Many insurers are currently wondering whether to give out car insurance rebates to NZ motorists for this year’s lockdown period. In a way, this does make sense. Traffic has dwindled, and many cars are just sitting in their parking lots not being used. There is also precedent for this as AA Car Insurance in NZ and Tower Car Insurance gave out rebates adding to just under $27 million during the six-week lockdown last year.
On the other hand, IAG which owns the State, NZI, and AMI brands opted to not give out any rebates during last year’s lockdowns. For this year, however, all three insurers now say that it’s too early to say whether it’s time to give away rebates.
AA Insurance spokeswoman Amanda Fifield says “Last year’s lockdown was based on a six-week nationwide lockdown, so it’s too early to say what the impact of this [year's]] lockdown will be.”
“Our executive team is constantly monitoring the situation including what we have learned about changes to driving behaviours and repair costs post lockdowns.”
“We are committed to letting customers know directly of any updates.”
This sentiment is also echoed by Tower spokeswoman Emily Davies: “It’s too early to tell what impact this alert level change will have on our customers and whether a rebate may be appropriate.”
“Right now our focus is on our people, on supporting our customers and maintaining all elements of our operations.” Davies adds. “We are continuously monitoring the situation and once we get through this period, we’ll be able to determine if any action is required.”
AA Insurance has refunded more than $19.5 million to 400,000 motor insurance customers after last year’s COVID-19 lockdown. Owners and households drove around less, resulting in fewer crash claims and a sudden windfall for insurers. Back then, AA Insurance chief executive Chris Curtin had pledged to return its windfall gains to customers, refunding a portion of their motor premiums during the previous alert level 3 and 4 lockdowns in the country.
“Premiums are calculated in advance, however, after seeing the number of motor insurance claims fall because people stayed at home, we wanted to acknowledge this and give back to our customers, so we have reviewed the premiums paid and have started refunding a portion of this back to them,” Curtin acknowledges.
Customers were able to receive around 42% of the premiums they paid between March 24 and May 13 as rebates. Customers who have AA’s comprehensive car insurance policy get a rebate of about $40. People who have a policy for their motorbikes, classic vehicles, motor homes, caravans, and even trailers were also entitled to a rebate.
Tower also refunded around $7.2 million in rebates last July 2020, while State, AMI, and NZI did not release any statements on whether they would follow suit.
For now, many insurers want to take a step back and assess the situation for the coming days, in order to determine the best way they can serve their customers and their own workers. For IAG executive general manager for customer and consumer Kevin Hughes, “Our immediate focus has been supporting our people and responding to the needs of our customers during the first few days of lockdown, including those affected by recent weather events.”
“Given the level of uncertainty around this outbreak, we are assessing the situation and considering how we best support our customers during this time. How long the lockdown continues will be important.”
“We will continue to do the right thing by our customers, by putting their specific needs at the heart of our response,” Hughes added.
IAG has reported some drop in profits in NZ as claims returned to pre-Covid levels with even bigger losses from the Australian parent company at AUD427 million, or NZD448 million. The company told investors that the losses were a result of paying out for any Covid-19 business interruption claims, while setting aside money for wronged customers and payroll failures.
They are not the only company announcing losses. Suncorp New Zealand, who owns Vero, and also owns a majority stake in AA Insurance has reported a 17% drop in profit earlier this month. This is after a $45 million spike in extreme weather claims, as well as around a $15 million hit for compensating its customers.
Customers and policy holders will have to wait and see for any further news when it comes to rebates. In the meantime, people can look at glimp's free comparison tool to compare car insurance in NZ. See the latest deals and most competitive rates on your premiums.
So what do you think? Will these insurers will give out more rebates like last year? Share your thoughts with us!
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