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DAVID SHIPLEY
Telegraph-Journal

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MONCTON - Auto insurance costs are on the rise for drivers in three areas of New Brunswick, including its two largest cities.

Drivers in Moncton, Saint John and the Acadian peninsula are facing increases of up to 10 per cent this year as a result of changes to the insurance industry brought in by the provincial Liberal government.

The changes, which included a switch from a four-territory insurance rates system to one with 11 different zones, have resulted in about 114,000 drivers facing an increase in premiums and another 266,000 experiencing a decrease, based on where they live.

The provincial government announced the 11 territories in December 2006 after negotiating reforms with the insurance industry.

The Liberals had campaigned in the last election on eliminating the territory system but abandoned the notion during the talks.

"Our preliminary indications are that territory-wise, Moncton, is probably at the top, Saint John, the Acadian Peninsula, those are the three highest-rated territories with this new system," said Ronald Godin, the province's consumer advocate for insurance.

Godin said his office has had a few calls about auto insurance premiums increasing as a result of the territory changes.

The insurance industry as a whole in New Brunswick will see no net revenue changes as a result of the shift, he said.

"There's not a dollar more for the insurance companies, it's just that a different way of distributing premiums according to risk," he said.

"For everyone who has had an increase there is someone who has a decrease. It works both ways."

Lisa Ferguson, spokeswoman for the New Brunswick Insurance Board, which regulates the industry, said the board had anticipated some shifts in premiums as the new 11 territory system came into force for 2008 policies.

Ferguson said the board's preliminary estimate is that 30 per cent of New Brunswick's 380,000 vehicle owners will face an increase.

The board capped rate increases at 10 per cent.

"If there was an increase ... that was higher than 10 per cent, we didn't want that to hit individuals all at once in one year," Ferguson said.

Drivers in higher-risk territories may see another increase next year as the system fully takes hold.

Bill Adams, acting vice-president for Atlantic Canada for the Insurance Bureau of Canada, said the new territories provide more detailed risk analysis, based on information such as on traffic patterns, vehicle density, terrain, road conditions and speed limits.

The shift to 11 territories meant some drivers have found themselves grouped with others in a new zone that has higher risk because of denser traffic or the other indicators now used to better judge risk, said Adams.

"The other reality is that there are drivers, because it is revenue neutral, which saw decreases and others it didn't affect them at all in terms of their premiums," he said. "Government was aware of that, that it was going to be one of the outcomes of a process like this, that not everyone was going to end up paying the same as they had been paying in the past. Some were going to pay more and some were going to pay less."

Valerie Kilfoil, spokeswoman for the provincial Department of Justice and Consumer Affairs said the old four territory system wasn't based on relevant or recent information on risk.

Drivers in urban areas are being hit with increases because of higher claim levels.

"It makes sense in terms of rating your risk. If you're a good driver, you're going to get a good rate no matter where you are. It may be a little bit higher in some of the higher density areas like Moncton and Saint John because it's a higher risk," she said.

"Overall the system is a fairer system for everybody. People aren't unfairly subsidizing other drivers because now everybody has the same fair rating system."