Since the onset of the COVID-19 pandemic, people are driving less, resulting in fewer cars on the roadways. Not only is traffic down, but the number of reported crashes has also decreased by more than half compared to previous years.
Despite this, many auto insurance companies in the province have started to increase their rates and stand to make a considerable profit off their policyholders.
Ontario drivers are already paying about $1,505 each year in auto insurance premiums. This is the second-highest rate in Canada. Drivers may have been overpaid for their coverage by at least $7.6 billion — and as much as $12.7 billion — between 2001 and 2018.
Many auto insurance companies last spring offered temporary rebates for drivers across the province, but those discounts have since ended. Policyholders are now starting to receive renewals that are higher than last year. The average premium has gone up $30 per policy since the start of the pandemic.
The Financial Services Regulatory Authority of Ontario (FSRA) estimates that if every Ontario driver experiences this increase, insurance companies could make nearly two hundred million dollars in profit.
These profits also include not having to pay out as much since not as many claims are being filed. The pandemic has also made it harder for injured accident victims to access the medical treatment they need. Insurers will likely save money on new claims and having to issue benefits on existing claims.
Overall, changes in driving habits should reflect better discounts for Ontario drivers. Crashes have gone down by more than 56 per cent in 2020 compared to 2019 and 2018, based on data from the Ministry of Transportation. Only time will tell if more will be done to protect policyholders from unreasonable rates.
Free Case Evaluation