Kiwi insurer Tower says it will refund $7.2 million due to the lower cost of car claims during the Covid-19 lockdown period.
Tower chief executive Richard Harding said every customer would be refunded part of the car insurance premiums they paid during the level 3 and 4 lockdowns.
“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,” Harding said.
For most customers, the refund will equate to around 40 per cent to 45 per cent of the car insurance premiums they paid between March 24 and May 13 this year, Harding said.
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Harding said all insurers needed to be transparent about how they dealt with the windfall gain from lower claims during the Covid-19 lockdown.
“Refunding customers is the right thing to do, and 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,” said Harding.
Last week, Tower proposed to cut 108 jobs as part of its wider cost-saving measures.
*Refunds will be paid to all customers who held car insurance with Tower from March 24, 2020 to May 13 2020, inclusive.
*Refunds will be calculated based on individual customers’ premiums paid, excluding taxes, fees and levies
*Refunds will be pro-rated for customers who cancelled or joined Tower during the lockdown period
*Tower will communicate directly with customers advising on how the refund will be paid, with refunds starting to be paid in late June
*The total cost of the refund is offset by the reduced claims cost and will result in a neutral financial impact to Tower.