Personal injury lawyer laments higher car insurance premiums despite fewer accidents amid COVID-19

Car insurance premiums have risen by an average of $30 per policy even though car accidents in Ontario have fallen by over 56 per cent since the province declared a state of emergency following the COVID-19 outbreak, Kennedy Nolan, a personal injury lawyer at Nolan Ciarlo LLP, has said.

In “Pandemic Price Gouging in The Car Insurance Industry,” published in the Ontario Trial Lawyers Association Blog, Nolan called attention to the over 56-per-cent decrease in reported car accidents in Ontario from March to July, as compared with the same period in the last two years, a change which is attributable to the decrease in the number of cars on Ontario roads since the beginning of the COVID-19 pandemic.

Nolan then questioned why, despite this drop in car accidents and in new car insurance claims, average car insurance premiums in Ontario have increased by $30 per policy, or by around 1.8 per cent since last year, while Ontario car insurance companies were expected to reimburse only 7.1 per cent of the premiums received. The savings on insurance premiums which consumers should be enjoying because of this drop in car accidents and in new car insurance claims is instead being enjoyed by insurance companies, Nolan said.

Nolan said that the temporary rebates being offered by car insurance companies, alongside the Financial Services Regulatory Authority of Ontario, have been minimal and varying across the car insurance industry. Many Ontarians are reimbursed with less than 5 per cent of their total premium costs, while more than 460,000 Ontarians received no relief at all, Nolan said.

Nolan called for a restoration of balance in the car insurance system through structural changes which would prioritize consumers and accident victims, instead of focusing relief efforts on temporary rebates and premium reductions. Nolan also urged greater transparency through publicizing the full details of insurers’ profits and full claims costs.

The provincial government can consider making its new rules dealing with the issue of pandemic price gouging also applicable to the car insurance industry, Nolan suggested. Nolan then said that the savings resulting from the pandemic should not become profits in favour of car insurance companies, but should instead be devoted to addressing the unfairness of the car insurance system.

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Nolan called it unconscionable for car insurance companies to experience significant savings and rising profit margins while Ontarians are facing financial challenges amid the pandemic, such as job losses, business closures and economic slow-down.

For its part, the Financial Services Regulatory Authority of Ontario has published guidance expressing its rules of interpretation on whether a program to refund, rebate or repay insurance premiums to consumers will be considered unfair or deceptive. The guidance states that a car insurance company’s premium repayment program will not be deemed unfair or deceptive if it respects the principles of consumer focus, transparency and disclosure, equitability, fairness and being time-limited.

The Financial Services Regulatory Authority of Ontario is tasked with approving the rates that car insurers use in calculating premiums for consumers. These rates should be just, reasonable and not excessive and should not impair a company’s financial solvency.