In a surprise move early on in the Coronavirus lockdown, Admiral told its customers that they will receive a £25 refund on the insurance policies that cover the 4.4 million cars and vans insured with them.
Admiral says it is giving the refund in recognition of the fact that during the Covid-19 lock down people are staying home and driving less. The risk of being in an accident is going down, and so the insurer expects to receive fewer claims.
Admiral says it will be refunding £110 million to customers. A £25 refund will be automatically given to all customers by the end of May for each car and van which was covered with them on 20 April 2020.
Its decision will not only delight customers but perhaps shareholders too, because it’s also a smart bit of business thinking.
First mover advantage
By moving quickly and being the first insurer to announce what they are doing, Admiral (and Diamond, part of the same group) garnered lots of column inches – free advertising. It has also gained masses of goodwill, both from their customers glad for a refund when many people are facing financial uncertainty, pay cuts or loss of jobs, but also people insured by other providers who are now thinking, ‘Why hasn’t my insurance company done this?’. These individuals may now remember Admiral or Diamond at renewal time.
Not only has Admiral been the first mover, they have said that no-one needs to claim the money, thereby avoiding creating any additional life admin for their customers.
In another smart move – customers don’t have to worry about getting the cash back or filling in forms. Admiral is making it completely effortless for them. The way Admiral has done it will also minimise administration on their end too. A flat refund means no time spent working out a proportion of the cost of your policy. You will get the same refund whether your policy costs you £250 or £1,200. Though you might expect a bigger refund if you pay a bigger premium, Admiral says it wants to make sure ‘all customers had an equal share in the savings made from the expected reduction in claims’.
And if your renewal is up soon, you don’t even have to worry about that. Admiral says it will issue the refund ‘regardless of your decision to renew, as long as your cover was active on 20 April 2020.’
Fixing costs to the business
By acting early Admiral has also crystallised the cost for themselves. They have estimated the refund will be £110 million. Moving early here has given them another advantage. If the lockdown drags on, insurers who act later may find the expectation of the amount refunded has risen as the time we are driving less has extended.
Why how companies behave now matters
There is already evidence beginning to build that customers will remember the companies that behaved well towards their staff and their customers when the lockdown ends. Indications are that local shops, independents and companies that took their social responsibility seriously will be rewarded with business, while those that didn’t will be spurned. The idea of the triple bottom line – profit, people, planet – has become more mainstream and companies that fail to remember the people and planet aspects could well get left behind.
And while horror stories abound about people trying to claim on their holiday insurance or business interruption insurance Admiral is likely to be remembered as doing the right thing for drivers.