By CRM staff
Toronto, Ontario — September 5, 2018 — The number of claims and associated costs in Newfoundland and Labrador has become one of the highest in the country.
According to the Insurance Bureau of Canada, for every 100 vehicles in the province, 13 of them are claimed, whereas in the other Atlantic regions the number of vehicles that are claimed is around 10.
Amanda Dean, vice-president of Atlantic Insurance Bureau of Canada confirmed that there has been a high rate of claims over the past several years.
“It’s been building,” she said.
The current annual premium for the province is $1,100 in comparison to the rest of the Atlantic region which is $800.
This has been brought to the attention of the Board of Commissioners of Public Utilities (PUB) and the Insurance Bureau of Canada, where they have been holding hearings in regards to some solutions as requested by the Newfoundland government.
These hearings will review and report the number of issues regarding auto insurance, including the reasons behind increasing claim costs and options to reduce costs.
This increase includes a number of bodily injury claims which might explain the reason why they are so high, said Dean. But they are still reviewing it to come up with other reasons they might have overlooked.
One of the things that they are suggesting is to put a Direct Compensation Property Damage policy into place. This would make it faster for drivers that have been in an accident to have their vehicle fixed in a timely manner. The rest of the regions in the Atlantic part of Canada already have this policy.
A couple collision repairers seem to agree that this policy would most likely benefit shops and drivers.
A collision repairer from Rideout’s Body Shop in Mount Pearl, N.L. said that he had a customer wait three to four days to have their vehicle fixed because the other person in the accident didn’t report it to their insurance company.
“This would definitely speed up the process,” he said.
Gordon Healey is the shop owner of Healey’s Autobody shop Ltd. in St. Johns N.L. said he agrees as well but it would probably benefit adjusters as oppose to collision repairers.
Aside from putting a DCPD policy in place, Healey had mentioned that he noticed a number of write offs, which ultimately impacts their work.
He also said that the reason he thinks the claims increased last year was because of the hurricane that hit the province. The severity of damage to the vehicles caused the claim costs to go up.
As for the Rideout collision repairer, he explained that the rising costs in claims would probably point to the increase in technology put in vehicles.
“I think technology is driving the costs up – part costs are through the ceiling right now,” he said.
In terms of the insurance companies in the province, they are not gaining anything from this increase in claims. They haven’t been gaining any profit for the past five years. Despite the high cost in premiums they have been inadequately covering the claims costs and expenses associated with insurance providers in the province.
This has resulted in a minimal number of insurance companies that can offer services in Newfoundland. If the remaining insurance companies continue to lose money and are unable to cover operating expenses, they may leave the province. This will further reduce choice in Newfoundland, leaving drivers with very few options.
The other option for insurance companies would be to charge enough in premiums to cover their costs.
Drivers are hopeful that reforms will help initiate some sustainability with the insurance system.
“Newfoundlanders and Labradorians deserve affordable auto insurance. With these hearings, IBC is pleased that the government has taken the time to understand the issues affecting the system that have been driving costs higher for Newfoundland drivers. The auto insurance system needs to focus on consumers. Auto insurance, especially when it comes to helping those with collisions and injuries, needs to make people well while also being affordable,” said Dean
Some of the recommendations made by the IBC are to implement a minor injury damages cap, enhance accident benefits, make it easier to repair and replace damaged vehicles and to change the rate regulation process so that it is quicker and less costly.
The hearing will resume tomorrow and continue Friday and all of next week.
