Companies blame distracted drivers, complex cars as auto insurance increases pile up

New Brunswick drivers caused $380M in insured damage in 2018

Robert Jones · CBC News

Two of New Brunswick’s biggest auto insurers began implementing rate hikes on customers of up to 35 per cent over the weekend.

It’s the latest and largest in a parade of steep insurance increases the province has been hit with over the past two years that are being blamed on wrecks caused by distracted drivers and on technology-laden vehicles that have become expensive to fix after even minor accidents.

“What we’re seeing particularly in New Brunswick is that car insurance prices are increasing,” said Justin Thouin, chief executive officer of the national auto insurance bargain hunting website lowestrates.ca.

“They have been increasing, they still are increasing and we predict them to continue to increase.”

On Saturday, auto insurers Unifund and Royal and Sun Alliance (RSA), which are both owned by Johnson Insurance, were cleared to begin charging average premium increases on new customers in New Brunswick of 24.5 per cent and 21.3 per cent, respectively, and up to 35 per cent on some higher risk clients.

Similar rate hikes take effect March 1 on existing customers who renew policies with the companies after that date.

The two insurers combine to cover 40,000 vehicles in New Brunswick, about 1 in 12 on the road. The increases approved by the New Brunswick Insurance Board are worth just under $200 and will be enough to push premiums on the average vehicle they cover close to $1,000.

Royal and Sun Alliance understands that automobile insurance premiums are significant expenses for our insureds and 24.5 per cent is a significant increase compared to the rate level we are currently charging,” said the company in a joint submission with Unifund to the insurance board last fall.

“However, this difficult decision has been carefully thought out and is necessary for Royal Sun Alliance to operate a sustainable business and maintain capacity to deliver the best insurance products and customer service possible to our customers in New Brunswick.”

Big players raising rates

The increases are the latest in a series of rate hikes imposed on drivers by New Brunswick’s largest auto insurance companies over the last two years.

The largest company, Wawanesa, which covers about 85,000 vehicles in New Brunswick was cleared to raise rates in mid January an average of 8.6 per cent on customers, including up to 35 per cent on those considered to be higher risk. That’s on top of an average 11.7 per cent increase the company won the previous January.

Intact, the province’s third largest insurer, began imposing average increases of 12 per cent on its clients in September and Economical, New Brunswick’s second largest auto insurer, won the right to raise rates 14 per cent last April.

Economical has also made an application to raise rates another 11.8 per cent this spring but is still waiting on a decision on that request from the insurance board.

Companies blame premium hikes on rising insurance claims being made by drivers and specifically point to increasing accident rates they say are caused by people paying too much attention to things happening inside their vehicles and not enough to the road in front of them.

In addition, companies say when accidents do happen sophisticated electronics inside modern cars are driving up repair costs.

In November, the Dominion of Canada General Insurance Company cited both issues in its application to the New Brunswick Insurance Board for a 15 per cent rate hike.

“The sensors and electronics distributed all around the car have made even simple claims such as fender-benders much more costly to fix. Many repair shops have also had to hire more costly technicians with the appropriate expertise to handle repairs on newer more advanced vehicles,” said the company in its submission.

“On top of the higher repair cost for similar accidents, distracted driving has led to increased frequency of accidents and full speed collisions.”

Insured damage on the rise

According to Canada’s General Insurance Statistical Agency, New Brunswick drivers caused $380.2 million in insured damage in 2018, an increase of $85 million over four years. Part of that was caused by a jump in the total number of accidents and part by a jump in the individual cost of each accident.

Cpl. Jullie Rogers-Marsh with the New Brunswick RCMP said impaired driving, speeding and passengers not wearing seatbelts are still the most common causes of serious injuries on the road in New Brunswick but agreed distracted drivers are adding to the problem.

“It is certainly something we continue to see,” she said. “It is considered to be part of being a danger on the road.”

