With the release of COVID-19 vaccinations and hopes lockdown measures will loosen, Canadians will be shifting their lifestyles and priorities in the coming year. There has been less commuting, more exercising, and growing importance for spending time with loved ones—with most either unemployed, taking classes online, or working from home there have undoubtedly been shifting trends in the insurance space.
When it comes to finances the insurance market should see an increase in premiums with attempts to stabilize the economy. “More rate action is needed and likely it will take beyond 2021 in some lines to get a rate adequacy” according to Albert Benmichol, CEO of Axis Capital Holdings.
Benmichol explained that this lack of activity is caused by “several factors, including increased frequency and severity of weather events, social inflation, uncertainties stemming from the COVID-19 pandemic, and low-interest rates.”
Ratehub took a look at each insurance space and assessed what the future of the market will look like for Canada in the coming months.
Since March, car insurance companies have been offering payment deferrals, waiving fees for bounced checks, and offer discounted or reduced premiums for those spending less time on the road.
With fewer people on the road, it is assumed that fewer accidents will occur, which could cause rates to drop even further than they have this year. “In the last few years, the average car insurance rates in Ontario have increased by around 5-10% per year.”
British Columbia is said to introduce no-fault insurance in May, promising the policy will reduce the cost in the country’s most expensive province when it comes to car insurance. Alberta “is still debating a full no-fault system while their prices keep going up.”
Greg Raymond, the CEO of Insurance Hero says “rates were on the rise before the pandemic hit; however, most insurance companies postponed any future schedule rate increases. They also provided premium rebates to consumers and some have even temporarily lowered rates.”
With fewer drivers on the road and fewer claims being filed, rates are expected to stay low until the economy begins to recover from the effects of 2020.
With more people confined to their homes and with no end in sight, lockdown isn’t the only challenge being faced as homes across the country have been dealing with an increase in flooding, fires, and hail.
Condo rates have also been on the rise; “following an increase in claims (climate) and resulting payouts, many insurers are retracting coverage altogether or increasing costs by as much as 300 per cent.”
It’s also good to keep in mind that “home insurance is not a maintenance plan”, so it’s important to assess your household and implement the necessary improvements to minimize claims.
Sean Graham from Begin Insurance said that “with more people at home there is greater exposure for liability and fire”, home insurance claims needed a surge in price as they’ve been too low for too long.
The best thing to do moving into 2021 is to “read your policy and understand your risks” in order to make sure you’re correctly insured.
Many have feared death over the last year due to rising coronavirus numbers causing even more people to buy life insurance over 2020, which boded well for most life insurance companies.
Mike Rogers from New Venture Insurance said that “term insurance products are at historically low rates right now to we’re starting to see longer terms, (30-40 years) instead of shorter terms (10-12 years). However, with permanent insurance, like universal or whole like, the premiums won’t come down.”
What to Expect
2021 will be nothing short of a turbulent year in the insurance space, with anticipation for car insurance to decline, home insurance to rise and life insurance to fluctuate based on the success of eradicating COVID-19. The trend that will remain stable across all boards will be an increase in buying insurance policies online.
By Surina Nath