Auto insurance rates could spike in 2016

Most New Brunswick drivers will be facing higher auto insurance rates next year as insurance companies line up to have increases they requested for 2016 approved by the New Brunswick Insurance Board.

For many drivers, it will be the first increase in auto insurance prices in a decade, although the insurance board's Kevin Duff said most will be modest in size.

"The bulk of the companies are certainly less than three per cent," said Duff.

In New Brunswick, companies asking for increases higher than three per cent face a mandatory hearing, and although Duff says on average companies have told the board they need 10 per cent increases to maintain adequate profit levels in the province, most have opted to stay below the level that triggers a full review.

"Most companies have looked at their situation and said, no we're not interested in applying for any kind of major increase. We are really going to take a longer view and look at rate stability," said Duff.

However, five auto insurance companies have applied for increases above three per cent and will undergo a hearing, including the province's second largest insurer, Intact. It covers about 40,000 New Brunswick vehicles, including 10 per cent of the drivers in the province, and has asked for an increase of 5.1 per cent.

An Intact spokesperson said no one from the company was immediately available to explain the reasons for the increase, although the increase is almost certainly tied, in part, to more generous accident benefits passed by the former Alward government that took effect on July 1, 2013.

Those changes tripled the amount auto accident victims could claim for "minor injury," pain and suffering to $7,500, and loosened the definition of what constituted a minor injury.

Claims increased

According to Canada's General Insurance Statistical Agency (GISA), auto accident victims in New Brunswick made $264.5 million in claims in 2014, the most since 2002 and $40 million more than 2012, the year before reforms.

Insurance companies still made money in New Brunswick in 2014, but $50 million less than in 2012, and they say the trend is pointing toward even smaller margins in 2016.

The public is represented at auto insurance hearings by lawyers from the attorney general's office. In the past, they have pressed the insurance board to take a harder line with companies on rates they charge consumers, given record profit levels in New Brunswick, even taking the board to court to force it to review company applications in more detail.

On Friday Anne Bull, a spokesperson for the attorney general, said the office will be intervening in all rate cases before the insurance board, which are likely to happen early next year.

In addition to Intact, other companies applying for increases above three per cent in New Brunswick include Portage la Prairie (7.7), Trafalgar (4.68), Primmum (3.97) and TD Home and Auto (3.8). A sixth company, IAO Actuarial Consulting, which calculates rates for a group of other small insurance companies, has applied for a 5.4 per cent increase and will also undergo a hearing.