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Premium problems in NL



​Why are premiums so high in NL?

Simply put, claims costs in NL are too high. In fact, the average claims cost per vehicle in the province is by far and away, much higher than in the Maritimes. The nature of auto insurance is about spreading risk across a large group of people to make it affordable to provide coverage for the small number of people who may be involved in a collision. In NL, however, claim costs are simply too high. In 2015, the claim cost per vehicle were $852 whereas in NS, NB, and PEI it was $631, $630, and $519 respectively. This shows the claim cost per vehicle in NL much higher than in the Maritimes.

 

Besides claims costs, the frequency of claims in the province is also concerning. The nature of auto insurance is about spreading risk across a large group of people to make it affordable to provide coverage for the small number of people who may be involved in a collision. In 2016 claims frequency was 13.08 vehicles per 100 in NL. In the neighbouring provinces, it was 10.79. That is a large difference when you consider that the population of NL is approximately 500,000, which is roughly the same population as Halifax, NS. A higher frequency in a smaller jurisdiction means that something is not working with the current system. Reforms are needed to get  the auto insurance system back to sustainable levels for all drivers.

In the late 1990s and early 2000s, the cost of insurance claims in Atlantic Canada was increasing faster than inflation. This caused premiums to rise. To help lower premiums, the Maritime governments introduced a limit, or cap, on pain and suffering awards for people with minor injuries like sprains and strains. NL chose a $2,500 deductible instead.

 

Impact on drivers, beyond premiums

High premiums are only one part of the problem affecting Newfoundlanders and Labradorians. With two insurance companies having left the province in the last five years, and only three insurance companies servicing most (76%) of the NL auto insurance market, drivers have very little choice.

With insurance companies spread too thin across the province, drivers involved in collisions may have trouble getting insurance. People who are injured in collisions may experience delays with their settlements.

 

What can I do?