HALIFAX, NS, April 28 /CNW/ - Auto insurance changes announced today by the government will add to claims costs, but the effect on premiums won't be known for some time until consumers and the insurance industry have had time to adapt to the new environment.
There are many factors that affect claims costs and the price of insurance in Nova Scotia - including the ongoing constitutional challenge against the previous cap; solvency requirements; claims inflation; individual company experience in a competitive marketplace; and how claimants and their legal representatives will respond to the changes.
Bill Adams, Vice-President, Atlantic, Insurance Bureau of Canada (IBC), said: "An effective auto insurance system must maintain a balance between benefits and stable premiums. The government has changed that balance to provide more benefits. We are committed to helping implement the changes and hope that the new balance works to the benefit of Nova Scotia drivers."
Business works best in an environment that is stable and free of uncertainty. Insurance companies face the dilemma of pricing their product before knowing what their costs, particularly claims costs, will be. In Nova Scotia, there has been the added uncertainty that comes with the constitutional challenge against the cap, which still remains today.
"We do know that caps work," added Adams. "The $2,500 cap introduced in 2003 provided Nova Scotians with a 26% decline in average auto insurance premiums. IBC is committed to working closely with government and other stakeholders to monitor the effect of today's changes to the province's auto insurance system, and to working to ensure that it continues to serve the needs of Nova Scotians."
A stable auto insurance environment will also contribute to the industry's continued positive contribution to the province's economy. A recent report, Insureconomy, highlighted the insurance industry's contribution, including 6,900 direct and indirect jobs, $222.6 million in provincial and federal taxes, and $747.4 million support of GDP in the province.
Insurance Bureau of Canada is the national industry association representing Canada's private home, car and business insurers. Its member companies represent 90% of the property and casualty (P&C) insurance market in Canada. The P&C insurance industry employs over 110,000 Canadians, pays more than $6 billion in taxes to the federal, provincial and municipal governments, and has a total premium base of $39 billion.
To view news releases and information, visit the media section of IBC's website at www.ibc.ca.
SOURCE Insurance Bureau of Canada
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