Disconnect between insurers’ record earnings and financial challenges facing Canadians
By Kirsten McMahon
The impact of the second wave of COVID-19 on the personal finances of Canadians — particularly personal injury plaintiffs — versus the insurance industry is “diametrically opposed” and “quite troubling,” says Easy Legal Group of Companies President and CEO Larry Herscu.
A new survey conducted by FP Canada indicates that Canadians are struggling with finances due to the COVID-19 pandemic and almost a third of respondents fear that their financial situation will never recover.
“The ‘Coping with Covid’s Financial Impact’ survey found that 42 per cent of Canadians are ‘not in a strong enough financial position to handle the challenges of the second wave of COVID-19.’ Virtually the same percentage ― 41 per cent ― say they are already in worse financial shape than they were before the pandemic,” the Huffington Post reports.
That same report highlights that Canadians under age 35 as well as the “sandwich generation” ― those caring for both children and aging parents ― are feeling particular pressure in the face of a second wave and continued lockdowns.
Herscu says that while the survey results are not shocking given the tumultuous nature of 2020, it is “unfortunate and sad.”
He says that for personal injury plaintiffs, the financial fallout of COVID-19 is compounded if they are no longer able to work due to health issues.
“There are delays in access to justice, and civil court cases are pushed out. Personal injury plaintiffs are not getting to see their day in court in a system that was already plagued by delays before the pandemic,” Herscu says.
“They are also facing delayed or restricted access to necessary medical treatment and rehabilitation services. Some may have got a temporary boost from government subsidy or payment deferral programs. However, some of these programs have been discontinued or have more stringent qualification criteria,” he adds.
All of these factors can lead to an increased pressure to settle their case prematurely, Herscu notes.
What’s troubling, he says, is at the same time, auto insurance companies are abandoning relief measures, increasing premiums and reporting substantial profits.
Global News reports while drivers are in their cars less and working from home more — if they’re employed at all — they are faced with increased insurance rates. A York University professor who has researched the industry over several years tells Global the insurance companies are charging higher premiums than necessary.
“The overpayments are likely in the 10 to 16 per cent range on average,” said Fred Lazar, who teaches at the Schulich School of Business in Toronto.
Canadian Underwriter reached out to several insurers to get an update on what temporary discounts and premium deferrals were still available, and if future rebate announcements could be expected.
“No new rebates were in the offing, all of the carriers contacted confirmed,” the article states. “That said, they are still monitoring the situation as it evolves, and many continue to offer other relief options such as flexible payments and waiving fees.”
Herscu says the stark contrast between the struggles average Canadians face versus how insurance companies are conducting business is concerning.
“The pandemic has changed driving habits, resulting in fewer insurance claims this year, yet drivers are receiving premium increases. You look at the robust quarterly earnings of insurers, and it’s a contradiction of what Canadian consumers are dealing with right now,” he says.
“Insurers are experiencing record earnings and growth, while the average Canadian is paying more and earning less. It’s disheartening,” Herscu adds.
The Easy Legal Group of Companies is a Canadian litigation financing firm. Its lending solutions service the personal injury sector including plaintiffs with pending injury claims, their legal representatives and the service providers involved in their cases. The firm is registered to conduct business in Ontario, B.C., Alberta and the Atlantic provinces. Services are delivered through three brands: Easy Legal Finance Inc., Rhino Legal Finance and Seahold Legal Finance.