Yahoo Finance How can LV= increase our car insurance in the Covid-19 crisis?
Can you ask LV= to explain how it can justify trying to increase my car insurance premium by 15%, given that I, and most people I know, have barely driven during the past 10 months?
I’ve been a good customer over the years, buying both house and car insurance, but I’m starting to feel the loyalty is rather one-sided. Last year I paid £213 to insure my Skoda Karoq and, although it spent much of the year in lockdown, the company has asked me to renew at £245.
When I complained, I was offered a new price of £226 which is still a 6% increase. It blamed it on the “increase in the price of parts as a result of Brexit which hasn’t helped the insurance industry”.
Imagine my feelings when I read in the Guardian that car insurance claims were down by 48% in 2020. I made no claims or changes during the year.
NR, by email
On the same day this letter arrived, Comparethemarket put out a note saying that car insurance premiums had dropped to the lowest winter level for five years. A day earlier, Confused.com said they had fallen by £52 following the “steepest annual price drop in two years”.
Meanwhile, James Blackham, who runs the pay-by-mile car insurance firm By Miles, went further. He said insurers have collectively saved in excess of £1bn through fewer claims, and that insurers should repay each 2020 customer about £65. So is a 15%, or even a 6%, rise justified? It certainly doesn’t look that way.
What many LV= customers may not be aware of is that it is a mutually owned firm, formerly Liverpool Victoria, and completed the sale of its car insurance business to Allianz on 2 January. The German insurance giant paid a total of more than £1bn. Could the new owner be trying to recoup some of its expenditure by increasing premiums?
LV= is unrepentant, and told me the increase is correct. “As a result of cars being driven less because of the various lockdowns, we have been passing on these savings to our customers through their renewal premiums. But, unfortunately, there are other factors that have resulted in prices needing to increase,” it said. “Claims inflation continues to be high and the cost of repairs continues to increase, too. These are factors we need to take into consideration.”
It will be a shame if these increases are seen across the board. LV= has been one of the best UK car insurers in recent years – competitively priced, with good customer service. But now customers, it seems, should definitely shop around come renewal. As one, I certainly will be.
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