We are living in a difficult time; people are getting sick and dying and the economy is in chaos. Recent PBO projections show a forecast of a federal deficit of nearly $250 billion. Millions of Canadians are out of work and many small and medium sized businesses will not survive the current crisis.
However, in the midst of all this, one sector of the economy is thriving; the automobile insurance industry. Even before the pandemic, Ontario auto was doing well. British-based Aviva insurance is a significant player in the field. In its 2019 Annual Report, Aviva advised that “their small Canadian operation” was the star of their global business for the previous year. They reported that Canada, as a stand-out, yielded improved returns and increased return on capital due to the fact that Aviva “successfully responded to challenges in the auto market.” While complaining to the Financial Service Regulatory Authority, Aviva Canada actually sent £156 million back to head office. Remember, this was before the Covid-19 outbreak.
Then, the pandemic hit, and Justin Trudeau and Doug Ford effectively shut down Ontario. Their actions were clearly necessary, given in the circumstances. However, the result of the “stay at home” decrees have been to largely isolate millions of people and create a world where few people do very little, if any, driving. The streets of Ontario are mostly empty. Accidents are happening at a significantly reduced rate. Many employees are working from home, and the commuting for hours each day on roads and highways have been replaced by walking across the hall into your home office.
In other jurisdictions, especially where coverage is provided by public insurance, insurers have provided significant rebate cheques to motorists. This is not the case in Ontario. The Insurance Bureau of Canada acknowledges that people who have their vehicles “parked at home pose a lower risk than when they were driving to work.” The fact is that your vehicle poses ZERO risk when it is in your garage. The industry has proposed measures that might result in savings of up to $600 million over the next several months. While this sounds like a lot, auto is actually a $9 billion industry in Ontario. So, the savings are not as large as one might think.
Even worse, some of those savings are actually deferrals and not reductions, which is not really a savings at all, as the full bill will still be due. To be fair, some auto insurance companies, such as Allstate Canada, have announced one-time payments of 25 per cent off their monthly premiums. They deserve credit for that. However, many of the larger companies are forcing customers to contact them and apply for reductions. In many cases, they are not actually offering reductions, but rather they are providing options for drivers to apply for reduced coverage through higher deductibles, or changes in driving conditions. Drivers could apply for these things anyway. They are not really reductions. The vast majority of Ontarians are unlikely to benefit from these changes. Worse, if you make the change, and get involved in an accident later, the reduced coverage will actually hurt you.
Another aspect of this crisis that is not receiving proper attention is the lack of accident benefits medical and rehabilitation services being provided to drivers that have already been involved in an accident. One of the things that you purchased through your insurance is coverage for medical and rehabilitation treatment that arises when you were involved in a motor vehicle accident. However, due to social distancing requirements, many service providers are not able to provide these services. Therefore, in addition to the fact that new accidents are not occurring as often, insurance companies are also saving money by not providing treatment to their existing injured clients.
Rather than provide relief, the insurance industry continues to allow the status quo to go on, to its benefit. For instance, insurance company indicated that the current regulatory regime prevented it from giving rebates. To its credit, the Ontario government amended the legislation to allow insurance companies to provide financial relief for working people and families struggling through the current public health crisis. Key regulations were amended to allow auto insurance to issue premium rebates.
In the press release announcing the change, dated April 16, 2020, Minister Phillips stated, “My message to insurance companies has been clear: they should provide relief that reflects the financial hardships their dedicated customers are facing due to the COVID-19 outbreak.” Unfortunately, for the majority of drivers, that relief has not been forthcoming.
The minister went on to say, “All of us will remember how companies treat us during these unprecedented times. I often remind business leaders that their customers from the past five years are likely to be their customers for the next five years.” He promised that the government and FSRA would continue to monitor how the auto insurance sector responded to his words.
The Ontario government should be commended for urging the outer sector to provide relief to working people and families facing unprecedented challenges during the pandemic. The time to provide relief is now, while people are not working and while finances are tight. We urge the government to mandate that the auto insurance sector provide meaningful relief to Ontarians now, when they need it the most.
If you have been injured as a result of a car accident, contact an experienced personal injury lawyer today! Rastin Law is here to help you.