New Brunswick

Car insurance hikes shaping up to be highest in decade, consumer advocate says

Car insurance premiums have been rising by up to 10 per cent, says the New Brunswick consumer advocate for insurance, who calls the increases unfair.

Insurance companies have been proposing increases as high as 10%

Insurance companies have received approval for higher rates, and some companies are blaming the province's higher cap on accident claims. (Dylan Hackett/CBC)

Car insurance premiums have been rising by up to 10 per cent, says the New Brunswick consumer advocate for insurance, who calls the increases unfair.

Michèle Pelletier said the indications so far are that increases will be the highest the province has seen in 10 years, and she warns drivers about them in her latest annual report.

"When you're a consumer and you're paying roughly $800, and all of a sudden you have a $100 increase, that's a lot of money for consumers to absorb at one time," Pelletier said Friday.

The higher premiums are being imposed after years of stability, when increases hovered around three per cent or less, she said.

Those more stable charges were the result of industry not wanting to go before the New Brunswick Insurance Board, which has to hold hearings if high increases are sought, Pelletier suggested.

"If companies are asking for less than three per cent, they don't have to appear in front of the New Brunswick Insurance [Board]," she said. "They've been filing for less than three per cent in order to avoid that."

But in 2013, the province introduced a $7,500 cap on what people can claim for pain and suffering for minor injuries such as sprains, whiplash and contusions. The cap had been $2,500.

Michèle Pelletier, New Brunswick's consumer advocate for insurance, says the higher rates across the province follow years of relative stability. (Submitted)

As a result, companies say they need to charge much more to cover what they've had to pay out, and they're going before the insurance board to justify it, Pelletier said.

"The companies are saying now, 'We're starting to see more claims of the injured, they're costing more money because of them.

What's just and reasonable for the company is not necessarily what's just and reasonable for the consumer.- Michèle   Pelletier

How cars are put together has also led to higher costs for the insurance industry, she said.

"Now cars, they're more sophisticated with all the electronics, it costs more money to repair cars. That would be another factor.

"They're saying, 'We're losing money and we want to charge more to the consumers.'"

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.

Largest increase in 10 years

New Brunswick's largest auto insurer, Wawanesa, was 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.

The company indicated earlier that 42 per cent of its policy holders would start being charged premium increases of between 10 and 15 per cent this year.

Intact, which covers 60,000 privately owned vehicles in the province, applied for a 9.5 per cent increase late last year, although the Insurance Board rolled that back to seven per cent.

Intact's new rates started in November for new customers and after Dec. 22 for existing customers.

Although Pelletier applauded the New Brunswick Insurance Board for its work, she said it's bound by the provincial Insurance Act, which says if companies can justify an increase, they can have it.

"What's just and reasonable for the company is not necessarily what's just and reasonable for the consumer," she said.

Time for change

Pelletier said it's time for the province to modernize the Insurance Act, and give it an in-depth review every seven to 10 years.

The last in-depth review was done in 2004, a much longer gap than in other provinces including Nova Scotia, which reviews its act every seven years.   

"We would have a thorough review and look at what's not working anymore, what needs to be tweaked, what needs to be arranged or modified or amended or included again," she said.

With files from Robert Jones