Thouin said recent premium increases in all six provinces served by private auto insurers, including New Brunswick, have begun to trigger a rush of people looking online for better deals if they can find them.

“People tend to not think about shopping for insurance until they see a change that they don’t like,” he said.

“We’re seeing double-digit, in some cases triple-digit, increases in terms of people looking for better deals on insurance.”

B.C. launches talks with taxi industry about fees to aid disability services

By Dirk Meissner

THE CANADIAN PRESS

VICTORIA _ Taxi drivers in B.C. will soon be able to purchase the same kind of insurance available to the ride-hailing industry, the transportation minister said Thursday.

Claire Trevena said talks are also underway with the taxi industry to ensure sustained and improved services for passengers with disabilities.

The province has been working for several months with the Insurance Corp. of B.C. and the taxi industry to provide insurance based on the per-kilometre distance travelled with passengers in their vehicles, which is equivalent to what is offered to ride-hailing vehicles, she said in a statement.

“In the near future, taxi drivers who want this new product will be able to switch their insurance, with coverage beginning in the spring. Drivers who wish to keep their current form of coverage will not be affected.”

Trevena said talks are underway as well with the taxi industry to ensure sustained and improved services for passengers with disabilities. Those discussions involve providing the taxi industry with a portion of the 30-cent trip fee that ride-hailing companies must contribute toward a passenger accessibility fund because their licences don’t require them to provide vehicles for disabled passengers.

The minister’s announcement follows petitions filed in British Columbia Supreme Court by the Vancouver Taxi Association alleging unfairness over the licence approvals for ride-hailing companies Uber and Lyft.

Meanwhile, Uber has filed an injunction application in the Supreme Court after Surrey Mayor Doug McCallum said city bylaw officers will ticket the company’s drivers operating there.

The taxi association documents, which ask the court to quash the licence approvals for Uber and Lyft, say the rules that require taxi firms to provide costly wheelchair accessible vehicles do not apply to the ride-hailing companies. A hearing is set for Tuesday in Vancouver.

In an interview Tuesday, Trevena said it was “unfortunate” passengers with mobility issues could face service issues connected to disputes over the introduction of ride-hailing in B.C.

“We want people with mobility challenges and accessibility challenges to have as many options for transportation as possible,” she said.

Taxi association lawyer Peter Gall said the companies will argue in court that Uber and Lyft have unfair advantages over the taxi industry. The advantages include no restrictions on vehicle numbers or charge rates and no requirements to provide wheelchair accessible taxis, he said.

“If we’re going to do something which costs more, they should either have to provide the same service, which they can’t, or they should be contributing to the cost of the service,” he said.

Gall said taxi drivers will continue to pick up passengers with disabilities.

Trevena defended the government’s approach to ride-hailing after a contentious first week in Metro Vancouver.

“While efforts continue to ensure safety and fairness, I am proud that our government refused to back down against pressures to abandon our regulatory measures on ride hailing,” she said in the statement. “As a result, British Columbia now has the highest safety standards in North America.”

B.C.’s auto insurance monopoly gets a makeover

The excerpted article was written by

The B.C. government has rejected efforts by private insurance companies to open the province’s auto insurance trade to competition, but it is rolling out a series of changes intended to make British Columbians feel better about the services they must buy from a Crown-owned monopoly.

Attorney-General David Eby says he wants to restore public trust in the Insurance Corp. of B.C., which exclusively provides basic auto insurance to more than three million B.C. drivers.

Mr. Eby has directed the Crown corporation to improve its complaints mechanism, to provide clearer financial reporting and to offer injury settlements – for eligible claims – without revoking claimants’ right to sue.

“We’re taking the steps to improve the oversight, accountability and transparency of ICBC, and to begin the process of rebuilding British Columbians’ trust and confidence in our public auto insurer,” he told a news conference.

