Auto insurance rate shock possible in 2017 due to rising claims

Surging insurance claims have grown by $70 million in New Brunswick over the last three years and helped push New Brunswick to the verge of what could be a nasty round of auto insurance rate hikes in 2017.

New Brunswick claims to insurers for damage have grown $70 million over 3 years and may lead to rate hikes

Dana Alexander, the owner of Dana's Collision Center, said about 80 per cent of customers are now putting through insurance claims rather than paying out-of-pocket for repairs. (CBC)

Dana Alexander has seen the trend developing at his Fredericton auto body shop for several years, skittish New Brunswick car owners getting more and more comfortable using their auto insurance to fix damage to their vehicles.

"We used to see as high as 40 per cent customer-pay. Now it's swung that we're probably up to 80 per cent insurance," said Alexander.

"We've had people put in for a $1,000 claim — less than $1,000. A few years ago if it was $1,000, they were going to pay that out of pocket."

Surging insurance claims have grown by $70 million in the province over the last three years and helped push New Brunswick to the verge of what could be a nasty round of auto insurance rate hikes in 2017.

According to newly released information from Canada's General Insurance Statistical Agency (GISA), New Brunswick drivers generated $304.8 million in auto insurance claims costs in 2015, the most in 14 years and a 30 per cent increase since 2012.

At the same time, auto insurance premiums have been in decline, sinking to an average of $759.38 per vehicle in 2015, the lowest level since 2000.

The combination of higher claims and lower premiums led to the worst financial year for insurers in New Brunswick since 2001 and it could spell trouble for consumers as companies file 2017 rate applications with the New Brunswick Insurance Board. 

Those applications are due Thursday, but won't be available for public inspection until next week.

Insurance bureau says time will tell

Amanda Dean, a vice-president with the Insurance Bureau of Canada, said insurers may view increased claims as an aberration caused by brutal winter weather conditions. (Krystalle Ramlakhan/CBC)
Amanda Dean, the Insurance Bureau of Canada's vice-president for the Atlantic region, said it is difficult to guess what insurers will do with premiums following those recent poor results.

She said it is possible they may not pursue major increases if they view high claims in 2015 as an aberration, brought on by the brutal winter months at the start of that year.

"It's hard to say, 2015 may be an anomaly because of the weather. But certainly time will tell," said Dean about whether New Brunswick drivers should brace for rate shock on their auto insurance renewals next year.

2015 may be an anomaly because of the weather.- Amanda Dean, Insurance Bureau of Canada

But claims had been on the rise in New Brunswick before 2015, pushed higher by more generous accident benefits approved by the province in 2013, and those changing attitudes among New Brunswick drivers about using their insurance to pay for damage.

Fredericton's Michelle Bradley said her car recently got dinged in a parking lot and although the damage looked minor, the woman who did it showed no interest in paying the bill out of pocket.

"She never said a word about it," said Bradley.

"She gave me her insurance card, I took a picture of it and I called my insurance company and I've never seen or spoke to her since."

About the Author

Robert Jones

Reporter

Robert Jones has been a reporter and producer with CBC New Brunswick since 1990. His investigative reports on petroleum pricing in New Brunswick won several regional and national awards and led to the adoption of price regulation in 2006.

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