Auto insurance rates rising as companies blame costs of accident claims

New Brunswick drivers can expect to see higher bills for car insurance beginning as early as next week, as insurance companies begin to respond more aggressively to escalating accident claims in the province.

Wawanesa has been approved for its largest automobile insurance premium hike in more than a decade

New Brunswick drivers can expect to see higher automobile insurance premiums beginning as early as next week. Insurance companies have received approval for higher rates and some companies are blaming the costs of higher accident claims. (Dylan Hackett/CBC)

New Brunswick drivers can expect to see higher bills for car insurance beginning as early as next week, as insurance companies begin to respond more aggressively to escalating accident claims in the province.

Michèle Pelletier, New Brunswick's consumer advocate for insurance, has been involved in a number of this year's rate hearings at the New Brunswick Insurance Board and confirmed rates are on the rise.

"Rates are going up," she said.

"We do expect an increase. We're trying to say, 'Yes, fair to the company, but it should be also fair to the consumer.'" 

New Brunswick's largest auto insurer, Wawanesa, has already been approved for its largest premium increase in more than a decade — an average seven per cent hike on more than 92,000 privately owned vehicles in New Brunswick.  

For Wawanesa customers it amounts to an average increase of $42 per vehicle, although that will vary significantly from driver to driver.

Insurance board agrees with increase

The company has indicated 42 per cent of its policy holders will be receiving higher increases of between 10 and 15 per cent effective Jan. 1.

If as a consumer we have a steady increase it's easier to absorb than all of a sudden to have a big increase — that's one of my problems.— Michèle   Pelletier, consumer advocate for insurance

Wawanesa presented evidence over the summer and fall showing it has been losing money in New Brunswick.

It claimed it actually requires an average 32 per cent rate increase to return to full profitability but was concerned about shocking New Brunswick customers with a change that severe.

The insurance board agreed.

"[Wawanesa] justifies its selection … in the face of the much higher indicated rate on the basis of retention and customer recruitment," ruled the board.

"The panel is satisfied that [Wawanesa] has justifiable business reasons for these decisions."

'That's one of my problems'

Pelletier has been opposing some of the larger increases companies have applied for, arguing their profit issues, if justified, should not be fixed too quickly.

"If as a consumer we have a steady increase it's easier to absorb than all of a sudden to have a big increase — that's one of my problems," said Pelletier.

"The insurance industry they are there to make money and that's OK but not too much money to the detriment of consumers."

New Brunswick currently has some of Canada's lowest auto insurance rates.  

In 2016 the average vehicle cost $775 to insure — 46 per cent less than rates in Ontario.

But auto insurance accident claims in New Brunswick have been escalating in recent years, up $90.5 million (39 per cent) between 2012 and 2016, and several companies say their profit margins in the province have disappeared.

New rates begin next week for some customers

New Brunswick's second largest insurer, Intact, covers 60,000 privately owned vehicles in the province. 

It applied for a 9.5 per cent increase, although the Insurance Board rolled that back to seven per cent.

Intact's new rates begin next week for new customers and after Dec. 22 for existing customers depending on when their current policies expire.

Michèle Pelletier, New Brunswick's consumer advocate for insurance, confirmed that automobile insurance rates are going up across the province. (Submitted)

Another large provider, Allstate Insurance, has applied for an average 10 per cent rate increase for the 34,000 New Brunswick vehicles it covers while Pembridge, another Allstate Company which insures 17,000, has applied for eight per cent.    

Hearings on those applications are not yet scheduled.

The news is even worse for drivers in high-risk categories who are covered by the Facility Association — an industry collective that operates as insurer of last resort for those with poor driving records and who companies will no longer deal with individually.  

Some companies keep increases below 3%

It has applied to raise rates in New Brunswick $267 per vehicle (15 per cent) for about 7,000 clients which would raise the average premiums in that category above $2,000 each.

That application has also not yet been heard but, as a sign of how poor some insurance markets in New Brunswick have gotten, the Facility Association won a $765 (18.2 per cent) average increase on the coverage of New Brunswick taxis earlier this year — pushing those premiums to an average of over $5,000 as of Sept. 1.

Premiums are set to rise for thousands of car owners across the province. (Getty Images/Cultura RF)
But not all companies are chasing large increases.

Full New Brunswick Insurance Board hearings are only required for rate hikes above three per cent and several companies have kept their requests below that, even while filing evidence claiming more is needed to obtain full profitability.

Included in that group are Aviva of Canada (+2.99 per cent), The Personal (+2.99 per cent),  Co-Operators (+2.91 per cent),  Certas  (+2.94 per cent) and CAA (+2.9 per cent).

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