Commentary

B8

By Hon. T. J. Burke, QC
Minister of Justice and Consumer Affairs

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The issue of auto insurance always generates lots of strong opinions and discussion in New Brunswick and rightly so. It is a pocketbook that affects most new Brunswickers over the age of 16.

Let's take the most recent example that has generated discussion: territories. Territories are geographical areas and are used as one factor to determine your auto insurance premium.

We used to have four territories. No one really remembers how they came about or why, which is probably a good indication of how out-of-date they were.

In 2007, the Liberal government eliminated the four territories and created 11 new ones. The new territories took effect in 2008. As a result, 70 per cent of New Brunswick drivers, mainly those in rural and smaller urban areas, saw a decrease in their premiums, while 30 percent, mainly in the larger urban areas like Saint John and Moncton, saw a modest increase.

The new territories were created based on research by experts called "actuaries" who analyze statistically relevant factors such as traffic patterns and vehicle density, terrain, road conditions, speed limits, crime rates and weather conditions to assign a "risk rating" to a territory.

As a result, it is a fairer system where drivers in higher risk areas pay the true cost of the higher collision risk, and drivers in low risk areas (the majority of New Brunwickers) received a decrease. And, it is "revenue neutral" for the insurance industry, meaning that the industry has not earned any additional money from the change.

It is also important to understand that territories are only one factor that goes into calculating the amount you pay for insurance coverage. That means even drivers in higher risk areas didn't automatically receive an increase.

Other relevant factors include:

• your personal driving record (the most important factor and one you have control over);

• the Canadian Loss Experience Automobile Rating (CLEAR) (which includes age, claims history of all makes and models, as well as value and type of vehicle);

• vehicle use;

• and kilometers driven.

The creation of the new territories is a final step in a reform process which began under the previous government and continued under the Liberal government of Shawn Graham. The reforms will ensure that New Brunswickers will not experience the "perfect storm" that happened in the early 2000s which saw auto insurance premiums rise sharply for a number of years for all drivers, regardless of their driving records.

As a result of the reforms, average insurance premiums have dropped over 40 per cent in the last several years and New Brunswickers now enjoy average premiums that are among the lowest in Canada.

Now, it is up to me and you, as drivers, to keep them that way. With the right system in place, we must all do our part by being safe and careful drivers. That is our role and our responsibility as drivers.

For tips on to control the cost of your insurance go to: www.ibc.ca/en/Car_Insurance/Buying_Renewing_Car_Insurance/Control_Cost.asp

To take a virtual driver distraction test, go to: www.besmartbesafe.ca.