Information to help consumers control automobile insurance premiums

Newspaper guest column: Submitted to weekly and daily newspapers in Nova Scotia,
New Brunswick and Prince Edward Island – for consideration and re-print. April 2002.

TORONTO, April 15 – The increased cost of automobile
insurance has been the focus of much attention lately. It is a subject that affects
everyone – consumers, the insurance industry and government. Consumers contacting the
Insurance Bureau of Canada are learning about the many options they have to control cost pressures.

What can consumers do to save on their insurance costs?

  1. Consult your insurance broker. Before you purchase your next
    car, ask your broker or agent for a quote. Expensive, high-performance cars and those with
    poor accident ratings cost more to insure.

  2. Review your policy. Consider raising your deductible or
    dropping collision coverage on an older car.

  3. Take advantage of any discounts or special programs.

    • Insure your car with the same insurance company that insures your home.

    • Find out if there are further discounts offered for the
      installation of an anti-theft system in your home or car.

    • Ask if there are any discount or rewards programs available
      for consumers over 50.

All of these factors may result in additional savings. Why are car premiums going up,
even for those who haven’t been in an accident?

There is no one reason why insurance premiums have increased, but rather an array of
factors contributing to the situation, including:

  1. Rising claims costs In recent years, the industry has
    witnessed an increase in the number of claims plus an increase in the average cost of a
    claim. Between 1996 and 2000, claims costs throughout Atlantic Canada have risen by
    between 36 and 52 percent. Some consumers have questioned whether seniors or youth are
    being singled out and charged more than other drivers. This is simply not the case. All
    consumers who purchase automobile insurance are experiencing increased premiums.

  2. Increased bodily injury claims There has been a significant
    increase in the number of injury claims, and the most costly claims are the ones for soft
    tissue injuries such as whiplash or neck sprains. Court awards as a result of these minor
    injuries are increasing, and related legal expenses are contributing significantly to
    claims costs as well.

What is the insurance industry doing to contain costs? In
Atlantic Canada, the industry is encouraging government to review this issue in
consultation with all stakeholders. Everyone has an important role in the discussion in
order to arrive at the most cost-effective and affordable solutions. In Newfoundland, the
government has completed a full public review, and public policy-makers are looking at
many different options to address the problems with auto insurance in the province.

Over the years, efforts by the home car and business
insurance industry have led to more effective theft control measures, more widespread
insurance fraud prevention programs, and more comprehensive road safety initiatives.

The industry has spearheaded campaigns for the mandatory
use of seatbelts and the introduction of graduated licensing for new drivers, and
campaigns against drinking and driving. These campaigns have reduced the frequency and
severity of collisions in Atlantic Canada. Unfortunately, these efforts to control costs
and improve the environment in which insurers do business are not making a significant
impact: costs continue to rise.

What else can consumers do to help control insurance
premiums? Consumers are encouraged to contact their agent/broker to discuss different
options that might be appropriate for them. For general information on car insurance
consumers can also call IBC’s consumer information centre 1-800-565-7189, Ext. 227. Most
importantly, consumers should contact their MLAs to find out how they can be heard by
government on this important issue.