Canada’s P&C carriers respond to calls for major premium relief
April 8, 2020 by Jason Contant
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Canada’s property and casualty insurance companies have answered the call from brokers and customers for stepped-up relief measures to help cope with the financial impact of COVID-19.
“It’s a very unusual set of circumstances, but in spite of that I think the industry is answering the call and it’s something we should all be proud of,” Insurance Bureau of Canada (IBC) president and CEO Don Forgeron told Canadian Underwriter in an interview Wednesday.
Canadian brokers Wednesday applauded carriers for announcing a number of relief measures intended to help clients in need, particularly drivers. They encouraged further measures to help Canadian small businesses, many of which are not operating due to government shutdowns aimed at slowing down the spread of COVID-19.
IBC issued a statement Wednesday that its member companies are offering reductions in auto insurance premiums for consumers whose driving habits have changed significantly. Insurers have also honoured requests to defer premiums for “thousands” of customers and businesses.
“Insurers have really been leading this,” Forgeron said. “From very early on in the crisis, they realized that the driving habits of Canadians obviously were changing, and in some cases, quite dramatically. The risk profile was different than what it was when those premiums had been set either a month or 11 months ago, depending on the policy. What IBC has done for the last couple of weeks is pull all of that together and on behalf of the industry get everybody to line up behind it and try to put some numbers behind what this will mean for Canadians.”
Auto premium reductions, which will continue for the next 90 days, could result in $600 million in savings, IBC estimated. Insurance customers whose driving habits have changed significantly or who are facing financial hardship as a result of the pandemic should contact their insurance representative, IBC advised. “As it relates to savings on auto insurance premiums, savings will vary depending on individual driving habits.
“The 90-day period is trying to put a box around the announcement so that there’s a beginning and end to this,” Forgeron said. “Nobody knows how long this crisis is going to continue. Nobody knows when we are going back to work and nobody knows what that looks like.”
He added that the $600-million estimate is a “reasonable approximation” based on what IBC experts thought reduced risk profiles would look like across the industry. A number not reflected in the estimate is the cost to the industry for altered payments or deferrals.
Related: UPDATED: What emergency relief will insurers offer customers? Here’s what they told us
In addition to adjusting premiums for drivers, IBC member companies have also committed to the following measures for the next 90 days:
- Explore flexible payment options for consumers who are in a vulnerable position or facing financial hardship as a result of COVID-19
- Waive non-sufficient funds (NSF) insurers would have charged if consumers have insufficient funds to cover their premiums (customers will remain responsible for any fees their bank may charge them)
- For customers temporarily using their vehicle or home differently, this will not affect their premium or ability to make a claim.
Insurers have generally dealt with premium relief for customers on a case-by-case basis. A variety of insurers have offered relief measures such as flexible payment options, waiving NSF fees, and rebates on auto premiums, among others. Some insurance companies have also made charitable donations to communities affected by the pandemic.
In a recent Canadian Underwriter reader poll, one of the greatest concerns about COVID-19 among the industry’s P&C industry professionals was offering clients some kind of relief measures during the coronavirus crisis. (The concern was cited by 51% out of 317 P&C professional respondents, tied with an economic recession as the most-often-listed concern among a list of 10.)
Canada’s national broker association told Canadian Underwriter Wednesday that it was pleased with the announced relief measures.
“These actions represent a positive and proactive first step on behalf of our industry to assist all Canadians impacted by the COVID-19 pandemic,” said Insurance Brokers Association of Canada (IBAC) president Kent Rowe.
Related: What Canada’s brokers have asked of insurers on behalf of Canadians in dire straits
“Reducing and/or deferring automobile insurance premiums at a time when many Canadians aren’t driving is the right thing to do. Many Canadians are facing extraordinary challenges in dealing with the COVID-19 pandemic and we believe that these measures will demonstrate our industry’s willingness to help do our part.”
Rowe added that while the initial cost-controlling measures introduced by IBC and their member insurers are “very positive” and will benefit many Canadians in a time of need, “we would encourage all insurance companies to continue to find ways to support the many thousands of Canadians that buy our products and services.”
Many insurers have already implemented various helpful measures to assist mutual clients, Rowe said, but IBAC is “advocating for further measures to be considered, particularly for small business owners. They are the backbone of the Canadian economy and any assistance we could offer them to reduce or manage costs would, no doubt, be greatly appreciated.”
Business owners in particular are feeling the strain, added IBAC CEO Peter Braid in a release. “We urge IBC to take the same collaborative approach with respect to commercial insurance and find innovative solutions that will help manage or reduce costs.”
IBC said insurers are also working with small business and commercial clients to help businesses manage their costs.
Forgeron said the issues arising from these discussions with commercial clients are much more complicated than the issues that come up in personal lines. “The ability for across-the-board changes, provisions or announcements is going to be far more challenging,” he said.
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I’m still seeing 10-20% minimum and mandatory rate increases and sometimes higher; the same as the last year and half in this hard market. Insurers not allowing coverage reduction while clients businesses have closed. Underwriters only making accommodations for brokers/ brokerages they favor; they want something in return for “helping” clients. I don’t see the compassion or consideration in this time of need and it’s devastating.
I could not disagree more. MORE NEEDS TO BE DONE. Insurers are still asking for standard rate increases when their clients are not working. This is ridiculous and this article is misleading.
The headline is misleading, as most insurers have taken steps on auto, but not on property & casualty. The steps on auto are admirable and the insurers deserve credit for this.
However commercial property & casualty renewals are being quoted and issued with double digit percent increases, at a time when businesses are closed and revenues are/will be down considerably. Yes there are some considerations with respect to deferring payments and NSF’s, but continuing the rate increases is wrong.
So far credit to Economical Insurance who have at least responded positively in this regard. I am sure there are a few others as well, but most of the insurers we deal with have not stopped the hard line rate approach.
Losses should be down in all lines for the short term, as there are far less autos on the road, police report less crime as people are staying home, and there have so far been no catastrophe events, so the overall bottom line has to be better. On top of rates increase for the past 18-24 months it’s now time for insurers to ease off.
Looking forward to seeing brokers help in providing premium relief to their customers by taking a reduction in commission.
Rate increases have not been 100% across the board for 18-24 months. We went through a relatively soft market for the last 10 yrs with an abundance of capacity in the marketplace.