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Joyriding and car vandalism could surge as the coronavirus lockdown drags on – but accidents are likely to plunge as drivers stay off the roads, Sabre Insurance has said.
Bored young people with "literally nothing to do" could embark on a wave of small-scale vehicle crime, according to the FTSE 250 firm’s boss Geoff Carter.
However, he added that the risk of collisions has dropped sharply. Road traffic has fallen as much as 73pc to levels not seen since 1955 after the Government urged families to stay at home.
Mr Carter said: “Clearly, during the lockdown period there are less miles being driven and claims frequency for these weeks is going to be significantly down.”
Claims could drop as much as 60pc while restrictions are in place, he said.
However, Mr Carter warned that the short-term benefits to insurers of fewer claims must be weighed against the increased cost of providing replacement hire cars for customers. Supply chain disruption after manufacturers shut down around the world mean repairs could take much longer than usual.
He also said there could also be a surge in claims when the lockdown finally ends as Sabre’s 327,000 customers travel to see family who they have been unable to visit for weeks or months.
Pre-tax profits at Sabre fell 8pc to £54m in 2019 as general expenses and the cost of paying out on claims rose.
Sabre will pay a full-year dividend of 8.1p per share but will not go ahead with a special dividend of 5.2p after the Bank of England last week urged insurers to be prudent. It may instead pay an interim dividend later this year as the impact of Covid-19 becomes clearer.
Mr Carter said: “This is not a time to be adventurous with the dividend."
The Bank raised no objection to Sabre paying some money to shareholders, he said.
Mr Carter said Sabre does not expect to seek state support, and has kept all staff on full salaries without using the furloughing scheme.
The firm said that even if revenue from premiums falls by half this year, it would still expect to be profitable.
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Mr Carter said Sabre’s solvency ratio – a measure of reserves held by insurers to make sure they can pay out on customer claims – had risen so far this year from a healthy 180pc at the end of 2019.
Insiders at other insurers say they are still watching closely to see how the Bank will react to Legal & General’s decision on Friday to go ahead with a £753m pay-out to shareholders.
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