New Brunswick

Auto insurance claims hit 12-year high in New Brunswick

More generous accident benefits and some harsh winter weather helped push auto insurance claims in New Brunswick to a 12-year high last year as drivers finally began to get their money's worth out of their auto insurance premiums.

Increase in automobile insurance claims partially tied to more generous accident benefits that started in 2013

More generous accident benefits and some harsh winter weather helped push auto insurance claims in New Brunswick to a 12-year high last year as drivers finally began to get their money's worth out of their auto insurance premiums 2:14

More generous accident benefits and some harsh winter weather helped push auto insurance claims in New Brunswick to a 12-year high last year as drivers finally began to get their money's worth out of their auto insurance premiums.

According to Canada's General Insurance Statistical Agency (GISA), auto accident victims in New Brunswick made $264.5 million in claims in 2014, the most since 2002 and $40 million more than just two years ago.

The increase is partially tied to more generous accident benefits passed by the former Alward government that took effect on July 1, 2013. 

Those changes tripled the amount auto accident victims could claim for "minor injury" pain and suffering awards to $7,500 and loosened the definition of what constituted a minor injury.

George McAllister, a Fredericton lawyer, says the changes have made a significant difference to people who have sustained injuries in auto accidents.

"Before you could have broken bones, you could have cognitive deficits so long as you were able to get back to work basically your claim was limited to $2,500," said McAllister

"People's perception of what they're entitled to has changed and they now have a sense they can make a claim."

Rough winter could have been a factor

But the insurance industry is not sure generous benefits were the big issue driving increased claims. 

Amanda Dean, the vice-president Atlantic with the Insurance Bureau of Canada, says the overall number of automobile accidents in New Brunswick jumped in 2014. (Insurance Bureau of Canada )
Amanda Dean, the vice-president Atlantic with the Insurance Bureau of Canada, says the overall number of accidents in New Brunswick jumped in 2014 and that suggests other possibilities.

"It could be the impact of the change to the minor injury cap," said Dean.

"We also had a pretty rough winter so there could be a number of factors." 

Whatever the reason behind increased claims New Brunswick drivers did not have to pay higher prices because of them. 

Auto insurance premiums actually fell in 2014 to an average of $774 per vehicle, the lowest level in New Brunswick in 14 years.   

Insurance companies were the biggest losers

New Brunswick's automobile accident victims filed $264.5 million in claims in 2014, the most since 2002, according to Canada's General Insurance Statistical Agency. (CBC)
The big losers were auto insurance companies, who posted their lowest profits in New Brunswick in a decade, dropping into a range government actuaries have suggested they should have been operating at all along.

According to GISA, companies took in $100 million more in premiums than they paid out in claims in New Brunswick 2014, almost the exact amount a report to government in 2010 suggested industry should be charging.

In the nine years before 2014, New Brunswick drivers were charged annual auto insurance premiums ranging between $130 million and $250 million more than the auto accident claims they are meant to pay for, often vastly exceeding profit targets they were asked to abide by.

Insurance companies have reacted in different ways to the new squeeze on profit margins in the province.

Two of New Brunswick's largest auto insurers — Wawanesa and Allstate — applied for and received increases in their rates for 2015 of just under three per cent. 

But other companies, such as The Dominion, have frozen rates for 2015 while some like RBC have applied for and received reductions.

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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