The changes were announced Wednesday, one day after the organization representing private insurance companies, the Insurance Bureau of Canada, released a report that found B.C. drivers are paying up to 42 per cent more for their auto insurance than drivers in Alberta pay for similar coverage.

Aaron Sutherland, the Pacific regional vice-president of the Insurance Bureau of Canada, said in an interview Wednesday that B.C.’s drivers are paying too much for public auto insurance.

“If ICBC is so convinced that they’re the best game in town, they can prove it: They should open themselves to competition. And if they’re right, nothing would change, but if they are wrong, drivers will start saving money, and that’s what this is all about.”

He said the province has thwarted competition, even for optional insurance that can be purchased to top up coverage that is not included in B.C.’s basic vehicle insurance.

There are 200 private insurance companies in Canada that could offer competition for services, Mr. Sutherland added, but ICBC will not provide information on drivers that would allow them to evaluate rates. As a consequence, only two companies have ventured into the B.C. market with optional insurance packages.

“If we want to see more choice on optional auto insurance, what we need to see is equal access for other insurers to drivers’ record and claims history,” he said.

Mr. Eby said the Insurance Bureau has wrongly calculated insurance rates to make ICBC rates look non-competitive. And, he said, privatizing auto insurance would drive up rates for a majority of drivers. “The only drivers to benefit would be about a third of drivers over the age of 45. … And because of that, we will not be going in that direction.”

Instead, Mr. Eby said he is focused on seeking to reduce insurance premiums and improving customer service at ICBC.

He said ICBC will offer plain-language financial reporting so customers will be able to find out how their insurance premiums are being spent. An independent “fairness office” will have more powers to investigate complaints and require public accountability from ICBC. And the Crown corporation will offer “pre-litigation payments.” Under the current system, claimants cannot accept a proposed settlement award from ICBC without having to give up their right to go to court if they believe they are entitled to more.

Mr. Eby says he was blind-sided by the depth of ICBC’s financial challenges when he took over responsibility for the Crown corporation in 2017. He has introduced a series of reforms designed to reduce costs and lower accident rates. On Wednesday, he said those changes have helped stabilize ICBC’s costs, but he promised further actions to try to reduce insurance rates.

It is not clear yet if drivers will pay more this year. The government directed ICBC to delay its annual rate application to the regulator until February, as it seeks additional savings.

Source: The Globe and Mail

B.C. introduces new complaint process in bid to increase trust in ICBC

VANCOUVER _ British Columbia’s attorney general says the province will  “supercharge” an office that deals with complaints against the Insurance Corp. of B.C. in an effort to increase public trust in the Crown auto insurer.

David Eby made the announcement as one of several moves that he says will increase transparency and accountability at ICBC.

The government will also require the auto insurer to post its annual reports online in  “plain language,” so that the average person can understand the financial health of the Crown corporation and how premiums are calculated.

And individuals who accept pre-litigation payments from ICBC will no longer be barred from later suing the corporation, a move that Eby said may reduce the number of cases that actually end up in court.

ICBC already has a fairness office with a $200,000 budget, but Eby said it is hard to find and there’s no statutory obligation for ICBC to respond to its recommendations.

Under the changes, the commissioner will be appointed by cabinet, complaints can be filed online and the nature of complaints, the commissioner’s recommendations and ICBC’s responses must be posted publicly in plain language.

“I don’t think it’s a secret that many British Columbians simply don’t trust ICBC,” Eby said at a news conference Wednesday.

“That’s a problem because British Columbians deserve the peace of mind of knowing that if they’re injured in a crash and they ask a public insurance provider for help, they need to know they will be well taken care of.”

The New Democrats  “inherited a mess,” when they took power and discovered ICBC was operating with billion-dollar deficits and projections showed massive increases to premiums for drivers would be required to break even.

“The fact that this information was not available to the public before the 2017 election is just one more example of why more transparency is needed at the corporation,” he said.

