The pricing relief Intact plans for commercial clients

Intact Financial Corp. is responding to the COVID-19 pandemic by dropping commercial premiums, in some cases, if it finds the client’s risk has gone down.

“We are adjusting risk profiles for customers where it might lead to premium relief,” Intact CEO Charles Brindamour said during a virtual fireside chat with Mario Mendonca, managing director of equity research at TD Securities. “In other words, if sales in your businesses are down dramatically, if you are parking [your] fleets and so on, we will adjust your risk profile to make sure it takes into account this environment.”

“We know that this is really tough for families across North America and small businesses,” Brindamour said during the chat, released Tuesday.

Mendonca asked Brindamour for some guidance on how COVID-19 could affect Intact’s underwriting income.

“The impact is uneven by line of business,” Brindamour replied. “And it’s also uneven by quarter if you look at how the year will unfold.”

For example, commercial specialty lines could see event cancellation and tuition refund claims. On the other hand, business interruption does not normally cover pandemic and fewer vehicles on the road mean reduced frequency of auto claims, said Brindamour.

“People are at home and could maybe catch [home] claims faster, but you have moral hazard building up,” said Brindamour. “We don’t expect much on the personal side of things.

“We have modelled a number of scenarios ranging from mild to severe, and our view is that the underwriting performance should overall be on track, maybe not throughout the year, but on track throughout most scenarios.”

As of noon Tuesday, there were 8,469 confirmed and presumptive cases in Canada of COVID-19, the Canadian Press reported.

Ontario has extended its state of emergency by two weeks. In an effort to reduce the spread of the virus, gatherings of more than five are banned and only businesses deemed essential are allowed to remain open. In Ontario, this means restaurants can only serve food for take-out and delivery, while events such as concerts are out of the question.

“As of today, 98% of our 16,000 people are working from home,” Brindamour said of Intact’s workforce during the fireside chat with TD Securities. Intact had fewer than 300 people in its offices on Friday.

“We are preparing for an even stricter lockdown,” said Brindamour. “And if it were to happen, we have plans to operate the business without our offices. This is unprecedented. There is a lot of pain here and abroad both for individuals and businesses, we are there to help.”