Admiral PLC (LON:ADM) is to refund customers £110mln due to the impact of coronavirus restrictions on car travel.
In the first such move by a major motor insurer, the FTSE 100 group said it would refund £25 for each of the 4.4mln cars and vans it insures.
The money will be credited by the end of May said Admiral to customers with an active policy on 20th April and reflects a slump in the number of car accident claims due to the fewer number of vehicles on the road.
Admiral said the refund amounts to about a third of 2019’s profits and its move is likely to force the hand of rivals to come up with similar measures.
Cristina Nestares, chief executive of insurance at Admiral said: “This is an unprecedented time when people across the country are driving significantly less than before the lockdown, and we expect this to lead to a fall in the number of claims we are seeing.
We want to give the money we would have used to pay these claims back to our loyal customers in this difficult time.
“The Admiral Stay At Home Refund was launched to recognise the considerable efforts people are making by staying home as much as possible and as a result driving less.”
Admiral added it will commit a further £80mln to lower prices and support the community and NHS staff during the coronavirus crisis.
NHS staff will have their excess waived, while cover is being guaranteed for transporting people, medical supplies and items to those self-isolating.
Industry sources suggest the insurance sector overall has saved £1bn in claims due to the coronavirus lockdown.
Peel Hunt, the company’s house broker, said: “Admiral is the first UK Motor insurer to follow the trend from the US and Canada to refund customers’ premiums as it returns the benefit of lower claims inflation to drivers (as cars stay off roads).
“We believe other leading UK Motor insurers will soon follow suit.
“Furthermore, GoCo has highlighted a decline in new business, quoting behavioural changes, albeit this is likely to be offset partially by an increase in renewal retentions and higher conversion rates.”
Shares in Admiral rose 3% to 2,268p.