Call to cut vehicle insurance premiums

WELLINGTON: New Zealand insurance companies will save about $100 million on payouts for motor vehicles alone during the lockdown because of the dramatic drop in driving during the pandemic.

The windfall for insurance companies is leading Consumer New Zealand to urge insurance companies to follow the lead of those in the United States, which have cut car insurance premiums by between 15% and 25%.

Consumer New Zealand head of research Jessica Wilson said Kiwi companies should follow on from those in the US.

‘‘Obviously insurers will be seeing a marked drop in claims because most of us are at home and not driving anywhere near as much as we used to.

‘‘That means insurance companies’ costs have gone down. It also means the risk assumptions they use to calculate the premiums that we pay have changed.’’

Insurance Council chief executive Tim Grafton said while he did not have exact figures, claims for motor vehicles may have dropped by up to 90%, saving the insurance industry about $100 million.

Not all the insurance risk of car ownership was associated with driving.

‘‘There is damage to motor vehicles when they are laid up, theft of motor vehicles when they are laid up, malicious damage to motor vehicles when they’re laid up,’’ Mr Grafton said.

Insurance companies had to manage their own income and new customers were hard to find during the economic downturn.

After RNZ made inquiries, AA Insurance announced it would freeze car insurance premiums and look to reduce them when the financial impact of the lockdown was clearer.— RNZ