June 12, 2019 by Jason Contant
What is contributing to New Brunswick’s skyrocketing loss ratio?
According to Canadian Underwriter’s 2019 Statistical Issue, the total (direct) loss ratio for the province last year was 100.8%, up 22 points from 78.8% in 2017. This makes it the highest in the country; the other provinces and territories ranged between 56.6% and 72% in 2018.
New Brunswick’s total property loss ratio was 138.6%, while the loss ratio for commercial property was an astounding 235.8% last year.
Total private passenger auto lines fared relatively better at 92.2%.
“Pressures have been building in the New Brunswick market for some time,” commented Amanda Dean, vice president of the Insurance Bureau of Canada’s (IBC) Atlantic region. “Last year’s floods certainly impacted those numbers in terms of both personal lines and commercial lines.”
The spring 2018 flooding resulted in hundreds of evacuations, about 12,000 properties affected by widespread flooding and dozens of homes and cottages “beyond repair.” However, Catastrophe Indices and Quantification Inc. (CatIQ) reported last year that the flooding didn’t meet the threshold of $25 million in insured damage to be considered a catastrophic event. Instead, it was a “notable event,” with between $10 million and $25 million in property damage.
So it’s not clear why the commercial property loss ratio was so high last year (In 2017, it was 70.2%).
In the auto insurance line, pressures have been building for years, as witnessed by the increasing loss ratios, Dean said. “A combination of rising costs and flat premium renewals has increased pressure on the auto insurance system,” she told Canadian Underwriter Tuesday. “IBC has observed pressures emerging with claim costs related to bodily injury claims, as well as property damage claims.”
What would insurers in the province like to see? “A review of the auto insurance product, to ensure that it is working for New Brunswickers, is encouraged by the insurance industry,” Dean said. “The design of the government regulated insurance product may need some adjustment, as indicated by the pressures highlighted above, but the rate regulation regime could benefit from a review to encourage continuing competition.”
Dean added that IBC looked at 51 private passenger vehicle rate filings which insurers had submitted to the regulator, the New Brunswick Insurance Board (NBIB), over a two-year period (2015-2017).
“IBC’s observations reveal that half of the filings were within 0.5% of the 3% public hearing threshold and only five were for amounts greater than 3%,” Dean said. “This, coupled with filings for larger increases that are now being put forward to the NBIB, indicates that the public hearing process might actually be providing a disservice to the drivers of the province, as insurers are waiting until larger rate increases are needed before incurring the cost of the public hearing process.”
Perhaps identify the best times to drive to avoid deer,moose + drinking drivers + distracted drivers!!!! may help to alleviate the carnage. Please legislate car manufacturers to invent? + put in “stupid phone” screens to stop function of “stupid phones” at least when the car is moving. No “handsfree” either as if someone calls without asking the driver to pull over in a safe manner (assuming they understand a cellphone might be in a car) & declares their mother / father / child has just died… at 60 m.p.h. on an undivided highway..brain in shock for a few seconds..the results may be more than one death.Please stop(or slow down substantially) the insanity. Government may build more rest areas for (stupid phone time for addicts/attempted murderers or perhaps have lectures in junior high schools (actually everywhere practical,public service t.v. adds etc..)showing actual pictures of cars where texting/telephone stupidity have contributed. Plastic bumpers should be eliminated or simplified(as a lot of extras) to reduce cost of claims..1-2 thousand or more for a scratch!!! ranting for 3 decades ..no not back to steel but aluminum with a contrasting color(glowing yellow comes to mind) versus stylish one color cars. More practical cars with less technology may be easier + less costly to repair + may be paid for in smaller payments + fewer years to take of some of the financial pressures created by “progress”..yet I digress..sorry(not) for the rant..older than dirt grumpy old man wanting to drive in a world with a lot more “common sense”.(Will volunteer to help locally..(regionally if expenses paid + time is available).A