprehensive motor insurance policy in Britain fell 5% in the second quarter, the largest quarterly drop since early 2018, but coronavirus-led uncertainty clouded future claims and pricing trends, a survey showed on Thursday.

The average premium for a comprehensive policy is now 770 pounds, according to the latest index from price comparison site Confused.com, compiled by insurance advisory company Willis Towers Watson Plc (WLTW.O).

British motor insurers, already struggling with high costs and tougher environmental rules, are now also looking at a hit to cost of premiums due to the decline in accidents and claims.

The index, based on price data submitted by customers to insurer Admiral Group’s (ADML.L) Confused.com, showed while insurers took pricing action over the quarter, not all surface-level changes in the market price were necessarily exactly as they seem.

“As we emerge from lockdown and roads become busier, insurers are attempting to predict claims and adjust prices before the full impact of COVID-19 on both medium and long-term frequency and severity trends is known,” said Graham Wright, UK Lead of P&C Personal Lines Pricing at Willis Towers Watson.

According to data published last week, British new car registrations fell by an annual 35% in June, the smallest drop since February, as many dealerships reopened after coronavirus-led lockdown measures were lifted.

In an attempt to support car finance and high cost credit customers, Britain’s Financial Conduct Authority on Wednesday granted borrowers and users the chance to freeze or reduce repayments on their debts for a further three months.

Companies such as Admiral, RSA Insurance Group Plc (RSA.L), esure, Direct Line Insurance Group Plc (DLGD.L) and Hastings Group Holdings Plc (HSTG.L) provide motor insurance for Britain’s highly competitive insurance sector.

($1 = 0.7921 pounds)

Reporting by Samantha Machado in Bengaluru; Editing by Krishna Chandra Eluri

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