Since then, ICBC’s finances have stabilized and accident rates have gone down thanks to road safety initiatives. But the government is still working toward a goal of decreasing premiums and establishing trust in the Crown corporation, he said.

B.C. Liberal Leader Andrew Wilkinson has called for more choice in the sector after a report by accounting firm MNP found B.C. residents pay up to 42 per cent more for car insurance compared to drivers in Alberta.

Wilkinson said the report concluded that B.C. and Alberta have similar insurance coverage and systems, but the difference is that Alberta allows choice and free-market competition.

Eby said Wednesday that he has considered the option of privatizing insurance but that his office has been unable to replicate the modelling promised by the private sector. Under independent analysis, he said moving to a private insurance model would actually increase premiums for almost all drivers, except for one third of drivers older than 45.

The NDP caucus has previously responded that privatizing car insurance could result in double-digit rate increases, saying that the Alberta government recently removed a rate cap, which allowed rates to skyrocket up to 30 per cent.

New Auto Insurance System, Same Old Story: BC Drivers Pay Much More than Alberta Drivers

VANCOUVER, Jan. 28, 2020 /CNW/ – Auto insurance in British Columbia (BC) and Alberta is substantially the same, according to a new report from accounting firm MNP. The price drivers are paying, however, is very different.

In the study, MNP found that BC drivers are paying up to 42% more for their auto insurance than their neighbours in Alberta pay for similar coverage. A key difference between the two provinces is that Insurance Corporation of British Columbia (ICBC), a Crown corporation, has a monopoly on mandatory auto insurance in BC, while in Alberta, drivers have choice.

BC’s and Alberta’s auto insurance systems have the following similarities:

  • Tort-based systems with the ability to sue for pain and suffering
  • A similar limit on pain and suffering awards for minor injury claimants
  • Similar mandatory coverages
  • Similar average payouts for injury claims: $50,658 in BC and $46,082 in Alberta.

MNP’s study obtained quotes through insurance brokers in each province, as well as online, for 14 different drivers. They then compared the price of auto insurance for the same drivers, with the same vehicles, and at the same coverage levels, in comparable locations across both provinces. For example, a 49-year-old small business owner in Surrey who drives a 2014 Ford F-150 would pay $1,953 with ICBC, which is $573 more than what the same individual would pay in Calgary.

Similarly, MNP has found that inexperienced drivers in BC are paying far more than the same drivers in Alberta for comparable coverage. A new driver with two years of experience would pay ICBC $4,319 to insure their 2008 Honda Civic to go to and from school (less than 15 km). That is $828 more than the same driver would pay in Calgary.

This report directly contradicts ICBC’s recent suggestions that drivers in BC pay less than drivers in other provinces. BC drivers pay the highest auto insurance prices in Canada, with annual premiums averaging $1,832. This is far higher than premiums in Ontario, Alberta and Atlantic Canada according to data from the General Insurance Statistical Agency (a statistical agency created and overseen by provincial insurance regulators).

Auto insurance in Alberta is by no means perfect and, like in BC, is in need of reform. In August, the Alberta government removed limits on rate increases in that province, and since that time companies in Alberta have applied for – and received – rate increases averaging 10.5%. These increases are included in the quotes MNP used in their analysis. In comparison, BC drivers will find out what ICBC’s next rate increase is when it is announced in February.

For more information on the study and to see the driver profile comparisons, visit betterautoinsurancebc.ca.

Quotes:

“The auto insurance systems in BC and Alberta are substantially similar, with a key difference being who sells auto insurance in each province. That difference has contributed to drivers in BC paying more than their neighbours in Alberta for similar coverage,” said Susan Mowbray, Senior Economist, MNP

“This study gives an apples-to-apples comparison of the price drivers are paying for similar auto insurance coverage in BC and Alberta, and clearly demonstrates the price impact of ICBC’s monopoly,” said Aaron Sutherland, Vice-President, Pacific, IBC. “ICBC has suggested that no private insurer could come into BC and offer the rates they offer in Alberta. If ICBC is so sure of that statement, it’s time they opened themselves up to competition to prove it,” added Sutherland.

