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Law360, London (April 20, 2020, 2:52 PM BST) -- Ireland's finance minister called for insurers in the country to issue a partial refund on motor premiums to customers, following the example of insurers in the U.S., as the lockdown has resulted in fewer people using their cars.
Ireland's finance minister has called for insurers to issue a partial refund on motor premiums to customers as the lockdown has caused traffic to fall. (AP)
The statement followed a meeting with trade body Insurance Ireland, which said in a separate statement it would "reflect" on the possibility of refunds.
Because fewer people are using their cars during lockdown, there is likely to be a reduction in claims costs, providing a profit bounce for insurers.
In the U.S., two major insurers — Allstate and American Family Mutual — said earlier this month they would return $600 million and $200 million respectively in motor premium refunds or discounts to customers.
Donohoe said the minister had called for a similar gesture by Ireland's insurers.
"In relation to the treatment of motor insurance policyholders, I pointed out that a combination of the very profitable part of this market over the last 12 months, when combined with what is likely to be a significant reduction in claims for this period, provides a strong case for some type of refund of consumers motor premium package," Donohoe said.
Insurance Ireland said in a statement that it would consider the possibility "as a matter of urgency," but added that motor refunds were not occurring in the U.K. or the rest of Europe.
"We listened to the minister's views regarding the potential for motor insurance rebates and we have committed to examining this issue fully with our members and to respond constructively," said Moyagh Murdock, chief executive of Insurance Ireland.
A spokesman for the Association of British Insurers told Law360 at the beginning of the month that there was no industrywide initiative in the U.S., and there would unlikely be one in the U.K.
"Any premium adjustments or refunds will be a matter for individual insurers," the spokesman added.
Donohoe also discussed with Insurance Ireland concern over what appeared to be a "blanket" refusal over business interruption claims.
Insurers have come under increasing fire for refusing to compensate businesses for lost profits under lockdowns, even when those businesses had "notifiable disease" cover in place.
"Failure to pay certain policies in the context of the industry clarifications reinforced the minister's view that some insurers were doing the industry significant reputational damage and were not treating customers fairly," the Department of Finance added in a statement.
--Editing by Rebecca Flanagan.
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