September 14, 2020 by Greg Meckbach
Sometimes it’s not just about the size of the pandemic auto insurance discount, but the fact that it was a discount and not a rate hike that makes all the difference to a consumer.
For example, a 25% auto insurance rate hike in New Brunswick was postponed from June 1 to Sept. 1, The Insurance Corporation of Prince Edward Island (ICPEI)’s parent company said last week.
Instead, as a result of the COVID-19 pandemic, ICPEI offered a 10% discount in New Brunswick auto, Echelon Financial Holdings Ltd. said in a securities filing Sept. 10. Mississauga, Ont.-based Echelon Financial owns 75% of ICPEI.
“The number of motor vehicle claims in second quarter and for the six months ended June 30, 2020 were lower compared to the same periods in prior year. The impact is reflected in the lower claims expense,” Echelon Financial said in its management discussion and analysis. Therefore, ICPEI implemented a slight reduction in auto rates in the Province of Nova Scotia.
“ICPEI has provided a number of accommodations to its policyholders if they experience hardship because of COVID-19 and have adjusted their auto premiums due to reduction of use,” Echelon Financial said in its 2020 Q2 financial results. “ICPEI has only experienced a very minor increase in the number of customer defaults and very few requests to lower monthly premiums based on lower usage of vehicles.”
Until it was sold in 2019 to CAA Club Group, non-standard auto insurer Echelon Insurance was the main operating subsidiary of Echelon Financial, which acquired 75% of ICPEI from Saskatchewan Government Insurance (SGI) in 2014.
Echelon Financial reported net written and assumed premiums of $11.19 million in 2020 Q2, up from $10.41 million in 2019. Its combined ratio was 86% in personal lines and 105.7% in commercial lines in the three months ending June 30.
Echelon Financial filed amended financial statements Sept. 10. A key change was in its guidance on business interruption exposure. Originally in August, Echelon Financial referred to guidance from its outside legal counsel and the Insurance Bureau of Canada when it said it does not believe that business interruption claims from pandemic COVID-19 are covered perils. Its amended guidance deletes the reference to IBC guidance.
IBC has made a statement that “generally, commercial insurance policies and traditional business interruption policies do not offer coverage for business interruption or supply chain disruption due to a pandemic such as COVID-19”, but IBC has not provided specific coverage guidance to ICPEI, Echelon financial said Sept. 10.
For the three months ending June 30, Echelon Financial reported net income of $872,000 in 2020, down from $55.6 million in 2019. Last year’s Q2 income included a gain of $56.23 million, net of expenses, from the sale of Echelon Insurance to CAA Club Group.
Feature image via iStock.com/NeoPhoto
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