April 13, 2020 by Jason Contant
Canadian insurers have rolled out a number of measures to help Canadian homeowners, drivers and business owners in need over the past week, and now Canada’s national broker association is discussing with insurers additional relief measures for commercial clients affected by the ongoing COVID-19 pandemic.
Insurance Brokers Association of Canada (IBAC) president Kent Rowe told Canadian Underwriter last week that brokers would like to see insurers adopt four separate measures, ranging from a premium cap or freeze on renewals to support for businesses that are retooling their operations to produce essential goods or services during the pandemic.
The four “asks” were sent to Insurance Bureau of Canada (IBC) last Thursday, Rowe told Canadian Underwriter in an interview. IBC announced Wednesday that member companies are offering reductions in auto insurance premiums for consumers whose driving habits have changed significantly. Canadian insurers have also honoured requests to defer premiums for thousands of customers and businesses.
On the auto premium side, reductions, which will continue for three months, could result in $600 million in savings, IBC estimated.
“We’re very happy to see IBC and their members provide some relief for the personal lines clients, people with vehicles who aren’t travelling for work, giving them such much needed-relief,” Rowe said. “But we have got many business owners out there now, of course, and they’re significantly and critically impacted by this, so we’d like to see measures in place to provide support on that level.”
IBAC’s recommended measures for commercial clients are:
1. A premium cap or freeze on renewals for businesses, in terms of rating for a specified period of time (perhaps matching renewal terms from last year’s rating).
“Whatever that may look like, I don’t know, but we are in the midst of a hard market on top of all of this,” Rowe said. “Of course, with hard markets typically come rate increases. Again, in order to provide some assistance and much-needed relief to business owners across the country, we’d love to see something like that happen, whether it be a cap of some sort on renewals or a freeze if at all possible.”
Where possible, IBAC would like to see insurers avoid non-renewals and work with brokers to “really try to find solutions to offer renewals to clients during this pandemic.”
2. Allow and support mid-term adjustments to premiums with respect to liability insurance policies for businesses whose revenues have been severely impacted by the pandemic.
Rowe noted that liability premiums are typically based on revenue, and that is how exposure is determined. But a lot of companies have decreased exposure because their revenues have declined.
“So, we’d like to see that translate into some form of relief for policyholders who are no doubt cash-strapped and feeling the effects of the lack of business during this pandemic,” Rowe said. “We’d like to see some sort of creative solution in place there in the vein of providing relief to small business owners.”
3. Support for businesses whose operations are retooling because of the pandemic.
For example, underwear maker Stanfield’s in Halifax is retooling to be able to make medical gowns, and brewery company Labatt’s is now making hand sanitizer in addition to regular alcohol. IBAC would like to see that changing operations are supported by insurers and the “appropriate and necessary coverage is provided in those instances.”
4. A uniform response from insurers on how to deal with commercial policies that have a 30-day vacancy or unoccupied clause (i.e. exclusions for losses or damage to property if the property is vacant for more than 30 days).
IBAC would like to see insurers waive the clause for the duration of the state or emergency and for the continued designation of essential and non-essential services, if possible.
IBC told Canadian Underwriter Monday that the 30-day vacancy period “has come up and the industry is aware of some of the challenges and working with policyholders on how to be helpful.”
While there has not been an industry-wide public announcement relating explicitly to commercial lines perspective, “our industry is being flexible, wanting to help consumers and businesses where we can,” an IBC spokesperson said. “As we all know, this crisis is a challenging and uncertain time for all Canadians. Canada’s P&C insurers are here to help and work with those adversely affected by the pandemic and are prepared to offer flexible solutions to their customers.”
Rowe said he is confident IBC will take a “good, hard look” at brokers’ recommendations. “They’ve all been really cooperative,” Rowe said of insurers. “If you go to them with special circumstances, for the most part, they are willing to make exceptions. It’s all about trying to create uniformity and trying to create this one approach to dealing with it whenever possible for the benefit of the client.”