By: Luke Jones, Published on June 26, 2018 09:15 AM, Last Update on June 26, 2018 06:17 AM
Newfoundland and Labrador is currently assessing a review into the troubled auto insurance system in the province. While some lay part of the blame at the door of insurance companies, who they believe profit too much from the market, that’s not necessarily the case.
Insurance Bureau of Canada (IBC) Atlantic vice-president Amanda Dean says insurance companies in NL are not making as much money as many think.
A review into the auto insurance system was commissioned last year to assess why claims costs for car insurance are increasing in the province. It is hoped the review can yield solutions for reducing claims costs and high premiums that are passed to consumers.
The Public Utilities Board (PUB) has held hearings to discuss the review, one of which was attended by Dean this month. She responded to accusations from other attendees that insurance providers have profited too much in Newfoundland and Labrador.
“Let me address the elephant in the room – that’s the falsehood circulating around the province that over the past few years insurance companies have posted hundreds of millions of dollars in profits,” she said. “Insurers are not making money on auto insurance in Newfoundland and Labrador. They are losing money [because costs are escalating].”
Indeed, Dean referenced an Oliver Wyman report that states the profitability for auto insurers in NL declined from 8% in 2007 to -6% in 2016. This has led to the possibility of some private insurance companies pulling out of the province.
“The study concluded that even though higher costs have led to higher premiums and limited availability, insurers still need to charge another 17% on top of 2017 premiums just to be viable.”
“Between accident years 2011 and 2016 the average cost jumped from $55,000 to nearly $79,000,” she explained. “The highest in Atlantic Canada.”