Without a doubt the Coronavirus COVID-19 lockdown which began on 23rd March 2020 is having a significant effect on the UK's motor trade industry. Both globally and locally. Historically only perhaps the fuel crisis of the 1970s and World Wars would have had such an impact on the operational use of a policy, the cost of running a business and motor trade insurance prices on the whole. Year on year general vehicle insurance and motor trade premiums have been increasing. There appears to be wide acknowledgement that due to millions of vehicles being taken off of the road, less accidents are likely. In turn this should mean insurance companies are paying out less money. Current COVID-19 Government advisory is to only leave the home for essentials and exercise or to work. This has taken a lot of traffic off of highways and motorways.

Could COVID Lockdown Result In Lower Motor Trade Insurance Prices?

Though not in regards to the motor trade. Quite the traffic is lessened and if discounting car showrooms, car valeters - not a key worker and other non essential trade services. Then the majority of transportation companies and hauliers delivering goods across the country and into Europe where possible, are in high demand. Insurance works on a sub sector claims basis. If there are instances of high claims then the pool of money paid via monthly premiums increases. To remain competitive, low claims result in lower premiums. The fluctuations differ annually.

The question of lower premiums and lower motor trade insurance prices due to COVID-19 will probably only become evident after a quarterly experience of lockdowns, perhaps Q2/Q3. Year on year it could be that in 2021 the cost of motor trade insurance policies may remain the same as before the virus hit. Comparisons will of course be made. Though it is possible competition could result in lower costs for motor trade businesses from October onwards depending on economic recovery and the claims rate.

Other COVID19 Factors And The Cost Of Running Your Motor Trade Business In Lockdown

Insurance is not just based upon claims after an accident. Loss of business insurance or Business interruption insurance are both an added extra which you have quite rightly paid for. The last SARS virus concerned insurance leaders but didn't result in any form of lockdown in western society. A great many insurers started ensuring communicable diseases, epidemics and pandemics were written out of their policies. A policyholder would need to check with individual insurance houses like AXA and AVIVA to find out their position.

Insurers may allow such COVID-19 protection to be written in but at a much higher cost and after an underwriter's evaluation on an individual's business. This may only affect motor trade insurance prices if holding a Combined trader's insurance policy. Which could possibly also include employee benefits. If running a delivery company and the worker contracts and dies with COVID-19 there is a significant payout, much like the death payout for NHS workers during the Coronavirus crisis. There is no sign that this amount should change. If anything a Director may feel obliged to either supplement the worker's pay packet or increase such danger money and the premium with an insurer.

Indirect Coronavirus Protections In Place For Motor Trader's New Activities

The Financial Conduct Authority (FCA) in the United Kingdom which oversees contractual financial loans with regards to insurance has advised of several expectations that industry leaders should take on board. The FCA are the final arbiters of all contracted financial services and is the nationally recognised regulator of each individual sector. FCA cannot intervene with motor trade insurance prices but instead industry are bound by their behaviours and a statute that puts the protection of the paying customer at the fore. The FCA has recommended that due to the COVID-19 lockdown insurers should be aware that many business owners and workers will have to stay away from their main registered business address and work from home. Through no fault of their own. Therefore should valuable tools now be kept at a home address, vehicles parked at their place of residence or policyholder work directly from their abode, if claims arise, these should be dealt with in the correct manner affording the developing situation.

Adapting Your Motor Trade Business For The Lockdown

If a motor trade business is large enough it is possible it took the government's offer and furloughed staff and drivers for the interim. Though Directors will certainly be aware that downtime could see a competitor rise to pick up contracts. Only certain motor traders are affected. Yes retail distribution is down. With the majority of shops shut the transportation from warehouse to individual outlet is cancelled. However the growth of online trading is phenomenal. The ability to meet demand in a crisis while providing a key service, such as meeting food delivery deadlines, transporting fruit and veg timely and reinvigorating operations to provide home deliveries due to the increased demand in online orders, is certainly going to be a challenge. But with the correct motivations, changes to insurance policies, using a different or existing stock of vehicles an acceptable endeavour. There is a way to take the motor trade business to a new and different level and basically survive, retaining employees and making those all important Motor trade insurance prices mean something.

The COVID-19 lockdown will not last forever. Anyone that believes there will be one lockdown and everything will get back to normal is fooling themselves. The 1918 Spanish Flu had three main waves. Adjustment is a trait of a motor trader. Handling a stock of cars vs sales, expanding routes to deliver while replacing short notice cancellations with new clients. Whether there are two more lock downs or four over three or five years motor trade insurance prices will react to the wholesale subscription value versus the claimant payout. On a quarterly basis providing the accident rate decreased during the Coronavirus lockdown, a Christmas bonus is not out of the question.

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