COVID’s effect on Canadian auto and property rates

Endorsements to auto policies as a result of changing driving habits from COVID-19 are resulting in average premium rate renewal decreases across most of the country, according to Applied Systems’ latest rating index report.

Personal property rates, on the other hand, appear to be on the increase.

In Canada’s personal auto lines, all provinces except Alberta experienced a downturn in renewal rates in 2021 Q1, relative to the last quarter of 2020, the tech vendor said in its Applied Rating Index Q1 2021 report, released Wednesday. Year-over-year, the renewal rate decreased 7.8 % in 2021 Q1 compared to 2020 Q4.

“Ontario, Quebec and the Atlantic provinces saw significant drops in premium renewal rates quarter over quarter with [decreases of] 7.5% [in Ontario], 6.9% [in Quebec], and 6.3% [in Atlantic Canada], driven mainly by endorsements to policies reflecting changing driving habits as a result of social restrictions and lockdown measures…rather than decreases in base premiums,” the report said.

Lockdowns to prevent the spread of COVID-19 resulted in Canadians using their cars less, resulting in fewer kilometres driven and the removal of coverages.

In contrast to the overall trend in Canada, Alberta saw an 1.4% increase in auto premium renewal rate quarter-over-quarter.

Ontario saw a year-over-year renewal rate decrease of 9.7% in personal auto, while the Atlantic provinces saw a 3% decrease. Quebec remained relatively flat, with a 0.1% increase from 2020 Q1 to 2021 Q1.

Applied’s rating index reports current conditions and trends in personal auto and personal property premium rates in Canada. Analyzing more than 1.3-billion quotes completed, the index is derived from rates generated in Applied Rating Services. The index covers more than 80% of the independent brokerage market and 675 insurer rating plans, the vendor said.

On the personal property side, the average premium renewal rate changed increased 3% in 2021 Q1 compared to the same period last year. Quarter-over-quarter, the average decrease was 0.2%.

For the fifth quarter running, Quebec’s year-over-year premium renewal rate in personal property remained the highest in Canada, with an 8.6% increase, although that’s down from what it was in 2020 Q4 (13.6%). Most provinces saw an increase year-over-year, including the Atlantic provinces (4.9%), Saskatchewan and Manitoba (4.2%), British Columbia (3.9%) and Ontario (0.3%).

Alberta turned around its negative trajectory, with a 1.6% average increase in personal property rates from 2020 Q1 to 2021 Q1. The province saw decreases of 1.2% in 2020 Q3 and 1.4% in 2020 Q4.

“Our findings indicate that the personal property market continued to harden in Q1 2021, as premium renewal rates increased compared to 2020,” Steve Whitelaw, vice president of industry and partner relations with Applied Systems, said in a press release. “The market for personal auto, however, is reflective of changes in driving behaviour influencing premium decreases year over year.”

Feature image by iStock.com/ancoay