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June 22, 2020
Debbie Arnold
Registered Insurance Broker
Group Business Development Manager
Sound Insurance Services
Automobile and property insurance carriers have responded to the pandemic crisis in various ways. Here is a review of some of the changes.
There are fewer vehicles on the road so there are fewer collisions. Consequently, one would think that automobile premiums would be reduced. Most people are still at home, not driving their vehicles very much, so why are policyholders receiving renewals with premium increases?
When it comes to property insurance, there hasn’t been very much severe weather this year, so why are most property policies seeing increases?
The answers to these questions come down to timing. Prior to the COVID-19 shutdown in March, and during 2019, insurers had taken several increases over the preceding year. Increases were applied in the spring and fall of 2019 with further increases in January 2020 in varying degrees from insurer to insurer.
Most insurers froze increases as of June or July 2020. How long the rate freeze will be in effect will be dependent upon when the country re-opens. However, if your renewal was at the beginning of 2020 or prior to your carrier’s rate freeze, you likely saw an increase.
To exacerbate this issue, although fewer vehicles are now on the road and consequently we are experiencing fewer minor collisions, with clear highways individuals are speeding and severe losses involving serious injuries are on the rise in Ontario. This translates into higher claim costs in Ontario (but not Quebec, where compensation for personal injuries is handled by a government-mandated single payer).
With more people at home, bored, and experimenting with cooking for the first time, the incidence of house fires has increased dramatically.
When the shutdown is over, will rates drop? By all indications, the hard market will continue, capacity will be diminished and rates will unfortunately probably continue to rise. COVID-19 has severely impacted businesses and the economy. The effects of this will be widespread and long-lasting.
What can you do to reduce insurance costs? Ensure that you communicate changes to your vehicle use and mileage driven to your insurance representative, and any changes to the use of your property. Review your coverage and shop the market when you receive your renewal while you stil have time on your side. The coverage offered by your insurer may cost less with another carrier.
APA members in Ontario should take advantage of the APA Group Property and Automobile Insurance Program. We’ll be pleased to review your coverage and premium and provide the best premium we are able to. At the very least, you’ll learn if the premium you’re paying currently is in the ballpark and be able to doublecheck that you have the correct coverages.
In the meantime, please be well and stay safe!
Debbie Arnold, R.I.B. (ON)
Group Business Development Manager
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Related COVID-19 Articles
June 3: Dealerships reopen after COVID-19 shutdown
April 26: Personal Automobile and Property Insurance
April 17: Expiring Warranties & Repairs
March 31: Leasing and Suspending Finance Payments
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