New Brunswick presents insurers with stiff ultimatum

In its first “throne speech” since the recent provincial election, New Brunswick’s Conservative Party (CP) government announced a legislative amendment to its Insurance Act which will require all registered insurers to file for new auto rates by August 15 of this year or face an automatic 20% reduction in the price of coverage. The new legislation also presents draconian “penalties” on insurers with regard to late reimbursement of “excess premiums” to policyholders as well as attempts by companies to withdraw from the province’s auto insurance marketplace.
In addition to the mid-August deadline for filing new rates with the province’s Public Utility Board (PUB), insurers will also have to make such price adjustments retroactive to the beginning of July this year. Insurers not having reimbursed policyholders the difference between their existing and new rates within 45 days will face fines up to $5,000 for each policy in effect. The new bill also places a “rate freeze” on auto pricing for 12 months to beginning of July 2004. Insurance companies having already filed for rate reductions will not have to do so again, the province’s premier Bernard Lord says.
Rate filings made by insurers to the provincial PUB will be made effective immediately to ensure that policyholders gain maximum benefit from the price reductions, Lord notes. He adds, “by permitting a company who has filed new rates to begin to charge those rates until its PUB hearing occurs, New Brunswickers should begin to experience a reduction in their auto insurance premiums very soon.”
Rate adjustments filed by insurers will remain in effect until the PUB has time to hold a hearing into an insurer’s rate filing, which then may have to be amended if it is felt that the rate reduction was insufficient. The new legislation also requires insurers looking to withdraw from the province’s auto market to provide the government with six months notice of their intent or face a maximum penalty of $100,000.