Companies blame distracted drivers, complex cars as auto insurance increases pile up

Two of New Brunswick's biggest auto insurers began implementing rate hikes on customers of up to 35 per cent over the weekend.

It's the latest and largest in a parade of steep insurance increases the province has been hit with over the past two years that are being blamed on wrecks caused by distracted drivers and on technology-laden vehicles that have become expensive to fix after even minor accidents.

"What we're seeing particularly in New Brunswick is that car insurance prices are increasing," said Justin Thouin, chief executive officer of the national auto insurance bargain hunting website lowestrates.ca.

"They have been increasing, they still are increasing and we predict them to continue to increase."   

On Saturday auto insurer Unifund and its parent company Royal and Sun Alliance (RSA) were cleared to begin charging average premium increases on new customers in New Brunswick of 24.5 per cent and 21.3 per cent respectively and up to 35 per cent on some higher risk clients. 

Similar rate hikes take effect March 1 on existing customers who renew policies with the companies after that date.

The two insurers combine to cover 40,000 vehicles in New Brunswick, about 1 in 12 on the road. The increases approved by the New Brunswick Insurance Board are worth just under $200 and will be enough to push premiums on the average vehicle they cover close to $1,000.

"Royal and Sun Alliance understands that automobile insurance premiums are significant expenses for our insureds and 24.5 per cent is a significant increase compared to the rate level we are currently charging," said the company in a joint submission with Unifund to the insurance board last fall.

"However, this difficult decision has been carefully thought out and is necessary for Royal Sun Alliance to operate a sustainable business and maintain capacity to deliver the best insurance products and customer service possible to our customers in New Brunswick."

Big players raising rates

The increases are the latest in a series of rate hikes imposed on drivers by New Brunswick's largest auto insurance companies over the last two years.  

The largest company, Wawanesa, which covers about 85,000 vehicles in New Brunswick was cleared to raise rates in mid January an average of 8.6 per cent on customers, including up to 35 per cent on those considered to be higher risk. That's on top of an average 11.7 per cent increase the company won the previous January.

Intact, the province's third largest insurer, began imposing average increases of 12 per cent on its clients in September and Economical, New Brunswick's second largest auto insurer, won the right to raise rates 14 per cent last April.  

Economical has also made an application to raise rates another 11.8 per cent this spring but is still waiting on a decision on that request from the insurance board.

Companies blame premium hikes on rising insurance claims being made by drivers and specifically point to increasing accident rates they say are caused by people paying too much attention to things happening inside their vehicles and not enough to the road in front of them.

In addition, companies say when accidents do happen sophisticated electronics inside modern cars are driving up repair costs.

In November, the Dominion of Canada General Insurance Company cited both issues in its application to the New Brunswick Insurance Board for a 15 per cent rate hike.

"The sensors and electronics distributed all around the car have made even simple claims such as fender-benders much more costly to fix. Many repair shops have also had to hire more costly technicians with the appropriate expertise to handle repairs on newer more advanced vehicles," said the company in its submission.

"On top of the higher repair cost for similar accidents, distracted driving has led to increased frequency of accidents and full speed collisions."   

Insured damage on the rise

According to Canada's General Insurance Statistical Agency, New Brunswick drivers caused $380.2 million in insured damage in 2018, an increase of $85 million over four years. Part of that was caused by a jump in the total number of accidents and part by a jump in the individual cost of each accident.

Cpl. Jullie Rogers-Marsh with the New Brunswick RCMP said impaired driving, speeding and passengers not wearing seatbelts are still the most common causes of serious injuries on the road in New Brunswick but agreed distracted drivers are adding to the problem.

"It is certainly something we continue to see," she said. "It is considered to be part of being a danger on the road."

Thouin said recent premium increases in all six provinces served by private auto insurers, including New Brunswick, have begun to trigger a rush of people looking online for better deals if they can find them.

"People tend to not think about shopping for insurance until they see a change that they don't like," he said. 

"We're seeing double-digit, in some cases triple-digit, increases in terms of people looking for better deals on insurance."