April 13, 2004 by Canadian Underwriter
Reacting to the release of New Brunswick’s Select Committee Report on Public Automobile Insurance, the province’s brokers say they want to keep competition for their consumers.
The Insurance Brokers Association of New Brunswick (IBANB) is critical of the committee’s report, saying it is “short on detail with too much guesswork and not enough actuarial data to back it up”. The association adds that an insurer would never be able to file such “guesstimates” with the Public Utilities Board (PUB). Specifically, the association questions the $200 per policy in savings the report contends public insurance would offer.
IBANB chair Mike Daniels says the report is peppered with qualifying language, for example, “an actuarial exercise is required before premium levels under the made-in-New Brunswick model can be determined”. “This report makes it look like the government could provide insurance for less,” he says. “We say show us the data to prove it because it isn’t in the report.”
Daniels adds that the report does not take into account cost-saving measures that are already underway in the province. “Even if they [the committee] suggest $200 average premium savings is correct, it is getting narrower every day and will become very narrow on July 1 when a number of the insurance companies are permitted to use their new lower rates,” Daniels adds.
His comments echo those of Dominion of Canada General Insurance CEO George Cooke, who says the report uses old rate data and that newer date would reveal just a $27 per policy savings.
Daniels is also concerned with the cost of implementing the system, which the committee pegged at $82 million, and the omission of certain categories of business ATVs, snowmobiles, buses, trucks, motorcycles, fleets and commercial vehicles.
However, Daniels does see some good suggestions in the report which could be implemented within the framework of private insurance. For example, the three-year accident-free “forgiveness period” versus the current six to 10 years; no-fault coverage; better benefits when there is no third party found to be liable. Also, Daniels was pleased the committee reinforced the importance of the broker distribution model in its report.