Deloitte Touche Tohmatsu Ltd. said on Wednesday that factors caused by the pandemic could lead to a 3.5% reduction in commercial car insurance premiums written in 2020.
Commercial net written premiums could apply to 1.4% for the whole of 2020 due to the economic downturn, while it remained flat in 2021. Commercial cars could return to growth, but with a quarterly increase of only about 1.0% in 2022, Deloitte said.
Drivers drive less due to the pandemic, the report showed.
Coronavirus-related shutdowns and restrictions, coupled with the resulting slowdown in economic activity, led to a 40.2% decrease over the year over millions driven by US drivers in April 2020 and 25.5% in May 2020, according to Deloitte said in its report on Wednesday the latest available information from the Federal Highway Administration.
The consultant claimed that such reductions could continue in the future.
"Although reports suggest that driving trends have begun to normalize in recent months, persistent health problems, greater acceptance of teleworking and an ongoing economic downturn may lead to reduced vehicle use for quite some time," said Deloitte.
While the personal car sector provided premium credits to many consumers during the first months of the pandemic, this is not appropriate for commercial risks due to customer differentiation.
However, commercial premiums are likely to be blunted at least in the short term, Deloitte said, noting "an overall decline in trade due to a pandemic-triggered slowdown in the economy is likely to keep premiums below prepandemic levels at least until 2022."
However, the reduced traffic should lead to fewer claims.
“There is a silver lining, however, for car insurance companies: Fewer miles are driven. Reducing traffic density normally lowers the frequency of the claim, as roads are safer with fewer vehicles. Ultimately, this would help improve the industry's top line, "said Deloitte.
More insurance and risk management news on the coronavirus crisis here .