Canadian Underwriter

As provincial economies re-open, insurers eye their auto claims frequencies

August 10, 2020   by David Gambrill

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As if it weren’t enough with all of the recent news reports about natural catastrophe losses in Alberta, and claims against insurers for business interruption losses due to the COVID-19 pandemic, there is another, more familiar risk looming on the horizon for insurers — auto insurance losses.

As employees start to migrate back to the office and schools prepare to open in September, Canadians are becoming mobile again, data from Apple Maps show. And that means P&C insurance companies are gearing up once again for auto claims frequencies to increase.

Aviva Canada CEO Jason Storah talked to Canadian Underwriter about the re-emergence of the familiar auto claims exposure in an interview Thursday, while he was discussing Aviva Canada’s half-year financial results.

“Insurance is in the long game,” Storah said, when covering off some of the major exposures facing P&C insurers right now. “There is a bit of noise around the [business interruption] losses at the moment, and there is also noise around the natural catastrophes. And I am sure at some point in the future, we’ll be talking about auto [claims] frequency going up again as well.”

Canadian P&C insurers may once again be facing the auto claims issue sooner rather than later, if the latest Mobility Trends Reports by Apple Maps is anything to go by. The Mobility Trends Reports show the percentage increase in the number of requests for directions in Apple Maps on any given day, tracking the changes in route requests since Jan. 13, 2020.

Daily requests for directions using Apple devices are mapped against an unspecified baseline of requests. Apple says only that: “the availability of data in a particular country/region, sub-region, or city is based on a number of factors, including minimum thresholds for direction requests per day.”

Still, the overall direction of the graphs is clear: Canadians are driving more often now, as the provinces limit restrictions on movement that were established to slow the spread of the novel coronavirus. In every single Canadian province, requests for driving directions increased between the range of 18% (in B.C.) to as high as 296% (in P.E.I.), as of Aug. 8, 2020.

By contrast, in all Canadian provinces, during the period when most provincial lockdowns took effect (late March 2020 to April 2020), requests for driving directions ranged between a 58% decrease to a 65% decrease.

Most Canadian provinces bounced back to baseline between mid-April (Montreal, Halifax, New Brunswick, Manitoba, and Saskatchewan) and mid-June (Vancouver and Toronto), depending upon where the regions were during their re-opening phases.

Here is a list of Canadian cities or regions and the percentage above the baseline they were for driving directions requests as of Aug. 8, 2020:

  • Vancouver: +18%
  • Calgary: +24%
  • Saskatchewan: +89%
  • Manitoba: +85%
  • Toronto: +31%
  • Montreal: +30%
  • New Brunswick: +159%
  • P.E.I.: +296%
  • Halifax: 64%
  • Newfoundland & Labrador: +136%

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1 Comment » for As provincial economies re-open, insurers eye their auto claims frequencies
  1. Kevin says:

    Interesting article. However, I am curious if the Mobility Trends Report, which indicates an increase in requested driving directions, truly represents the increased risk exposure for automobile accidents.

    I would imagine that more Canadians are using their automobiles to vacation within the country as leaving the country for leisure is not an option at this time. Canadians will also be looking for alternatives to their normal leisure activities, as restaurants have limited abilities, theatres and event centres are closed, and out of caution large groups are being avoided. However, it is possible that Canadians are driving relatively the same amount, perhaps even less, but are now going to new destinations which prompt the driving direction search.

    COVID-19 has disrupted the normal routine of most Canadian’s day-to-day. There have been more people working from home on more flexible schedules, allowing them to run errands perhaps closer to home or in a different area of their city rather than on their pre-pandemic daily route. Would this account for an increase in searches for driving directions? Likely. Would this mean that automobile use has increased? Not necessarily.

    Something else to consider is that many major sporting events and concerts have been postponed or cancelled. For a season ticket holder to their local NHL/CFL team, these people likely did not need to search for directions on their smartphone to their city’s arena or stadium. Now that these events are not happening, these individuals might seek out other alternatives for entertainment, such as camping, hiking, going to a cabin, or maybe meeting at someones home rather than out at a restaurant. These new activities could prompt a location search. All of these activities would be equally likely to require an automobile and could contribute to auto claim frequency the same, but only one would require a smartphone search for a destination.

    Using this particular metric as an exposure basis for automobile claim frequency may not be the most accurate, but it is interesting to see that Canadian’s are going new places and perhaps trying new things!

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