New Brunswick auto insurance companies justify high premium increases
Published: February 28, 2019
CATEGORY: Car Insurance
Auto insurance companies in New Brunswick have requested significant auto insurance rate increases in 2019 and seem to be winning over the province’s insurance board.
Wawanesa is New Brunswick’s largest auto insurance provider. Already this year, the company is sending renewals to customers with premiums price increased as high as 25 percent. Those increases following approval from the Insurance Board in October, which was the largest premium increase in 16 years.
Despite the already large increase, Wawanesa is seeking a 11.7 percent increase in 2019. In fact, the company insists this is generous because rising costs of claims means it could have asked for triple that amount.
“Our indication is about 30% [for rate hikes],” Wawanesa explained.
“[But] taking a rate increase of 30% would create substantial rate shock for our current policyholders and likely decrease retention dramatically.
“Keeping the overall impact on our current [customers] to 11.69 per cent allows us to take another step towards rate adequacy, while not shocking [clients] too drastically”
Customers would be forgiven for thinking auto insurance providers like Wawanesa are just getting greedy. However, the reality is more complex as few companies are making significant profit in New Brunswick thanks to increased collisions and higher cost of repairs.
Companies say auto insurance reforms introducing generous accident benefits have harmed the industry. Those reforms were introduced by the David Alward government in 2013 and resulted in higher insurance payouts.
Canada’s General Insurance Statistical Agency (GISA), says collisions in New Brunswick resulted in $376.9 million in insurance claims during 2014. That is a 62 percent increase over the $144 million paid out five years earlier. During that five-year period, auto insurance companies did not receive a premium increase approval.
In fact, GISA’s data shows customers actually paid less in that time as the average premium in New Brunswick fell 53 cents to $803.15.