Car accidents declined during the pandemic. But insurance premiums kept going up

New figures show auto insurers operating in New Brunswick enjoyed a pandemic windfall in 2020 as lockdowns triggered a steep decline in accident claims even as companies continued raising rates on most drivers.

The combination led to insurers charging New Brunswick motorists $197.6 million more in premiums than they paid out in claims, a 172 per cent increase in underwriting returns over what companies earned in New Brunswick in 2019.

Similar results were posted in Prince Edward Island and Nova Scotia, where Halifax trial lawyer and longtime critic of the auto insurance industry Barry Mason called the financial results "obscene".

"It doesn't surprise me at all that their numbers are astronomically high in terms of profits," said Mason.  "Given COVID, of course for a long time no one was driving.  This is just another example of how the insurance industry will bleed the consumer and make obscene profits."

Multiple insurance companies offered New Brunswick drivers pandemic rate cuts, rebates and delayed premium increases in 2020 because of a dramatic shift in driving habits caused by COVID lockdowns. 

But those amounts  proved to be a fraction of the money companies were taking in because of behaviour changes.

New Brunswick government figures show sales of gasoline in the province fell by 120 million litres during the first 10 months of 2020, a 12 per cent decline, as many people worked from home and parked their cars.

That led to an $83 million drop in accident claim expenses, a major boost to company revenues which they added to with more than $40 million in rate increases.

According to the General Insurance Statistical Agency (GISA) the non–profit body that gathers and reports on auto insurance statistics in provinces served by private companies, premiums in New Brunswick jumped an average of $70 per vehicle in 2020 (7.7 per cent), the fifth increase in the last five years.  

In Fredericton, Jessica Bleasdale said her insurance company did issue two pandemic rebate cheques totalling $60 in 2020, but also raised premiums on her family's vehicles by $224, and that was only after she fought off a larger increase.

"There's usually room to negotiate, otherwise I shop around and leave," said Bleasdale.

Moncton insurance lawyer Justin Robichaud said companies had to know how much money they were making in 2020 and should have offered consumers larger discounts than they did.

"They should have seen the numbers much quicker and could have made sure that insureds were not paying these high premiums, especially given the significant profits that are seen," said Robichaud.

Barry Mason agrees.

"They gave a little bit of money back last year in terms of premium. If they're giving you back 10 cents, they've made a dollar," he said.

"They would have known that these numbers were trending excessively high and yet obviously used the pandemic as an opportunity to further bleed consumers."

Amanda Dean with the Insurance Bureau of Canada acknowledges companies did see a surge in earnings in 2020 but said it was an unusual event and a string of lean years prior to that shows insurers have not been overcharging in New Brunswick.

"While earnings in 2020 were stronger than usual, they are clearly anomalous and unprecedented when compared to the longer term trend in earnings, especially in the province of New Brunswick," said Dean.

"Since 2014 insurers have lost money in underwriting in the province of New Brunswick."

Auto insurance companies have raised premiums an average of $214.85 per vehicle in New Brunswick since 2015 attempting to improve their financial results, an increase of 28 per cent.