N.B. drivers paying for accidents they don't have, figures show
Robert Jones | CBC News | Posted: August 13, 2013 3:23 PM | Last Updated: August 13, 2013
Insurance companies exceed profit targets for 10th consecutive year
New Brunswick drivers paid for thousands of auto accidents they didn't have last year, new figures show.
That helped auto insurance companies beat profit targets in the province for the tenth year in a row.
New Brunswick drivers filed just $204.4 million in accident claims in 2012, the lowest level in four years, according to data released last week by Canada's General Insurance Statistical Agency (GISA), an independent body charged with compiling auto insurance premium and claims data across the country.
However, insurers anticipated significantly higher accident rates and charged New Brunswick drivers $373.7 million in premiums, allowing the industry to surpass profit targets in the province by a wide margin.
It's the tenth year in a row auto insurers have made the same error overestimating claims and premiums required to pay those claims in New Brunswick.
The Insurance Bureau of Canada (IBC), an industry association representing companies that sell auto insurance in New Brunswick, says it has no position on whether companies are making too much money in the province.
But it advises consumers to shop around if they feel they are being overcharged.
"That's up to the regulators and government officials to take a look at and decide," said IBC Atlantic Vice President Amanda Dean, about whether companies have been making too much money from New Brunswick drivers.
'There's a lot of choice out there. Consumers can shop around if they're not happy.' —Amanda Dean, Insurance Bureau of Canada
"I certainly can't tell them how to do their job," she said.
"There are 68 auto insurance companies operating in New Brunswick. There's a lot of choice out there. Consumers can shop around if they're not happy."
Auto insurance is regulated in the province by the New Brunswick Insurance Board, which approves rates company by company every year.
The board asks companies to aim at achieving a 12 per cent return on equity for themselves when setting premiums, but two separate studies have shown the industry routinely exceeds those targets.
At a board hearing in 2011, Paula Elliot, an actuary hired by the provincial government, gave evidence suggesting insurers had charged New Brunswick drivers an average of $100 million a year more than required between 2004 and 2008 to hit their 12 per cent return on equity targets.
Those results were mirrored in a PricewaterhouseCoopers profit study commissioned by the board itself.
Since 2008, auto insurers have continued to earn returns well above the 12 per cent return on equity target. Last year, in a new review, Elliot estimated that insurance companies were likely charging New Brunswick drivers $91 per car more than required, or about $40 million too much.
Since 2003, New Brunswick motorists have been charged a combined total of $3.8 billion in auto insurance premiums, but made only $2.1 billion in claims.