The place where insurers are seeking double-digit auto rate increases

Auto insurers asking for double-digit increases from New Brunswick’s regulator could face some hard questions during hearings this fall.

“Some of the companies have been asking for a big increase” and will not necessarily be approved for the increases they asked for, said Michèle Pelletier, the province’s Consumer Advocate for Insurance, in an interview Tuesday. The Consumer Advocate for Insurance is appointed by the New Brunswick legislative assembly.

At the moment it is too early to speculate whether the double-digit rate increases that some insurers are asking for will get approved, said Pelletier. The fact that some are asking for double-digit increases is cause for concern.

“We want the companies to continue to do business here in New Brunswick because the more the merrier,” she told Canadian Underwriter. “However, they want the rates to be fair also for the consumers.”

New Brunswick auto insurers are sometimes called in for hearings before the New Brunswick Insurance Board. For example, the insurer must appear before board if it files for a rate change more than twice in 12 months or if the average rate increase would be more than 3%.

Hearings convene Nov. 26 for Economical Insurance, the insurance board announced this past Thursday. If Economical gets the rate changes it is asking for in private passenger auto, the overall average, for all coverage types combined, would go up 11.8%.

RSA is asking for rate changes in private passenger that would bring its overall average up 24.38%. Hearings are scheduled Oct. 23-24 at the Fredericton Convention Centre.

The insurance board posts some rate change proposals on its website. For example, the Facility Association is asking for an increase of 22.3% in private passenger auto. The Facility Association is scheduled to appear at a hearing Oct. 1 through 3 in Moncton.

Those hearings will involve the insurers’ actuaries and government actuaries, who will have the opportunity to challenge the numbers behind the companies’ rate increase proposals.

In New Brunswick, the P&C industry had a loss ratio in private passenger auto of 94% in 2017, as the rate board said in its 2018 annual report. That was attributed in part to a dramatic increase in repair costs due in part to high tech sensors.

In 2018, Aviva was approved for a 13.04% increase, which is what it asked for. Ditto for The Dominion (owned by The Travelers Companies Inc.) which asked for 8.06%.

The Facility Association asked for a 18.2% overall average increase in private passenger auto in 2018, but only got approved for 6.2%, the board said in its annual report for 2018.

The average private passenger auto premium was $802 in 2017 in New Brunswick,  compared to $1,680 in British Columbia and $1,434 in Ontario.