More insurer competition, consumer awareness key for stable auto rates: IBAN president

Kent Rowe reacts to provincial plan to review auto insurance system

If the Newfoundland and Labrador government wants to fight what it sees as rising insurance rates, it must consider changing regulation that limits the number of personal lines insurers through which brokers can write business, says the president of the province’s broker’s association.

Brokers can access a maximum of four insurers when writing home and auto insurance contracts, says Kent Rowe of the Insurance Brokers Association of Newfoundland (IBAN) in an interview with Canadian Insurance Top Broker.

Related: Newfoundland and Labrador to review auto insurance system

A change in this rule would be “fantastic,” says Rowe, who is also a vice president at Wedgwood Insurance in St. John’s. “Competition [among insurers] is healthy, competition is going to provide some stability to pricing in the long term so that would be ideal.”

Rowe is reacting to the news that the province’s government will conduct a review of the auto insurance system in response to rising premiums and claims costs. The review will include an analysis of closed insurance claims provided by insurers as well as a public consultation.

Rowe argues that the average auto insurance rates are not much higher than they were before 2005, which is when the province conducted its last review of the auto insurance system. However, “claims costs are escalating at an unsustainable pace. We’ve had, over the last two years, more accidents on our roads with higher payouts for claims than any other province in Atlantic Canada,” he says.

From the archives: Auto insurance rates too high: IBC

Rowe believes that the review is an opportunity for the government and insurers to educate policyholders about the effect that rising claims costs can have on premiums. “You can’t have your cake and eat it too. You can’t have an auto system where you can claim for minor bodily injuries and get $30,000 or $40,000 and expect your auto rates to be stable and to come down. It’s not a sustainable model,” he says.

The IBAN will participate in public consultations that are being organized as a part of this review. “We’re fairly vocal and fairly active with government,” says Rowe. “We have been assured [by government] that we definitely will have a voice and we’re looking forward to that conversation starting now that this announcement has been made and working together to find a solution.”

Copyright © 2017 Transcontinental Media G.P.
Transcontinental Media G.P.