Car Insurers Have Saved $2,8 Billion in Canada During Covid-19 Restriction Measures

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Savings made by Canadian car insurers during restriction measures

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Annual average car insurance premium

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Overall numbers as for Canada
Total claims amount that should have paid car insurers in a “normal” 91-days period*5,066,838,140 $
Average claims number decline across Canada during the restriction measures54,9%
Actual amount paid by car insurers during the restrictions measures2,283,694,524 $
Estimated savings made by car insurers during the restrictions measures2,783,143,616 $

*Our insurance partners reported us that there had been a significant impact of the pandemic on car claims between March 15th and June 16th. That is why we have chosen to focus on this 91-days period.

$ 2,783,143,616

…is the estimated amount of savings on payouts realized by the Canadian car insurance companies because of the Covid-19 restrictions, as most drivers had to stay home from mid-March to the first half of June.

53,4% drop in car accidents

With most Canada’s States facing restriction measures from March 15th to June 16th*, many Canadians were forced to stay at home. As a consequence, daily commutes came to a halt, meaning fewer people on the roads, and a lower probability of accidents occurring. That’s confirmed by the numbers :

53,4%
decrease in car accidents
 

…across the Canadian territory

35,6%
decrease in deaths by
accident


…due to low traffic on the Canadian roads

67,4%
decrease in repairs

..sent by motor insurers to Canadian garages, in comparison with same period in 2019


54,9% fall in car-related claims

As a consequence of accidents decreasing on the roads, the car-related claims rate has also dropped – 54,9% overall on the Canadian territory . With a 64% rate observed, British Columbia is the State where car claims have decreased the most, just in front of Ontario (56%) and Quebec (55%). On the opposite, Nunavut (29%), the Northwest Territories (19%) and Yukon (12%) were less affected by the governmental restrictions, and are the regions where claims decreased the less.

Car insurance savings per State (most populous States)

Car insurance savings per State (less populous States)

Overall, insurance companies in Canada could have actually saved up to $2,8 billion thanks to the change in driving habits caused by restriction measures.

  • The Canadian State accounting for the highest savings is Ontario, with a $1.1 billion reduction in payouts by the insurers. The State of Quebec ranks number 2, with more than $647 million saved by the insurers.
  • Usually, motor insurers put aside ⅔ of premiums to cover road accidents. However, the reduction in the number of accidents has cut that  proportion significantly. One big car insurance player has told Hellosafe.ca that it will save as much as half the funds it expected to have to pay out for personal injury claims in 2020.

Will customers receive their money back?

With the savings made while Canada was facing drastic restriction measures related to the pandemic, the big insurance companies seem to have reacted. “In recognition of the fact Canadian’s are driving less and claims are down during the COVID-19 pandemic, private insurers across the country have returned an average of approximately $280 per driver in auto insurance premium relief, as of June 30”, said the Insurance Bureau of Canada (IBC) on a document released on July 30th.

“The industry had already returned more than $775 million to auto insurance customers”, estimates the IBC. However, with the $2,7 billion saved during the pandemic, there are still almost $2 billion that have been pocketed by the car insurance industry. With the pandemic starting over again in August, the situation may change soon, with potentially additional refunds expected by policyholders.

In British Columbia, a controversial monopoly hold by the ICBC
In this Pacific State, drivers felt deceived when the Insurance Corporation of British Columbia (ICBC) announced it would not provide financial relief to its policyholders – although our estimates say that car claims have decreased 64% there. With an average annual car premium of $1832, British Columbia is the Canadian State where car insurance is the most expensive.


Whoever they’re insured with, people can save money on their car insurance by withdrawing unnecessary cover. In addition, if they’re not driving as much as they used to because they’re teleworking, they can reduce their mileage, which will bring down the premium. 

telechargement

Antoine Fruchard, insurance expert and CEO at Hellosafe.ca

With most people stuck at home, their cars have inevitably stayed in the garage. Now that the restriction measures are over and people are going out again, the number of cars on the road is almost back at its pre-Covid level. However, customers are inevitably questioning why they continued to pay such high insurance premiums while they weren’t able to drive. It will be interesting to see if all the insurance companies will make refunds. Competition between them may be increasing in the coming months, and that means customers should benefit from a slight drop in car insurance premiums”.

For a version of this document in French, please click here.

Our methodology

We based our study on public information provided by reliable data-providers and several insurance partners who provided us anonymously with claims for the studied period.

About Hellosafe.ca

Hellosafe.ca is a comparison platform which is shaking up the insurance market – giving you access to the best Canadian insurance deals in less than 30 seconds. Hellosafe.ca is supported and financed by Blue, an Insurtech Venture Capital firm. Blue already owns two leaders in the French insurance comparison market, Réassurez-moi and Coover. These platforms help more than 10 million people with their insurance every year. We have developed a unique comparison technology that gives access to cover details and quotes without customers having to give their phone number or email address. This engine is the result of four years of hard work.

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Alexandre Desoutter
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