COVID-19 is a case without precedent for the insurance industry. With lockdowns in several states and places, many drivers using their vehicles are no longer on the route. There possibly are other ways to take care of our car or using it nowadays. However, the effect COVID-19 on car insurance claims has considerably decreased.
While insurance lenders may see this as good news, what does it mean for those customers who have purchased insurance that they cannot use? And what consequence(s) does it portend for the entire automotive industry?
Change in Behaviors
Those who can work remotely can generally prefer to choose to make more flexible arrangements. If people use their cars less often, car share or use public transportation, this will eventually influence what consumers expect from their insurance plans.
Can the use of telematics make insurance ‘pay as you go’ the new standard for drivers? Usage-based plans may have temporary mile-insurance protection. Another possible alternative would be to expand coverage to leased cars for work purposes.
Even the lack of vehicles in operation means they could not be tested frequently. Although market agreements to ease vehicle maintenance standards have been reached, any disuse may trigger problems when the vehicles are finally back on the roads.
When the lockdown is relaxed, an increase in car use is likely to occur as people may want to visit friends and family or return to work, which raises another set of issues. The rise in vehicles on the roads would not only make crashes more likely, but accidents can also occur when drivers are out of practice.
Supply Chain
The car industry’s productions and business model have slowed down very predictably. This would have a knock-on impact on both sales and innovation with a decrease in demand, the closing of auto-shops, garage repairs, and services. If people want to use their vehicles less often once restrictions on lockdowns have been removed, the trade would also be slow to pick up again as vehicle owners will not transport themselves the same way as before the pandemic.
Manufacturers and retailers may often have significant, unoccupied buildings containing high-value products that might not be protected by their current policies due to circumstances shift. Materials that could expire or have to be disposed of may also cause a financial loss that may not have been factored into previously.
Claims Handling
Although there might not currently be many auto insurance claims, a spike is probable once the lockdown is lifted. This may either be due to a rise in accidents once cars are back on the road or because before the lockdown, consumers were previously unable to contact their attorneys about injuries.
GEM coverage services research can also be conducted to investigate how consumers of motor insurance were handled during the lockdown period.
The insurance industry continues to collaborate with commercial bodies and the government to try to resolve these issues. New challenges come up each day, with consumers unsure whether their insurance policies are still covering them. Wherever possible; therefore, it is important to provide updates and clarity on the measures taken to resolve how insurance adapts to these unexpected shifts in circumstances.