About Insurance Bureau of Canada

Insurance Bureau of Canada (IBC) is the national industry association representing Canada’s private home, auto and business insurers. Its member companies make up 90% of the property and casualty (P&C) insurance market in Canada. For more than 50 years, IBC has worked with governments across the country to help make affordable home, auto and business insurance available for all Canadians. IBC supports the vision of consumers and governments trusting, valuing and supporting the private P&C insurance industry. It champions key issues and helps educate consumers on how best to protect their homes, cars, businesses and properties.

P&C insurance touches the lives of nearly every Canadian and plays a critical role in keeping businesses safe and the Canadian economy strong. It employs more than 128,000 Canadians, pays $9.4 billion in taxes and has a total premium base of $59.6 billion.

For media releases and more information, visit IBC’s Media Centre at www.ibc.ca. Follow us on Twitter @IBC_Pacific or like us on Facebook. If you have a question about home, auto or business insurance, contact IBC’s Consumer Information Centre at 1-844-2ask-IBC.

BACKGROUNDER
Comparing BC and Alberta Premiums: January 2020

To ensure an accurate comparison of premiums, MNP gathered quotes for 14 different drivers through an insurance broker in each province, as well as online in Alberta, using the same vehicles, and at the same coverage levels, in comparable locations across both provinces. MNP compared ICBC’s prices in British Columbia to the lowest Albertaquotes for each driver.

Coverage levels purchased are the same in each province and include:

  • $1 million in third-party liability
  • Collision coverage with a $500 deductible
  • Comprehensive coverage with a $300 deductible for BC and a $250 deductible for Alberta
  • Uninsured motorist protection

A Detailed Comparison of BC and Alberta Premiums

Driver Profiles

British Columbia

Alberta

Location

ICBC Premium
January 2020

Location

Premium

January 2020

Experienced Drivers Without At-fault Accidents

Small-Business Owner

Surrey

$1,953

Calgary

$1,380

Family

Langley

$1,985

Calgary Area

$1,516

Young Parents

Vancouver

$1,967

Calgary

$1,500

Seniors

North Vancouver

$1,417

Calgary Area

$1,130

Single Individual

Kelowna

$1,499

Red Deer

$1,448

Inexperienced Drivers

New Driver (City)

Burnaby

$4,319

Calgary

$3,491

New Driver (Rural)

Kamloops

$3,194

Medicine Hat

$2,393

Young Driver

Prince George

$1,757

Fort McMurray

$1,340

Experienced Drivers with One At-fault Accident

Driver with an Accident

Surrey

$2,805

Calgary

$3,090

Multiple Drivers with Different Risk Profiles

Family with New Driver (City)

Richmond

$2,540

Edmonton

$2,398

Family with New Driver (Rural)

Kelowna

$1,956

Red Deer

$1,835

Recreational Vehicles and Motorcycles

Luxury Car

Burnaby

$2,394

Calgary

$1,730

Recreational Vehicle

Victoria

$1,036

Edmonton

$590

Motorcycle

Fraser Valley

$1,908

St. Albert

$1,806

Note: MNP obtained the quotes in January 2020.
The Alberta government recently removed the cap on rate increases in that province, and since then companies in Alberta have applied for – and received – rate increases averaging 10.5%. These increases are included in the quotes MNP used in their analysis. Prices shown do not include ICBC’s 2020 rate increase, expected to be announced by February 16.

SOURCE Insurance Bureau of Canada

Related Links

www.ibc.ca

A new report says B.C. drivers pay up to 42 per more more for their car insurance compared to Alberta. Is it time to open up ICBC to private competition?

Read more

Subscribe To Our Newsletter

Join our mailing list to receive the latest news and updates from ILSTV

You have Successfully Subscribed!

Pin It on Pinterest