Where are those COVID Insurance Savings?

When COVID-19 arrived in Canada and much of the country shut down, Canadian drivers hoped for one ray of sunshine to poke through the clouds: Lowered car insurance premiums. But many Canadians have told us they don't feel they've gotten the discounts they were expecting, or have gotten just small reductions for cars that have sat for months. So we've looked at available data and spoken with the Insurance Bureau of Canada to find out what's going on with car insurance premiums during the pandemic and what you can do to help lower them.

If you dared or needed to enter any major Canadian city in the second half of March, or all of April, you were likely one of the only vehicles on the road. Even downtown Toronto saw traffic volumes slashed and city dwellers enjoyed a brief experience of rural levels of traffic. Google's published mobility information showed transit station activity down 55 per cent compared to average and workplace mobility down 32 per cent. Even for October, transit was still down 46 per cent and workplaces down 32 per cent compared with the baseline nationwide.

That, though, doesn't mean less driving. Park traffic is up 43 per cent, and was up as much as 187 per cent, while retail traffic has largely returned to normal. In midsummer, workplace mobility was back to the baseline over the summer. Canadians were off the road for a short period, but quickly got back to their cars. While many are still working from home, recreation travel is up. Car sales are also up, especially direct to consumer sales, suggesting we're still finding places to go.

Early on in the pandemic, the IBC, which represents Canada's private insurance companies, announced that member companies were offering discounts including lower premiums as well as offering deferred premiums and exploring payment options and waiving fees for returned payments. The group expected this to total $600m in the first 90 days, but instead, Ontario's Financial Services Regulatory Authority says relief has totalled $1b in Ontario alone so far. That's 7.1 per cent of total annual auto premiums in the province.

IBC Director, Consumer & Industry Relations Pete Karageorgos addressed the discounts, said that, "I can't think of any other industries or groups that have provided such a large refund, rebate, savings to clients."

Karageorgos said that driving was typically down, but that there is more than just distance travelled that matters when it comes to rates.

"What we're still seeing today is the severity of these collisions," he added. Claims are what matter to insurers, even more than just the number of collisions, and Karageorgos suggested that claims have increased. While data for crashes and injuries lags by a year or more, the Ontario Provincial Police reported in May that fatal collisions were already up 16 per cent for the year. Police have also reported an increase in the number of drivers travelling at excessive speeds, and both of those can bring increased injury claims along with them. Injury claims generally cost more and when you're looking at injuries, it takes months, and in some cases, years  to resolve, Karageorgos said.

"So you don't necessarily have a true sense, unfortunately for insurance, of what the cost is until all the claims are closed," Karageorgos said. “In some instances, that's years down the road. So to say that costs are down, or anything like that, really is a misnomer." Because of the long runway of data insurers use, when it comes to a sudden and sharp change to the factors insurers use "the impact isn't truly felt or assessed until much later," Karageorgos added

Rate changes, even decreases, need to go through regulators. The changes require data and an extensive review process. Instead of asking for a decrease, some insurers instead held off on applying for increases expected prior to COVID including higher repair costs and increased costs related to severe weather.

Does that all mean you should just deal with current rates? Not at all. "Shop around," said Karageorgos. And reach out to your current provider too. "One of two things is going to happen. You're either going to realize that what you're paying is probably a fair rate or you might be able to get yourself a better rate," he continued.

While not everyone has seen a change to his or her driving habits, if you have, make sure to tell your insurer. While some offered a blanket discount, you may have missed the email or letter and you most likely had to call to ask to have it applied. If you're thinking that you could have used some of that payment relief, contact your insurance provider or broker, it might not be too late.

Started working from home? The only way your insurer knows you're not driving 100 km each way to work anymore is if you tell them. Reducing your reported distance travelled is often a good way to lower your rate, especially if a commute is removed, as long as you remember to change it back when you return to the office.

Households with more than one vehicle but who are no longer using all of their vehicles could look at reducing coverage on the one that sits. Though your lender may require certain coverages (check your loan or lease agreement) if your car is free and clear and parked, lowering your coverage to a level more appropriate to storage could save hundreds of dollars. Maybe you're still using both but don't need to, in which case parking one vehicle for the duration could save gas, maintenance, and insurance costs.