New Brunswick Insurance Board

New Brunswick Insurance Board responds to CBC-TV report (06/09/06)

NB 1187

Sept. 6, 2006

SAINT JOHN (CNB) - The auto insurance special report by Robert Jones, which aired on CBC-TV on Tuesday, Sept. 5, misled New Brunswick drivers, said Paul D'Astous, chairman of the New Brunswick Insurance Board.

"As the agency responsible for setting rates in New Brunswick, we feel that it is our responsibility to provide accurate information by providing the correct methodology used by the board to determine appropriate rates for New Brunswick drivers," D'Astous said.

"Mr. Jones took an erroneous approach, and his implications are misleading. The validation of his numbers is not actuarially certified. The board's numbers are certified by two of the leading firms in Canada: PricewaterhouseCoopers, and Ernst & Young.

"In 2006, drivers will realize an additional reduction of 11 per cent in average rates, to a provincewide average of $851 by the end of the year. In addition, indications are that New Brunswickers should see an additional reduction of about 11.5 per cent in 2007. This will bring the total reduction to about 36 per cent by the end of 2007. With this new reduction in rates, we expect New Brunswickers will be paying among the lowest insurance premiums in Canada.

"Insurance rates are set once a year. For instance, the New Brunswick Insurance Board will soon be reviewing company applications for 2007. When approving insurance rates, the board must rely on historical data and future predictions.

"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. As a restaurant needs to cover not only food costs but operating costs such as rent, staff, utilities, etc., insurance companies need to cover related expenses in their industry."

Since its inception, the board has helped to realize the following:

06/09/06

MEDIA CONTACT: Lisa Ferguson, New Brunswick Insurance Board, 506-643-7710 or 506-643-7714.

06/09/06