Ontario’s COVID-19 Auto Insurance Response Arrives as Collisions Fall

2.2K

Since the COVID-19 pandemic escalated in Ontario, auto insurers have worked to help customers. For consumers, their car insurance outlook may be more positive now than a few weeks ago. From potential cuts in premium costs to a visible fall in collisions, many drivers now pay less for coverage.

Insurance companies can provide more flexibility to customers through their own changes, alongside amendments made by the Ontario government’s insurance regulator. Some carriers have cut premium rates, others offer insurance rebates, and most allow more payment options, such as reducing penalties for late payment.

Drivers who have been struggling to meet their financial obligations in a COVID-19 world are now able to get premium discounts. In April, the Ontario government amended the Insurance Act to allow insurers to offer auto premium rebates. Discounts are provided for up to a year following the end of the state of emergency declared because of coronavirus.

Auto insurers were concerned about their ability to offer rebates because of previous regulation limits. Now that the limit is removed, insurers can scale rebates and help motorists across Ontario.

Across the industry, businesses have pledged to provide relief to customers in the following ways:

• Discuss changing driver circumstances and explore flexible payment options for customers facing financial difficulties during stay-at-home measures.
• Waive NSF fees normally charged when a customer has no money to pay their premium.
• An agreement that states and individual’s claims circumstances do not change even if the vehicle is used differently (e.g. working from home and not using a car as much as normal).

Several of the nation’s biggest insurers quickly worked out their plans to offer discounts – some as much as 75 percent – for drivers. Specifically, rebates are available for Ontarians whose driving habits changed during the COVID-19 lockdown. Visit InsuranceHotline.com for more information on auto insurance measures during the coronavirus crisis.

Companies keep the biggest discounts for motorists who are not driving at all during the crisis. Many people in the province use their vehicles less during the COVID-19 crisis as businesses and schools remain closed. With cars parked for weeks and left unused, these drivers can apply for larger rebates.

Still, some insurance companies say they will evaluate the cuts on a customer-by-customer basis and use the driver’s driving habits as a benchmark.

Collision Reduction

Roads in Ontario are quieter as lockdown and social distancing measures are used to slow COVID-19 infection. One of the few positives of the crisis has been a significant reduction in accidents and collisions. Insurance companies do not pay as much in claims during these months and can pass on savings to clients in the form of discounts.

According to Ontario Provincial Police (OPP), collisions in the Greater Toronto Area (GTA) have fallen 30 percent since early March. OPP Sgt. Kerry Schmidt likened Toronto’s current traffic flow to a Sunday morning and sometimes even lighter.

1,535 collisions have been reported in the province since the Ontario government started the lockdown on March 23, down 79 percent year-on-year. Through the same period in 2019 there were over 7300 confirmed crashes.

Still, OPP acknowledges while roads are quieter and collisions are down, some drivers are taking advantage of the situation. Stunt driving and high-speed street racing have increased since lockdown measures were introduced.

Since the government ordered stay at-home measures, Toronto police have issued 222 stunt driving tickets. OPP points out this number is up almost 600 per cent compared to the same time last year.

Law enforcement officials have issued warnings that urge stunt drivers to not put more pressure on overburdened health services by getting involved in avoidable crashes.

“This kind of speeding has become more prevalent because the roads are cleared but that is no excuse whatsoever,” Mayor John Tory told CP24. “I would just say to everybody – not just the stunt drivers who are clearly people who are crazy – don’t do this please. Be more careful than ever now when the streets are clear and just obey the law. That is all we are asking people to do.”

With collisions down and motorists receiving rebates, the car insurance situation for many customers is improving during the COVID-19 pandemic. Ontario’s insurance industry reacted positively to the situation, providing customers with some financial relief during uncertain times.

Will Insurance Rates Change?

Insurance companies acknowledge many customers are now under different circumstances to when they took out their policy. Furthermore, reducing collisions during COVID-19 means companies do not pay as much in claims costs. Carriers have responded by reducing rates and offering other benefits but have stopped short of meeting the 50 per cent recommendation from the Ontario government.

Some companies did meet this rate reduction while other did not. In a recent interview, the president and CEO of the Insurance Bureau of Canada (IBC) said a broad reduction across the auto insurance industry is impossible. However, Don Forgeron points out most companies “decided that adjustments need to be made to better reflect the reduced risk.”

While the New Democratic Party in Ontario is calling for all insurers to cut rates by 50 per cent, Forgeron says it’s unrealistic. Insurance companies operate differently and have different products so reaching a universal conclusion on premium cost is impossible.

“This is an incredibly challenging and uncertain time for many Canadians, and insurers want to help alleviate some of the financial burdens for the most vulnerable. Insurers understand that many drivers are no longer commuting or using their vehicle as regularly, which could result in savings,” said Don Forgeron, President and CEO, IBC.

Insurance companies pledged to help customers navigate the uncertainties of stay-at-home measures. Many motorists face economic hardship in the coming months and those whose driving habits have changed are advised to contact their insurer.

This is a necessary step because insurers have no way of knowing when a client’s circumstances change. Through direct contact with the customer, insurers can evaluate individual cases and decide which discounts and relief measures are available.