Europe's largest insurers are taking a wide variety of approaches to refunding customers' premiums if the coronavirus pandemic is reducing their propensity to claim.

Most major car insurers in the U.S. have enacted some form of premium rebate program, including discounts on future renewals and refunds of a proportion of the amount paid for certain months.

In Europe, several companies have reported lower claims frequencies in certain lines of business because of government restrictions designed to curb the spread of the virus, particularly personal lines motor. But while most companies are seeing broadly similar trends, there is a patchwork of responses.

Smaller and more specialist insurers have led the way on rebates. U.K. motor insurer Admiral Group PLC announced April 21 that it would return a total of £110 million to car and van insurance customers because they are driving less. Allianz Group's U.K. personal lines subsidiary, Liverpool Victoria General Insurance Group Ltd., said May 1 that it had made £30 million available to refund car and motorbike customers who are facing financial difficulties because of the pandemic, funded by savings it expects to make from reduced claims.

And U.K. personal lines insurer Direct Line Insurance Group PLC said in its first-quarter trading update that it is refunding premiums for motor policyholders who reduce their annual mileage or cancel cover for foreign use of their vehicle, and is also refunding travel insurance policyholders with multitrip policies on a pro rata basis.

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Wait and see

Some companies want to see more evidence of claims reductions before offering refunds. AXA SA CFO Etienne Bouas-Laurent told analysts on a May 6 earnings call that although the insurer expected an "excellent" motor loss ratio in the second quarter, it was not clear what would happen in the second half.

"We are very keen to look at the overall balance of our [profit-and-loss account] before refunding retail clients after just one or two months of pretty good experience," he added.

Axa has, however, given two months' premium refunds to small and midsized companies and extended work-stoppage insurance for pregnant women and people with chronic disease in France, Bouas-Laurent said.

Danish insurer Tryg A/S is adopting a similar stance. CEO Morten Hübbe said on an April 21 earnings call that rebates could be discussed if benefits from lower claims were "very strongly positive" but added: "We are many quarters away from such a dialogue."

A spokesman for Dutch insurer NN Group NV said via email that although the company was seeing lower motor claims, the Netherlands is not in lockdown and traffic is "lower but still lively." He added: "Pricing assumptions are long term and we should view the impact of temporary lower traffic frequency therefore also on a longer term."

Regional variations

Others' approach varies by country. A Zurich Insurance Group AG spokesman said via email that the company has announced refunds in "a number of countries." In Portugal, Zurich is offering an €8 million "renewal bonus" for auto policyholders who do not claim during the coronavirus state of emergency period. In Spain, the renewal bonus covers private car customers as well as property and general liability policies for shops and small to mid-sized businesses.

In Ireland, Zurich will issue a €40 gift voucher to personal motor customers starting from the end of May. In the U.K., however, Zurich has instructed policyholders who are driving less because of the pandemic to contact the company or their broker and update their policy details, and they will get a refund if the update results in a lower price.

Allianz also does not have a single central policy for coronavirus premium refunds. A spokesman said via email that in some markets, premiums are generally adjusted according to mileage. For example, it is standard practice at the insurer's German operation to ask policyholders for their mileage at the end of each year and adjust the premium accordingly.

Customers who know they will be driving less can also get an immediate refund by changing their mileage details through their agent or Allianz's online customer portal, the spokesman said. Allianz's French unit increased the discounts for telematics customers in March and April.

Regulatory impetus

In some cases regulatory pressure is playing a role in the rebate decision. Spanish insurer Mapfre SA is granting premium refunds of 15%, totaling more than $30 million, to personal motor policyholders in Massachusetts, where the insurer has its biggest U.S. presence, in April and May. Mapfre CFO Fernando Mata said on a May 5 earnings call that the company had done this "following a strong recommendation from the state supervisors." He added that similar measures could be taken in the other U.S. states where Mapfre operates.

Outside the U.S., Mapfre is focusing on people and companies suffering financial difficulty. For example, it has allocated €60 million to premium discounts for the self-employed and small and mid-sized businesses when they renew their business insurance. A spokesman said via email that Mapfre's approach was governed in part by what legislation allowed in the countries where it operates. Some countries mandate that a car is insured regardless of whether it is driven, the spokesman said.

A further consideration is that any reduction in claims could only be temporary.

"The fact that people cannot leave their home implies that there are many situations and claims that are simply going to be postponed, not canceled. There are risks that in this period [that] have not only not been reduced, but have increased," the spokesman said.