AA and Tower vow to make refunds on premiums

Two major car insurance companies will make refunds or reductions on car insurance policy premiums because of much lower claims rates during the COVID-19 lockdown.

AA Insurance and Tower say motorists are driving less and making fewer claims on policies.

There’s no word yet from IAG, the parent company of several insurers including AMI and State, as to whether it will offer refunds.

Chris Curtin, chief executive of AA Insurance which was the first at announce refunds, says his company has created a $2 million fund to look after customers facing genuine financial hardship.

It has also frozen premium increases on personal car, home and contents policies.

Once it has a clearer picture of the impact of the lockdown and other alert levels on claim costs, it will look at “recognising this through premium reductions for our car insurance customers.

“We are mindful people are driving less which is reflected in fewer claims being made. We do not intend to take advantage of this at the expense of our customers.”

Curtin says customers experiencing financial hardship now should contact AA Insurance to “work out an appropriate plan, so they retain their insurance cover during Covid-19 Level 4 restrictions and beyond.”

Tower Insurance CEO,, Richard Harding, says Tower will make premium refunds to car insurance policyholders by the end of May.

He says Tower knows people are driving less, and making fewer claims: “any savings we make will be passed back to our customers.”

Harding says there is still a lot of uncertainty, and the company hasn’t processed this level of refunds before. “We need some time to calculate and arrange them,” hence the end-of-May payment date.