October 30, 2020 by Adam Malik
Insurance companies responded well and appropriately to the COVID-19 pandemic in terms of assisting customers by way of premium relief and other measures, according to industry experts.
Canadian Underwriter recently checked in with insurers on the current status of relief measures. At the time, all said no additional rebates were on the horizon (though CAA later announced an additional $50 rebate to eligible members), while some were continuing to offer options like waiving certain fees and others had removed all measures.
Insurance Bureau of Canada member companies have offered more than $1 billion in personal and commercial insurance premium relief as of June 30, IBC told Canadian Underwriter. Additionally, private insurers across Canada have provided about $200 million in deferred premiums to personal and commercial customers.
In an Oct. 1 update, the Financial Services Regulatory Authority of Ontario said drivers in the province have been eligible to get $1 billion in relief from insurers.
The response has been appropriate given the fact that insurers are going through uncharted waters, said Justin Thouin, co-founder and CEO of LowestRates.ca. Companies have to be careful to not do too much in case it puts them in a precarious financial position going forward. There is no historical data for a pandemic, so their response has to be measured, he explained.
“Insurance companies don’t know what the future claims are going to be, and so the insurance companies need to be very careful because if they give back too much money without the requisite knowledge, it could lead them to being underfunded for claims and could even impact their statutory solvency position,” he said. “It’s hard to say, and we won’t really know how appropriate the measures that they’ve taken are until all the claims have been paid out.”
Kent Rowe, president of the Insurance Brokers Association of Canada, praised the industry’s response to helping out clients. “Given this is an unprecedented event that was totally beyond foreseeable, I felt that our response was handled very well,” he said in an interview with Canadian Underwriter. “Insurance companies put money back in people’s pockets.”
Rowe highlighted the fact that accommodations were made to policy wordings in addition to allowing for discounts.
The price index of LowestRates.ca shows that auto insurance prices in Ontario have actually dropped about 4% compared to last year, Thouin reported. “So [insurance companies] have certainly done something.”
And brokers will continue to help drivers cope and find the best solution possible, Rowe said. “So if that means going after the insurance companies for a reduction of liability premium during a downturn, brokers are doing that. Brokers are having those conversations and advocating for their clients for those things every day.”
As for what the future may hold in terms of future rebates or other relief options, the next number of months are a mystery for everyone involved. “It’s going to be a long game, and all I can say is that I’m confident that our industry will respond the right way,” Rowe said. “I have every confidence in the world in us as brokers. We’ll continue to sit down with the best interest of our clients in mind. I really believe insurance companies are doing the same thing.”
Feature image by iStock.com/AndreyPopov