Once considered industry friendly, New Brunswick's auto insurance regulator is pushing back

A rare request from New Brunswick's largest auto insurer for two rate increases this year is legal, but it will likely face intense scrutiny at the province's insurance board which has quietly been shedding its one-time reputation of being industry friendly. 

The Wawanesa Mutual Insurance Company covers 77,000 private passenger cars in New Brunswick and raised rates just last month by an average of 8.6 per cent. It is now seeking permission to impose another 12.42 per cent increase on customers on July 1.

The company says it paid out $1.21 in claims and expenses in New Brunswick last year for every $1 its customers paid in premiums and has nowhere to go for the money to close that gap except to policyholders.

"We are not publicly traded and do not have shareholders," said Wawanesa's Brad Hartle in an email to CBC News.

But applying for an auto insurance rate hike in New Brunswick lately has been no guarantee of receiving it.

Marie-Claude Doucet is Chair of the New Brunswick Insurance Board and said Wawanesa's attempt to win a second rate hike in 2020 is "not usual" but is permissible and will be the subject of a full hearing.

"The board has authority over proposed rate changes by [auto] insurers," said Doucet.  

"It takes a lot of resources from the insurance company to apply twice in a year so it's not typical but it does happen."

No rubber stamping

Doucet was appointed to run the insurance board in late 2016 just as financial results of insurers began sagging across Canada and her organization has dealt with a parade of companies applying for significant rate hikes in the wake of those troubles.  

During her tenure, the board has granted some of the increases requested by companies in full but it has also knocked a number of them down following detailed reviews and hearings.

In 2018 the board slashed a proposed 18.2 per cent increase in rates to New Brunswick's highest risk drivers to 6.2 per cent after finding faults in the rate application by the non-profit industry collective that handles bad drivers, known as the Facility Association.

In 2019 the group returned and asked for a 22.3 per cent increase, but the board found problems again and awarded 14.4 per cent.

New Brunswick's third-largest insurer Intact, had a combined 7.4 percentage points shaved off its last two requested increases in 2017 and 2019 and last month, New Brunswick's second-largest insurer, Economical, was approved for a 6.1 per cent increase. That was barely half of the 11.9 per cent it had asked for.

In all five of those cases the hearings were conducted by three-person panels headed by Doucet. She also wrote the final decision in each case, a sign of how she has taken charge of the organization.

In 2019 the board held a record 27 hearings, 16 related to private passenger car insurance most of which Doucet conducted personally

"If I am able to handle the workload yes I absolutely sit in on the hearings as long as there are no conflicts," said Doucet who has a psychology degree, a law degree and a masters of business administration degree.

Michele Pelletier is New Brunswick's Consumer Advocate for Insurance and says although companies have been winning some substantial rate hikes from the insurance board, policyholders have been getting fair treatment at hearings under Doucet with decisions sometimes in their favour.

"I think she has the respect of all the parties," said Pelletier.

Previous administration

That's a shift from the insurance board's early years when it appeared to be tilted toward the interests of insurance companies under its former chair, Paul D'Astou.

In 2010 New Brunswick's office of the Attorney General challenged two rulings of the insurance board under D'Astou at the New Brunswick Court of Appeal. It argued the body was allowing companies to earn too much profit, limiting questions that could be asked of companies during rate applications and giving no reasons for decisions it made.

The Appeal Court ruled in the Attorney General's favour in each case.

In 2013 the insurance board found more controversy for soliciting donations from insurance companies to support its annual golf tournament fundraiser.  

The event allowed companies the board regulates to buy advertisements on golf holes in support of the board's chosen charity and have company representatives play in the tournament alongside board members in exchange for an entry fee.

There have been no similar incidents under Doucet.

In a statement Monday, New Brunswick's Office of the Attorney General, which intervenes in rate hearings with lawyers and actuarial experts on behalf of the public said it has been able to win lower auto insurance rates from the board than companies have requested 11 times since 2017, around the time Doucet took over.  

"Over several years of intervention on behalf of the public interest, the Attorney General has been successful in achieving lower rates for automobile policyholders in many cases," said spokesperson for the office of the attorney general Paul Bradley.

The board currently has several decisions pending from hearings it held earlier this winter including an application for a 50 per cent auto insurance rate hike from Sonnett and a 51 per cent increase from Echelon 

A hearing into Wawanesa's application for a second rate increase for 2020 is likely later this spring.