Millions of vehicles are now parked in garages and driveways as people shelter in place, or worst yet, suffer crushing job loss. That means hundreds of thousands of fewer accidents and billions of dollars in claim dollars that won’t be paid. Big-name insurance carriers will be the chief beneficiaries in this scenario, leaving consumers fighting for relief.
The coronavirus and the associated shutdown of the U.S. economy will dramatically reduce car insurance accidents. The impact began in mid-March with the “15-days to slow the spread” initiative and will continue until U.S. drivers are driving as much as they were in early March.
The impact of social distancing will soon become very apparent in auto accident statistics. Our projections are that the paid losses in 2020 could be as much as $100 billion less than in 2019. If this savings is passed through to customers, this $250 billion industry would shrink by $150 billion.
For consumers, this means there’s significant opportunity to save money. This can easily be done by adjusting insurance coverage to account for new driving patterns. On average, consumers could save approximately $560 per vehicle. For those out of work or working from home, the amount could be even larger.
The impact on carriers will be two-fold. ValChoice expects that many carriers are hoping to see a substantial increase in profits due to reduced claim payouts. Other carriers will use this as an opportunity to gain goodwill through lower prices.
No matter how the auto insurance industry reacts, the outcome that’s almost certain is that some companies will fail. In the long-term, less competition is bad for consumers.