Auto insurance reforms paying off for consumers: IBC

In its most recent quarterly “Perspective” report, the Insurance Bureau of Canada notes auto insurance premiums have dropped significantly in all private market provinces from their 2003 peaks, with the exception of Newfoundland.
Topping the list is PEI, where premiums are down 20.6% since last August, followed by Nova Scotia, where rates dropped an average 18% since last November, and New Brunswick, with an 11.4% drop since last July. In Ontario, rates were down 6.7% since December, 2003, not including recent reductions averaging 10.15% to take effect in the second quarter of 2004. Even in Alberta, where auto reforms are still pending, rates have dropped 9.4% since November, 2003.
Newfoundland has experienced the lowest drop in rates, and IBC chief economist notes recently tabled government reforms will lower rates, but not to the extent seen in the other Atlantic provinces because they offer no claims cost relief.
For those provinces reporting significant rate relief, Voll says, “for the past two years insurers have been actively working with governments to reduce insurance costs in order to lower the prices that consumers pay for coverage. Those actions are starting to make a difference for consumers.”
IBC data show rates did indeed peak in 2003, although Quebec provides an interesting contrast. In that province, rates in 2003 were up 14.9% over 1992 rates. This compares with much steeper jumps in other provinces, led by Newfoundland, where, over more than a decade, rates were up 95%. The difference can be understood in terms of claims costs. In Quebec, average injury claims cost was $12,399 in 2002, whereas in Atlantic Canada, the average injury claim hit $20,171 that same year (the most recent year for which Atlantic data is available).