Tory insurance changes a bust for drivers

Government reforms to New Brunswick's auto insurance system have resulted in drivers paying hundreds of millions more in premiums than they collected in claims, according to a CBC investigation.

ConservativePremier Bernard Lord nearly lost the 2003 election over the high price of auto insurance. Voters turned his healthy majority into a one-seat victory mostly because they were angry about the dramatic rise in the cost of car insurance since 2000.

Lord made changing the system his top priority, created a "no-frills" insurance coverage policy for driversand increased regulation for companies, all aimed at bringing the costs to consumers down.

The Lord governmentforced insurance companies to drop their rates immediately,then capped awards to accident victims on the promise thattheinsurance companies would further cut premiums.

Accident claims came tumbling down to levels not seen since the 1980s,but premiums didn't follow.

In the interim, New Brunswick consumershave paid hundreds of millions of dollars more for insurance than government promised they would.

ACBC investigation shows that during the last three years, New Brunswick drivers have paid $621 million more in auto insurance premiums than they have collected in claims.

In 2003,claims in New Brunswick fell to a 10-year low of $616 per car, whiledrivers paid anaverage premiumof $1,095 per car.

Over 2004 and 2005, New Brunswick drivers paid an average of $1,070 in premiums, but collected an average of $507 in claims.

That's 20 per cent more for car insurance than the other three Atlantic provinces in that time, even though claims costs in New Brunswick were lower.

The numbers were obtained from the Insurance Bureau of Canada.

Changes a 'sweet deal' for insurers

Grand Bay resident Cathy Boudreau spearheaded the campaign for insurance changes during the 2003 election campaign,with a petition and loud complaints about her treatment by insurance companies.

Three years later,Boudreau is paying$1,500 a year to insure her Honda Civic. She says the changes are putting more money in the pockets of insurance companies, instead of protecting drivers.

"My view of it is that insurance companies have a sweet deal.They are selling a product that people are afraid to use.That's what I think," she said.

Halifax lawyer and insurance critic Barry Mason said it's a case of insurance companies not passing benefits of government auto insurance reform on to drivers, as promised.

"It's simple: government was duped," he said. "It was duped by the insurance industry."

In a press release posted Wednesday to the New Brunswick government's website, the New Brunswick Insurance Board disputes the numbers used in the CBC report. The board was created in 2003to reviewapplications for rate increases from the insurance industry.

Board chairman Paul D'Astous says the CBC investigation is "erroneous" and "misleading" but did not provide any financial information for the three years detailed in the story.

"The methodology for setting insurance rates is complex and does vary slightly by each insurance company, because they operate in a competitive environment. It needs to take into account not just premiums and payouts, but also operating costs including taxes for each company, as well as room for a modest return," he said in the press release.