The Ontario government on Thursday cleared the way for auto insurers to lower premiums during the COVID-19 pandemic and put them on notice that they are expected to follow through.
But drivers in the province, who pay some of the highest car insurance rates in Canada, can be forgiven for being skeptical.
“I’ll believe it when I see it, to be honest,” says William Wirtz, a bus operator in Kitchener.
Prior to the announcement, auto insurers were required to clear any changes in driver premiums — increases or decreases — with the Financial Services Regulatory Authority of Ontario months ahead of implementing them.
In the case of lowering premiums, that requirement has been suspended for up to 12 months after the province’s declared emergency has ended.
“Insurance companies indicated that the regulation preventing rebates was a barrier to providing relief to their customers,” provincial Finance Minister Rod Phillips said in a statement accompanying the news. “That barrier has now been removed so auto insurance companies can step up and do the right thing for the people and families of Ontario.”
The Insurance Bureau of Canada expects the move will result in a savings of $600 million for Canadians, more than half of which will apply in Ontario. That would be welcome news for the province’s drivers, who pay an average of $1,528 per year, which is second highest in the country after British Columbia, according to the IBC.
Wirtz, however, is among many Ontarians who are seeing their premiums increase despite the economic turmoil brought on by the pandemic shutdown. Wirtz’s provider — Tradition Mutual Insurance, a small firm based in Sebringville, near Stratford — is increasing his monthly fee by $21 when his policy renews in May.
Wirtz says he has had no claims or accidents over the past year. When he spoke to a friend who works at the company, he was told that all insurers are raising premiums because overall claims have been going up.
“If you call any of these small companies, they’re all working out of the same price book,” he says. “I don’t know what if anything can be done … all these (hikes) are just systematically crippling us all.”
Another driver in Brampton, who did not want his name used but whose policy documents were seen by the Star, says his premium with Johnson Insurance is increasing by $38 a month. He also hasn’t had any claims or accidents.
“(They gave me the same) excuses of postal code we live in and it’s (an) increase across the board with all the insurance companies,” he says.
He is also skeptical that the easing of regulations will cause his insurer to reverse course.
“I also want insurance companies to lay out plans on how and when they will offer rebates to policy holders and hopefully without any conditions,” he says.
A spokesperson for RSA, which owns Johnson Insurance, declined to make anyone available for an interview. She suggested in an email that customers who are being affected financially by the pandemic should contact their broker to discuss flexible payment options and deferrals and the waiving of fees on non-sufficient funds.
She also pointed to a press release that says the company will be implementing additional auto and property insurance premium relief measures moving forward to support customers during the crisis.
The premium increases, meanwhile, run contrary in spirit to headlines made recently by some insurers, who were dispensing refunds and breaks to customers before last week’s announcement.
Allstate Canada, for one, has said it will spend $30 million on rebates for customers, with each receiving a one-time payment of 25 per cent of their monthly auto premium. Aviva also announced it was freezing premium increases at renewal.
Marlene Morrison Nicholls, president of Lindsay, Ont.-based Stewart Morrisson Insurance Brokers, says that prior to last week’s news, the main way that insurers could give customers a break was by adjusting the usage covered by their policies.
Customers could temporarily drop certain coverage options such as roadside liability, for example, although in that case they would be unable to actually drive their vehicle — it would have to remain parked.
Drivers could also report that they are driving considerably less, which could lower their monthly payments.
In each case however, their base premiums would stay the same, Morrisson Nicholls says. Relaxing the regulations governing the lowering of premiums should change that.
“Auto insurance is regulated and rates must be filed with (FSRA), so this allows them the ability to deviate from those filings and give more,” she says. “It is good news.”