Auto insurance board blasted by Liberals, NDP

New Brunswick drivers generated identical levels of auto insurance accident claims as drivers in Newfoundland and Labrador over the last two years but were charged $169 million more in premiums to pay for them records show, leading New Brunswick opposition leaders to question the effectiveness of provincial regulators.

"Is it a question of the [New Brunswick] Insurance Board not being able to operate effectively," said Liberal MLA Donald Arseneault on Wednesday.

"If they can't do the job maybe we can start reviewing that board or look at another board that would work like the EUB [Energy and Utilities Board]."

Many of the companies selling auto insurance in New Brunswick also sell to consumers in Newfoundland and Labrador.

In 2010 and 2011, records show motorists in the two provinces generated identical accident claims of $427 million, but drivers in Newfoundland and Labrador were charged $569 million in premiums to finance them, while New Brunswick drivers were charged $738 million.

The Insurance Bureau of Canada says it is unsure why New Brunswick drivers paid so much more to finance identical accident claims experienced in Newfoundland and Labrador, but contends it has heard no grumbling about rates in New Brunswick.

"What I do know is that our consumer information centre hasn't received complaints from New Brunswickers," said Amanda Dean, a spokesperson for the insurance bureau.

"The most recent report from the consumer advocate in New Brunswick didn't report that consumers were complaining about the price of insurance. That tells us the system is working."

New figures show New Brunswick drivers likely overpaid for auto insurance by $71 million in 2011, the ninth year in a row provincial drivers have been overcharged despite provincial government regulation.

New Democratic Party Leader Dominic Cardy said he wants the provincial government to pursue refunds for drivers.

"They're being ripped off," Cardy said.

"There's a massive overpayment and that money needs to go back to New Brunswickers."

Auto insurance rates in New Brunswick are regulated by the New Brunswick Insurance Board, which was set up in 2004 by the former Progressive Conservative government of Bernard Lord.

Its job is to watch over the rates charged by approximately 41 private companies selling mandatory car insurance in the province but it has been accused by critics of being indifferent to the possibility of consumers being overcharged by companies, including once by the New Brunswick Court of Appeal.

Cardy said recent revelations that New Brunswick drivers were charged nearly $800 million too much for insurance over the last nine years proves the entire auto insurance system should be scrapped and replaced with a public system, similar to those in Manitoba, Saskatchewan and British Columbia.

But Arseneault said it may be time for the insurance board's powers to be stripped and transferred over to the Energy and Utilities Board, which the province plans to beef up with full-time professional commissioners early next year.

Transferring auto insurance to the EUB was also a recommendation of New Brunswick's energy commission last year, who felt one professional regulator would serve consumers better on a wide range of issues.

The insurance board openly allows higher profit levels for companies operating in the province than Newfoundland and Labrador's Public Utilities Board permits and has been accused of turning a blind eye when those levels are in danger of being exceeded.

In 2009, the board blocked attempts by the Office of the Attorney General to fully challenge a rate application by the Dominion Insurance Company that government lawyers felt would overcharge consumers and generate excessive profits for the company.

The case went to the New Brunswick Court of Appeal, which expressed surprise at how the insurance board sided with the company without exploring the government's concern for consumers.

"The attorney general was asking Dominion to recalculate the ROE [Return on Equity] rate by using alternative actuarial assumptions; that is to say, ones that were different than those which Dominion had adopted," said the court.

"More importantly, one would have thought that the Board would have been interested to learn how different actuarial assumptions would impact on the percentage rate of return on equity and the insurance rate to be approved. Yet, the board’s curiosity was not piqued, nor could it offer this court a reason why the so-called new information being sought was not relevant, material and trustworthy."

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