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How Auto Insurance Could Shift Post-pandemic

During the pandemic, we saw plenty of shifts in driving habits and our lives in general that affected auto insurance. Changes such as less driving and moving out of city centres like Toronto.

So now that we are coming out of the pandemic, or at the very least shifting back to our pre-pandemic world with people going back to work and businesses opening up to their usual levels and capacities, what can we expect to see in the world of auto insurance? Let’s take a look…

Driving changes

First, let’s review some of the shifts we have seen in driving behaviours…

Back to business as usual for driving

With the pandemic and lock downs, there was a marked decrease in the number of drivers out on the road. That was one factor that led to many insurers dropping rates or offering discounts. Now we are seeing driving rates back to what they were pre-pandemic.

Longer driving distances

As we mentioned, many people moved away from large city centres during the pandemic. 60% of Canadians relocated during the pandemic (source: Canadian Underwriter). Now that for many their work structure is returning to what it once was, and workers are being called back to the workplace, we are seeing people driving longer distances with their commutes.

Driving seen as a better option than public transportation

Another shift we are seeing is a reticence to get back on public transportation. For many, if driving is an option to them, that’s what they will choose. There is a hesitation to get back on crowded enclosed spaces such as trains and buses.

What about oil prices?

It has been predicted that the dramatic rise in fuel costs should translate into less driving. When gas is as expensive as it is, one would expect that people will think more carefully about jumping into the car. However, given the points we talked about above, this might not have as dramatic an impact as has been predicted. Only time will tell…

Auto insurance impacts

Dialling back on the pandemic savings

More drivers out on the road means increased potential for accidents and claims. This, paired with supply chain issues that are making vehicle repair more expensive than it once was, means that auto insurance rates should shift upwards accordingly. When claims costs rise, so do the costs to the consumer.

Leveraging telematics to save on auto insurance rates

With such dramatic shifts in car usage and driving distances, more than ever telematics or usage based insurance models can be a way for drivers to save on their auto insurance rates. They give insurance providers concrete information about how a car is used and can thus help consumers save.

Resources used for this post come from the Canadian Underwriter:

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