SAINT JOHN, NB, Nov. 22, 2002 – The insurance industry is disappointed with the results contained in a report on how to control automobile insurance costs in New Brunswick.
The Select Committee on Auto Insurance has produced 15 recommendations to help control auto insurance rates in New Brunswick. But industry officials warn that, if implemented, such changes will place an even greater burden on consumers and insurance companies.
Don Forgeron, Insurance Bureau of Canada’s (IBC) Atlantic Vice President, says the report does not address the huge financial awards for soft-tissue injuries – the major factor affecting insurance costs.
“The committee results are extremely disappointing,” Forgeron says. “The reasons for high rates are crystal clear, but the committee has chosen to focus on the symptoms of the problem instead of solving the larger issues behind the increases, namely, soft-tissue injury awards.
Forgeron maintains that none of the 15 recommendations will reduce rates. In fact, many of them will only add costs.
One recommendation calls for the elimination of “file-and-use” for rate approvals. Under the current system, insurers can request rate adjustments from the Public Utilities Board. Unless the proposed rate is considered excessive, unreasonable or unfair, it can be implemented immediately. With the recommendation to add more bureaucracy to the system, the costs to insurers will increase significantly.
“The recommendations in this report will add to the regulatory burden already experienced by the province’s auto insurers and more regulation means less competition – and that’s bad for consumers,” says Forgeron.
“Instead of moving forward, the committee is taking a backward step. The “file-and-use” recommendation alone will delay the ability of the insurance industry to respond quickly to market forces.”
Insurance Bureau of Canada is the national trade association of the home, car and business insurance industry. It represents the insurance companies that provide more than 90 per cent of the home, car and business insurance in Canada. For more information, please visit our Web site at www.ibc.ca.
The report from the New Brunswick Select Committee can be seen at the NB Government site, http://www.gnb.ca/ at page http://www.gnb.ca/cnb/Promos/Insurance/index-e.asp with a 55 page report as a pdf.