Forecast: Volatile situation in Ontario could affect premiums here, says insurance advocate

I5

James Mallory
the Northern Light

Stumble Upon

del.icio.us

Digg

Facebook

Print

Email

1 Comment(s)

BATHURST - The drop in automobile insurance premiums some New Brunswickers have enjoyed in recent years could change in 2010.

Enlarge Photo

Ronald Godin

Ronald Godin, New Brunswick's insurance advocate, said this province could suffer from insurance companies' revenue losses in Ontario.

"What is a bit upsetting right now is Ontario is going through what we were going through in 2001, '02, '03," said Godin, a former Bathurst lawyer. "They're going through a crisis right now and the Ontario market is the biggest market in the country and it's the same companies that are doing business across the country. Our fear is what happens in Ontario "¦ the companies might want to balance that off with their other markets such as Western Canada or Atlantic Canada.

The out-of-control insurance costs were implemented by insurance companies who claimed they were losing money paying out claims. In 2004, the Liberal government introduced a soft-tissue claims cap in the province to help insurance companies cut costs. The idea was for insurance companies to pass along savings to the consumer.

Since 2004, Godin said premiums have been cut by 40 per cent from an average of $1,025 to $751 in 2009. However, Godin said those rates could increase again when insurance companies release their 2010 rates in the coming weeks.

"The New Brunswick Insurance Board does require the companies to file their rates according to their book of business in New Brunswick. But, I tend to think that no company can sustain major hits, negative impacts where they probably derive over 50 per cent of their revenues from Ontario market alone.

"I'm thinking somewhere down the line it's got to affect the rest of the country. The insurance industry is telling us that the market is starting to harden "¦ so that would tend to make us believe that rates will be going up"¦ The companies (were) filing (last) month their proposed rates for 2010 so we'll find out in a month or two what rates are being proposed for 2010."

Godin said what might save New Brunswick from a major premium increase is competition.

"My discussions with the companies is "¦ New Brunswick has a very competitive market and just in the auto sector there are over 40 some companies doing business. Nobody is going to move very much if no body else moves "¦ and being very competitive, they're going to be very leery of making any substantial moves on their rates. I think they will try to keep them at that level or just a marginal increase to take into account inflation and cost of living, which is normal."

Meanwhile, Godin said vehicle insurance claims have been increasing in recent years but many drivers remain wary.

"The statistics show us that the claims reported are increasing," he said. "They're starting to pick up again over the last year or two, probably because the situation has improved and people feel more comfortable about submitting a claim. But I think people are more particular about which type of claim they'll submit in a sense that they won't submit claims involving small amounts.

"We see on car insurance and also residential insurance, people have increased their deductible. We used to see deductibles of $100 and $200 and now we're seeing more and more deductibles of $1,000, because people made the decision that they wouldn't report a claim for an amount of less than $1,000."

Godin noted many still have not forgotten how some insurance companies gouged consumers earlier this decade.

"There's still caution there because it's recent. The decreases have been gradual over the last four or five years so people have not been that many years with premiums at this level. So there's still a bit of tension, still a bit of concern when there's an accident, whether you're at fault of not.

"There's still some nervousness out there but the more stability. The more years we can have of this type of premium level, the better it will be."

Steven White, of Henry White Insurance in Bathurst, is president of the Insurance Brokers of New Brunswick Association. He said property claims have increased quite a bit in recent years.

"On the property side, because of a lot more weather-related claims in the last number of years, and the cost of construction, we are seeing some dramatic increases in the claims costs. There's been a lot more wind damage claims, water damage claims, snow load claims and whatnot because of the weather we've been having the last number of years."

White said today's consumer is better informed about insurance companies and that goes a long way to alleviate fears.

"There was some problems in the past but I think what's happening now is the consumer is better educated. I think they understand the product better, which is a good thing," he concluded.

"I don't think there's any ill will toward the insurance companies by the consumer."