Insurers announce five-point action plan to lower auto insurance rates in response to New Brunswick government pressure and public outcry

IBC delivers No Frills proposal to NB Government

Moncton, NB, Feb. 24, 2003 – Responding to government pressure and public outcry over the high cost of auto insurance in New Brunswick, Insurance Bureau of Canada (IBC) today announced an action plan to bring premium rates down quickly throughout the province. The long-awaited initiative will also provide long-term relief to New Brunswick drivers.

“Private insurance companies have been in New Brunswick since before Confederation and we want to remain here providing competition and choice to our customers,” said Stan Griffin, President and CEO, IBC. “We have listened to the Government and to the people and we realize that we must move quickly to provide real solutions that will drive auto insurance rates down and ensure the long-term viability of our industry in this province,” he added.

Griffin explained the components of the plan, – all intended to provide rate relief and permanently resolve the auto insurance problem. Components of the plan include:

  1. A “No Frills” auto insurance policy proposal delivered to the office of Premier Bernard Lord in Fredericton today. This proposal emphasizes a “driver’s choice” approach to auto insurance, while ensuring drivers have the same liability protection currently required by law. “No Frills” creates a buy-what-you-need insurance environment while maintaining an unchanged level of service on, for example, the claims settlement side.

  2. A commitment to remove an additional 7,200 New Brunswick drivers out of the high-priced Facility Association by August, 2004, leaving FA with 2.5% of New Brunswick drivers;

  3. The introduction of a new toll-free consumer help line to assist New Brunswickers with their exit from Facility Association and their search for lower rates;

  4. The launch of a new consumer information campaign to reinforce consumer understanding of the rights available to them through the government’s new reforms;

  5. The launch of a community outreach initiative this summer to educate New Brunswickers about how to properly adjust their headrest to prevent serious neck injury in the event of a collision.

“While it’s true that government designs the insurance product we sell, we understand we have to be part of the solution,” said Griffin. “We believed the reforms recently introduced by government would help to solve the problem, but it’s become painfully clear that we need to accelerate the process.”

“We are presenting to government an option today for a ‘no frills’ policy. Every element of the no-frills proposal emphasizes a ‘driver’s choice’ approach to auto insurance in New Brunswick,” Griffin continued. “But options for a customized product extend far beyond what the industry has tabled with government. ‘No frills’ provides the opportunity for government to provide significant savings on a buy-what-you need basis.”

“Our proposal is in direct response to the government’s commitment to New Brunswickers,” added Griffin. “It’s government that designs insurance ultimately. We believe our tabled option is a good starting point for discussion.”

Reducing the number of drivers in Facility Association is also a key component of the plan. Although progress has been made and some consumers have seen large rate reductions when they moved to the lower priced regular market, Facility Association still accounts for 4.4% of the New Brunswick auto
insurance market. Historically the market share is 2 to 3%.

“The industry has been working diligently to find new auto insurance coverage for those drivers that do not belong in Facility Association and would be better served in the regular market. But we have heard the message — it’s not happening fast enough. We are committing publicly to change that,” said Griffin.

The new consumer help line will support the effort to reduce the number of drivers insured by Facility Association and provide consumers with the information they need to find the best possible insurance rate.

“Many Facility Association policyholders don’t realize they are in the high risk market,” Griffin added. “Beginning this week, New Brunswickers with rates well above the provincial average can call 1-877-U-ASK-IBC
(1-877-827-5422) to determine if, in fact, they are in Facility Association. If they are, and if they qualify for insurance in the regular market, we will help get them a policy. If they are not, we will provide useful information that will help them shop for better rates”.

An informed consumer holds the power to obtain the best deal possible. IBC will arm consumers with the information they need to understand their rights when it comes to buying auto insurance in New Brunswick.

“In July, the government passed legislation to protect auto insurance consumers. Yet many New Brunswickers are unclear about the ways in which these reforms can help them. Our new consumer awareness campaign will communicate a very important message to New Brunswick drivers — they have the power to choose how they purchase insurance, and the ability to get the best rate
possible,” said Don Forgeron, IBC’s Vice-President, Atlantic. The campaign starts on February 25th, 2004 and messages will be heard on radio and TV and seen in newspapers.

Insurance Bureau of Canada is the voice of companies that insure the homes, cars and businesses of Canadians. Member insurance companies provide about 90% of the private property and casualty insurance sold in Canada.