Drivers say auto insurance in this province is “financially difficult” to afford: poll

Nearly two-thirds of polled drivers in Newfoundland and Labrador have said that auto insurance has become “financially difficult” to pay for, according to a new poll commissioned by Aviva Canada.

“The system is broken and insurers, government and other stakeholders need to work together to fix it,” says Gordon Murray, Aviva’s vice president of broker distribution for the Atlantic region. “This poll shows that as auto insurance premiums increase, drivers are not seeing an increase in value. We all can – and we must – do much better for the drivers of Newfoundland and Labrador.”

The poll of 400 Newfoundland and Labrador residents was conducted by MQO Research last month and is considered accurate within plus or minus 4.9 percentage points, 19 times out of 20.

Most respondents (83%) said they noticed how fast the cost of auto insurance premiums has been rising. Newfoundland and Labrador drivers pay the highest auto insurance premium rates in the Atlantic region – $1,090 per year on average. Premiums increased 22.4% from 2008 to 2016, compared to 11% at the same time in other Atlantic provinces.

When asked by Canadian Underwriter if there was anything in particular that stood out regarding the poll, Murray pointed to findings that:

• Nearly all drivers in Newfoundland and Labrador view “car insurance companies” in the province as profitable, contradicting findings in an Oliver Wyman report on private passenger auto insurance written in the province;
• Uninsured drivers are seen as a significant issue in the province as the vast majority feel it is having an impact on premiums. Almost all – 97% – of drivers agree that insurance premiums should be based on your driving and claim history; drivers with a clean driving record pay less for their premiums and drivers with a poor driving record pay more.
• Many would like to see more competition in the market.

Other poll findings included:

• Ninety per cent of drivers want more choices about their insurance coverage to reduce the premium they pay. “There is broad support for giving drivers the choice to pick and choose what benefits are included in their policy as a means of reducing their premiums,” Murray said. “This included options for the level of rehabilitation care and making the right to sue an optional benefit that could be purchased as part of their policy”;
• Four out of five drivers polled were not aware that 95% of insured Newfoundland and Labrador drivers have never made an injury claim;
• Eight in 10 drivers favour a cap on legal contingency fees;
• Seven in 10 drivers favour an optional tort right to recover damages, which lower premiums while still allowing those injured in an accident to receive compensation for medical and other accident-related expenses like lost wages. Optional tort is making the right to sue for pain/suffering an optional benefit that customers can purchase as part of their auto insurance policy. This would have no impact on income replacement, health care or other standard benefits; it would result in a lower premium for those who choose not to add the right to sue for pain and suffering;
• More than two-thirds of respondents (69%) felt that uninsured drivers have a big impact on car insurance rates;
• Two-thirds of drivers favour a cap on pain and suffering claims if it would result in lower premiums; and
• Half of drivers wish there was more competition in the marketplace among insurers to drive premiums down.