Auto costs still higher in Atlantic Canada: Insurance industry financial results

The Insurance Bureau of Canada (IBC) has released its most recent auto insurance financial results figures for 2000 and 2001 in the Atlantic Region confirming the continuation of losses being incurred on automobile insurance. “Costs are still on the rise and that will continue to negatively impact motorists in every province in this region,” says Don Forgeron, IBC’s Atlantic vice president, who released the figures today at a national gathering of the Insurance Congress of Canada. Automobile insurance losses incurred during 2001 are estimated at $190 million but industry analysts anticipate this estimate may be low and will increase once final data is entered into the system. For the year 2000 the preliminary estimated loss was $190 million but when the final data came in, the loss was determined to be $234 million. “Car insurance premiums in Atlantic Canada have increased because the industry is now paying out more money in claims,” says Forgeron. “The situation has now become critical. For every premium dollar an insurance company collects in Atlantic Canada, it pays out $1.22 in claims.” Earlier this year, IBC released a study on closed claims, which revealed that the primary factor linked to auto insurance costs is the number of soft tissue injury claims (sprains and strains). Alone, these claims represent 70% of injury claims reviewed in the study, and more than half the money paid out. For all claims studied, the bulk of the amount paid (67%) was for pain andsuffering – not economic loss. “We’re also concerned about the growing practice of hiring a lawyer after every car accident,” Forgeron says. “It’s no longer simply about helping people get well following an accident. Now, it’s also about how much extra money a person can receive for even the most minor of injuries – such as a sore neck or sore back.” As consumers feel the effects of these rising costs, government and industry leaders are being called upon to respond. “Insurance companies know how to control rising costs and can deliver an affordable product,” says Forgeron. “The insurance industry believes there must be a thorough and open review of the situation, much like that under taken by an all-party committeein Newfoundland and Labrador.” A similar review is underway in New Brunswick and IBC will be making a formal presentation on June 12, 2002. “What most consumers don’t realize is that provincial governments decide, through legislation, on the type of auto insurance companies are allowed to sell,” Forgeron says. “For many years we have been asking governments to make the much-needed changes that would enable insurance companies to sell competitively priced auto insurance. Governments have been slow to takeaction. For the sake of all drivers in Atlantic Canada, our governments must take the lead in changing the way insurance now works.” “It’s critical to focus on the solutions now that we know the problem,” says Forgeron “We have to get back to the real reason for insurance to return injured persons, as nearly as possible and as quickly as possible, to their condition before an accident.”