New Zealand's Tower Insurance is set to refund $7.2 million to customers due to the lower costs it incurred paying out car claims when most New Zealanders were off the road during the nationwide Covid-19 lockdown.
The company said it is "the right thing to do".
Customers will be refunded part of the car insurance premiums they paid during the Level 3 and 4 lockdowns, Tower CEO Richard Harding said today in a statement.
“We’re a Kiwi company and look after our customers, so after seeing a significant reduction in claims, we knew the right thing to do was pass these lower costs on,” Mr Harding said.
The refund for most customers will equate to around 40 to 45 per cent of car insurance premiums paid between March 24 and May 13. It will be paid to all customers who held car insurance with Tower during the period.
“We had planned to make refunds by the end of May, but because we also saw lower claims during the Level 3 lockdown, it’s taken us a little longer to calculate, so refunds will now be paid from late June.”
Mr Harding stressed the importance of transparency for all insurers over their handling of the windfall gain from lower claims during the lockdown, including whether they will refund customers.
“While the lockdown could cause supply chain constraints and a slight uplift in claims expenses over the short term, the significant reduction in claims costs should be passed on.”
Refunds will be calculated based on individual customers’ premiums paid, excluding taxes, fees and levies.
Customers who cancelled or joined Tower during the lockdown period will receive partial refunds.
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