COVID-19: The Effect on Motor Exposure

Andy Goldby - March 27th, 2020

Andy Goldby, Chief Actuary, The Floow

Over the last few weeks, we have seen a number of significant changes to our everyday life as the COVID-19 pandemic continues to spread throughout a number of countries. As the pandemic has travelled to more countries, and with many of these countries entering a phase of complete lockdown, we have observed the impacts which this has had on mobility as our ability to undertake day-to-day travel has been affected. 

We are keen to ensure that our motor insurance clients stay one step ahead and by monitoring the customer mobility levels on the Floow platform, we are able to present an overview of the impact of COVID-19 across the world. We’ve looked at whether the restrictions which are being put in place by various governments are actually reducing people’s driving and if there is a knock on effect on Auto Insurance exposure.

There is evidence that since the COVID-19 pandemic, there has been a reduction in miles driven that could lead to a reduced exposure for Auto Insurance of up to 80% but this reduction varies significantly by country.  Particularly when you take into account the differences in lockdown strategies taken by different countries over the last few weeks (see table below).

The lockdowns of various countries due to COVID-19


China Lockdown in Hubei province begins 23 January with death toll at 17
Italy Lockdown begins 9 March with death toll at 463
Spain Lockdown begins 15 March with death toll at 288
France Lockdown announced on evening of 16 March with death toll at 148
United States Limited lockdown on 23 March with death toll at 325
UK Lockdown begins 24 March with death toll at 355

What data have we analysed?


We have used summarised data from multiple clients across a number of key territories which has been aggregated to allow for a daily analysis of:

  • Active users – those who have completed a driven trip on a day
  • Trips
  • Mileage

The data we have used covers all of March, up until 21st March, and has been compared against data from the last week of February to allow for normal weekly seasonality. This data covers the time period before the lockdowns came into effect in the United States and the UK and there is evidence that figures for those regions will have reduced since then.

Firstly, we looked at changes in miles driven. The graph below shows that Iberia started to reduce daily mileage well before other countries, now reaching an 80% reduction in total miles monitored per day. Interestingly, mileage had already dropped in Iberia by around 50% before the lockdown had even been announced.

Graph showing relative total miles recorded across Floow clients split by territory

The above graph also shows that the United States, Germany and South Africa have all recently started to reduce daily mileage, although they are currently only showing around a 40% reduction. For the UK, mileage only started to reduce in mid-March – coinciding with the postponement of major sporting events and the first daily press briefing from the PM, Boris Johnson, urging people to work from home where possible. 

As of 21st March, despite Government requests, UK mileage had only reduced by ~20%. However, now that the UK has been placed under lockdown, it is likely there would be a significant drop over the last few days and we will report on this next week.

Possible causes of reduced exposure


So why have we seen a significant drop in the number of miles being driven per day? This could be caused by one of three key factors:

1. Reduced miles per trips

Average distance per trip

The above graph shows some evidence of trip length reduction in Iberia and Germany whilst South Africa, the UK and the United States show limited reductions.

2. Reduced number of trips per user

Average trips per user

The above graph shows the average number of trips per user dropping by 15%-30% in Iberia, South Africa and the United States, a 10% reduction in Germany and no change in the UK.

3. Reduced number of users driving

Average users per day

The above graph shows the number of active users as the root cause for where the main reduction has occurred. The number of active users has dropped by 50% in Iberia and 20%-30% in the United States, Germany and South Africa.  Once again, the UK seems to be lagging behind in its response with only a 10% reduction in active users seen from 2nd March to 21st March.

What are the likely effects on the insurance industry?

Auto claims are generally proportionate to the amount of exposure to risk as well as a user’s driving score. To date, as the chart below shows, there is no strong evidence that scores are changing over time.

Average score

Although, it is possible that the United States, South Africa and Germany are showing a small deterioration – this could be due to an increase in the speed of drivers now that the roads have less traffic or a result of an increase in distraction from mobile phone use as people ensure they are regularly checking in on their families and friends.

Therefore, the overall effect on insurance profitability will depend mainly on the reduced miles driven due, in the main, to the reduced number of people driving.  As of 21st March, our figures showed:

  • 80% risk reduction in Iberia
  • 50% in Germany
  • 40% in the United States
  • 30% in South Africa, and;
  • The UK showed only a 20% reduction in risk (although we expect this will have changed significantly since the full lockdown came into effect)

The last few weeks and months have been a learning curve for us all as we come to terms with the changes we have had to make to our lives as a result of the COVID-19 pandemic. As many countries stay at home and continue to have restrictions on movement, it is understandable that this would have an impact on motor insurance and their exposure to risk. 

At The Floow, we are keeping a close eye on the ever-changing situation around the globe and we are happy to help current clients and the motor insurance industry navigate these seismic changes. In the meantime, we hope you are all keeping well and staying safe.

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