Earlier in the week, we reported on the potential for auto insurance hikes around Canada. New Brunswick was the focus of spiraling auto claims and the result was expected to be excessive premiums rate hikes. In a new twist, insurance companies in the province have opted not to ask for an increase in premium prices, at least for this year.
Some predictions suggests motorists could be paying as much 35% for the next policy, but insurance companies have decided to not raise premiums. The move is unexpected but saves car owners a lot of money, as much as $247 per year in fact.
While insurers have held off this year, 2017 will see the situation reassessed. Needless to say, if the frequency of claims continues to rise, at some point the market will be forced to respond with increased rates. There is an argument that insurance companies would have been better off raising premiums by a percentage this year and then by another percentage in 2017, effectively splitting the cost for customers.
However, statistics seem to suggest that the insurers have made the right move. It is predicted that there will be an average increase of 3% next year, or around $20 per vehicle.
“I think it’s fair to say we were surprised,” the executive director of the New Brunswick Insurance Board, Kevin Duff, told CBC News, highlighting how insurance companies caught everyone by surprise.
“There are some significant variances between what the company actuaries say the companies require, and what the companies are asking the board to approve.”
It is arguable that New Brunswick is going through an auto insurance crisis. The province is currently in its worst year for insurers since 2001 as the amount of collision claims rose exponentially in 2015.
Wawanesa is the largest insurance provider for vehicles in the province, it was one of the company that went against predictions. Nationwide giant and second largest insurer in New Brunswick, Intact Insurance, also bucked expectations by applying for a 2.99% rise. While this was an increase, the company points out it could have asked for 14.29%.