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COVID-19 pandemic should mean $150 in annual insurance savings for motorists, government document says

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COVID-19 pandemic should mean $150 in annual insurance savings for motorists, government document says

By Robert BenzieQueen’s Park Bureau ChiefTue., June 16, 2020timer2 min. readMost Ontario motorists should save $150 in annual auto insurance premiums due to the COVID-19 pandemic, according to a confidential government document obtained by the Star.The internal briefing note to Finance Minister Rod Phillips from the Financial Services Regulatory Authority of Ontario (FSRA), an independent…

COVID-19 pandemic should mean $150 in annual insurance savings for motorists, government document says

With COVID-19 forcing many people to work from home and spend less time on the roads, an independent regulator estimates that Ontario insurance companies should be passing along $685 million in reductions to vehicle owners.

Robert Benzie

By Robert BenzieQueen’s Park Bureau Chief

Tue., June 16, 20202 min. read

Most Ontario motorists should save $150 in annual auto insurance premiums due to the COVID-19 pandemic, according to a confidential government document obtained by the Star.

The internal briefing note to Finance Minister Rod Phillips from the Financial Services Regulatory Authority of Ontario (FSRA), an independent regulator, calculates that insurance companies should be passing along $685 million in reductions.

“As a result of the COVID-19 disruption and related emergency declaration under the Emergency Management and Civil Protection Act, Ontario drivers have reduced their vehicle usage, resulting in fewer vehicles on Ontario roads and fewer collisions,” said the note dated Monday.

“This will reduce insurer costs and calls into question whether rates approved based on different cost assumptions remain just and reasonable,” the regulator said.

“Ontario insurers reported in May that the total financial relief provided or promised is $685 million, which is 4.9 per cent of the total annual premium Ontario drivers pay for auto insurance,” it continued.

“Approximately 70 per cent, or 4.6 million policyholders, are receiving some form of relief with average savings of $150.”

In an email to the Star, Phillips said he was “pleased to report that FSRA has informed me that $685 million in relief will be provided to Ontario drivers.”

“Since COVID-19 started, our government has been keeping a close watch to make sure insurance companies are treating the people of Ontario fairly during this unprecedented time,” the treasurer said.

“My message to insurance companies has been clear from the beginning: you should provide relief that reflects the financial hardships your customers are facing because of COVID-19.”

Earlier this spring, the Insurance Bureau of Canada, the organization representing the major insurers, estimated the industry would provide $600 million in savings across the country.

Still, the regulatory authority, which last year replaced the old Financial Services Commission of Ontario and the Deposit Insurance Corp. of Ontario, warned that “more relief may be appropriate.”

“FSRA will continue to actively engage with auto insurers, monitor the market and use our regulatory authority to help ensure Ontario drivers are treated fairly,” it said, adding the regulator is “not convinced every company is doing their part.”

“We have been hearing from drivers that they feel let down by certain companies and the minister is planning to follow up with those CEO’s directly.”

In April, Phillips eliminated a hurdle in the provincial Insurance Act that insurance companies said prevented them from offering rebates to Ontario drivers during the pandemic.

The internal briefing note calculated that $275 million of the $685 million in savings is because of that decision.

“On April 15, FSRA provided guidance to insurers to support such rebate programs and to facilitate premium reductions and other pathways to consumer relief,” it said.

Ontario has been in a state of emergency since March 17, forcing millions of people to work from home.

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The pandemic has cost some 1.15 million Ontarians their jobs with 403,000 jobs lost in March, 689,000 in April, and 65,000 last month.

That has led to fewer people on the roads and a reduction in auto accidents and insurance claims.

Robert Benzie

Robert Benzie is the Star’s Queen’s Park bureau chief and a reporter covering Ontario politics. Follow him on Twitter: @robertbenzie

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