NL auto insurance report lands without recommendations
Published: February 6, 2019
Updated: February 28, 2019
Author: Luke Jones
CATEGORY: Car Insurance
After a year-long review into its auto insurance system, Newfoundland and Labrador has a report but no course of action. The Public Utilities Board (PUB) published a detailed 186-page report highlighting the problems facing the auto insurance system in the market, but did not provide any recommendations to remedy it.
Some would argue the whole point of conducting a review would be to create a detailed roadmap for change. Many of the issues in the NL car insurance market are self-evident, but PUB previously said last summer it was not in a position to make recommendations:
“The board is not a public policy instrument of government, and as such the board will not be making any decisions on any of the issues under review or making any recommendations to government on the issue of the cap or deductible…. It will then be up to government as to how they wish to use the information contained in our final report and whatever changes it contemplates for the automobile insurance product in this province.”
That means the report is now in the hands of NL’s politicians and it is they who are tasked with creating a plan to move forward. Indeed, a meeting is scheduled for this week where the province’s Minister of Service Sherry Gambin-Walsh will meet with insurance industry association the Insurance Bureau of Canada (IBC), insurance companies, and legal experts.
Speaking about IBC’s immediate perspective on the report, vice president of Atlantic Region said its own plans are worthy of consideration. “From our perspective, we think there is a lot that supports the reform recommendations that IBC, on behalf of our member companies, put forward to government.”
“One of the things that is incredibly clear is that if there isn’t change to the auto insurance system in Newfoundland and Labrador, consumers are going to pay higher and higher prices. It is in government’s hands right now, and we are hoping that they make some big changes to the benefit of consumers.”
The core takeaway from the report is consumers are paying too much for their auto insurance, 35% above the other maritime regions. Auto premiums in Newfoundland and Labrador cost $1,100 per year on average, while in New Brunswick the average is $819, Nova Scotia is $842, and Prince Edward Island’s average $796.
“Even with the higher premium levels in this province relative to the other Atlantic provinces, the total private passenger premiums paid by consumers over the period 2012-2016 were not sufficient to cover industry costs for this business,” the PUB observes. “The estimated premium deficiency ranged from 6.8% in 2014 to 16.2% in 2016 and was forecast to be 17% in 2017, or approximately $190. These findings point to the possibility for further premium increases in the short-term.”
Insurance are not making money, customers are paying too much but should pay more, and no ideas have been tabled for solving the problem.