Have auto premiums, loss ratios returned to pre-pandemic levels?

At least one major Canadian insurer has seen driving patterns return to pre-pandemic levels last seen in late 2019 and early 2020.

Aviva closely monitors both the amount of driving and its claims frequency, said Phil Gibson, executive vice president and managing director of personal insurance at Aviva Canada.

“We saw a dramatic decrease in both driving and driving-related claims when the pandemic began,” he said. “Driving has slowly increased in the last two years, and it is close to pre-pandemic levels.”

As might be expected, that’s led to an increase in claims.

“With more drivers on the roads, there has been an increase in accidents and claims,” he told CU. “And with recent supply chain issues, we have also seen an increase in the cost of those claims, which puts further pressure on premiums.”

Gibson noted Aviva Canada returned  more than $150 million to customers in response to significantly lower levels of vehicle use in 2020 and 2021. In all, the company reduced its auto premiums in Ontario by 12%, he added.

“As we have seen claims costs rise, we are similarly slowly returning our insurance premiums to pre-pandemic levels,” he said. “We are slowly removing the premium reduction in incremental steps and expect it to be back to pre-pandemic levels this fall.”

There’s been speculation that rising gasoline prices, spurred by sanctions and oil supply chain issues following Russia’s invasion of Ukraine, may dampen Canadians’ driving habits. But for now, evidence suggests consumers are looking to return to some level of normalcy, including driving more than they did during the COVID-19 lockdowns.

Feature image by iStock.com/RobertCrum

Phil Porado

Phil, an award-winning journalist with over 30 years of experience in financial topics, has been managing editor of Canadian Underwriter for more than three years.