Insurance is an added expense that, even in the best of economic conditions, is rarely something most people want to pay for yet this necessity of life is often key to everything from driver’s licenses to the ability to conduct retail business.
Now, AA Ireland is recommending that insurance companies lower their premiums – and fast.
Due to unique economic conditions introduced by the COVID-19 pandemic, Irish insurance firms and their clients face unprecedented economic pressures.
These challenges necessitate new thinking and strategies but, until then, the easiest thing that the insurance company partners of business and individuals could do to ease the burdens of the current situation would be to lower premiums.
While this makes sense, it is easier said than done.
How so? Insurance premiums are often based upon guarantees that the company then has to back up when the time comes.
The rates and fees attached to these financial instruments tend to be set according to risk/loss ratios as well as how much the insurer might have to pay the customer in the case of a total loss.
As is readily apparent, changing one value within this complex dance of equations alters many things for the insurance company itself.
It not only does that, but it also introduces new complications and uncertainties.
Towards that end, AA Ireland actually has a logical and, indeed, material counterpoint: Since many people aren’t driving, the risks of accidents have plummeted thus allowing insurance companies some leeway in assessing rates.
Without such extraordinary circumstances, it is admitted, it might be tough to give consumers such a broad discount.
Yet, given the change in the risk profile of the entire nation, AA Ireland argues, it only makes good economic sense to cut clients a break now in order to help mitigate other negative economic factors that could impact insurance premiums later (such as a full-blown economic downturn).
The director on Consumer Affairs at AA Ireland, Conor Faughnan, argued that though none of this is necessarily an easy task, it is certainly a necessary one.
Helping motorists in whatever material ways they can, he says, despite industry forecasts that are showing decreased revenues and hits to the bottom line from the economic slowdown.
Even while acknowledging the difficulty such actions might place insurance companies in, Faughnan pushes for quicker rather than more considered action, pushing the urgency of the dire economic situation as a reason for a swifter response from the industry.
As he describes in his statements to the press, the insurance industry cannot let the consumer come in “at the bottom of the food chain once again” in terms of relief options.
In the meantime, AA Ireland outlined some of the other programs it is pursuing in order to help its customers during the novel coronavirus pandemic, among which includes free Roadside Rescue for frontline employees like doctors and nurses as well as temporarily waiving site inspections for the AA’s Hotel Inspection Grading Business.