Royal & SunAlliance withdraws from Nova Scotia auto market

Royal & SunAlliance Insurance Co. of Canada will cease to write new personal and individual corporate auto covers in Nova Scotia effective immediately, says the company’s president Rowan Saunders. Royal & SunAlliance is the first among a number of auto insurers expected to withdraw from the province in reaction to legislation passed last week under Bill-1 requiring insurance companies to drop premiums by 20% with rates subject to a 12 month freeze.
In addition to the rate freeze, Nova Scotia’s new auto insurance product legislation requires insurers to refund 20% of premiums collected as from the beginning of November this year to the expiry of policies. Bill-1 was proclaimed last week containing several last-minute amendments which insurers believe will negate any cost savings contained in the product reform legislation. Saunders notes that, “we are happy to work with the government of Nova Scotia to provide the best, fair priced product to the consumer, but Bill-1 does not provide the solution.” He strongly urges the province’s premier John Hamm to work with insurers to amend the legislation.
A Royal & SunAlliance statement also refers to a report issued by a government-appointed actuary which suggests that the amendments contained in Bill-1 do not merit a 20% reduction in auto rates. The report says the legislation as it currently stands should lead to a variance in insurance rates from a drop of 4.6% to an increase of 3.1%. “This piece of legislation will force insurance companies to sell automobile insurance below cost. Writing business at a loss will inevitably become unsustainable for insurers in the province and consumers will not be able to find insurance in the regular market,” comments Saunders.