Atlantic Provinces 71 COMMUNITIES

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1 NATIONAL STUDY OF AUTOMOBILE INSURANCE RATES Third Release Atlantic Provinces 71 COMMUNITIES vs. British Columbia, Alberta Saskatchewan, Manitoba & Ontario 3,985,162 Auto Insurance Rates Compared October 19, 2005

2 This Consumers Association of Canada national study on auto insurance rates provides a statistically valid rate comparison in response to the following question: How much would the same driver pay for auto insurance if they lived in each of the communities in Canada surveyed in this study and had: - The same vehicle - The same driving record - The same claims history 2

3 ADVOCACY ON BEHALF OF CANADIAN CONSUMERS The Consumers Association of Canada is a national non-profit organization that has served the interests of consumers for over 50 years. A network of volunteer members supports the Association across Canada. In addition to its national office in Ottawa, Ontario branches of the Association are active from Nova Scotia to British Columbia and focus their work on local or regional issues. The Association provides an independent consumer voice when government and industry make decisions about products, policies or programs. The Association has worked with thousands of individual consumers in resolving disputes with product and service providers. The Association also advocates solutions to issues that are clearly in the consumer s interest even when these solutions are in conflict with Government or industry positions. Auto Insurance The Association has been a strong national advocate for fair auto insurance rates and fair treatment for victims of crashes. Since 1999 the Association has been publishing studies on auto insurance rates across Canada in response to consumer reaction to huge premium price increases, declining benefits, and massive industry profits. This study is the largest, most comprehensive comparative auto insurance rates comparison study ever conducted in Canada. All comments, analysis, findings and conclusions in this Study are the sole responsibility of the Consumers Association of Canada. COPYRIGHT

4 1.0 OVERVIEW 1.1 STUDY FOCUS The purpose of this study is to provide an independent source of information for consumers and policy makers about auto insurance rates across Canada. Recently, auto insurance has emerged as a significant consumer, public policy and political issue. In many provinces rates have increased dramatically, reduced benefits have been legislated by Governments and record profits achieved by insurers. This study focuses on delivering answers to a key question: How much would the same driver pay for auto insurance if they had the same vehicle, same driving record and same claims history but lived in each of the communities surveyed in this study? 1.2 STUDY METHODOLOGY The first release of the 2005 national study examined and compared auto insurance rates in Alberta and British Columbia. The second release included comparative information on Ontario. This third release focuses on New Brunswick, Newfoundland & Labrador and Nova Scotia. Three Hundred diverse rating profiles were selected to establish a statistically valid representative profile of the Canadian driving population. In effect, this study provides a statistically valid snapshot comparison of Canadian drivers, similar in approach to the Canadian Consumer Price Index. These profiles were selected to be representative on key insurance rate determinants such as age, gender, claims history, driving record, community population, marital status and vehicle type. The Association utilized 74,846 auto insurance rate quotes from New Brunswick, 25,432 from Newfoundland & Labrador and 89,370 from Nova Scotia covering 71 communities across these provinces. As well, the study used over 3.7 million quotes from the provinces of British Columbia, Alberta, Saskatchewan, Manitoba and Ontario for comparative purposes. The study obtained rate quotes for each driver profile for every one of the communities from the largest insurers with significant market shares in each province, as well as public auto insurers where applicable. Adequate data was not available for Prince Edward Island. The driver profiles were selected using a statistically valid selection method and each profile was selected randomly from a large pool of individuals who have recently sought to purchase auto insurance. 4

5 2.0 AUTO INSURANCE RATES 2.1 COMMON FACTORS THAT AFFECT RATES In both private and public auto systems factors that directly affect how much a consumer pays for their auto insurance are: Vehicle make, year and model Use of vehicle Claims history Location Driving record Deductibles In addition to the factors cited above private insurance systems use a number of other factors in determining rates that are not used in public auto systems. These factors include: Driver age Gender Marital Status 2.2 RATES DON T TELL THE WHOLE STORY Differences in rates between provinces reflect what a consumer pays for auto insurance but does not reflect differences between policy coverage. For example, caps on personal injury pain and suffering claims have been Government mandated in a province like New Brunswick in an effort to reduce policy premiums. Yet, rates are higher in that province than in a province like British Columbia where such caps do not exist. 5

6 3.0 KEY FINDINGS The key findings of this study regarding auto insurance rates in New Brunswick, Newfoundland & Labrador and Nova Scotia are: FINDING #1 Rates in New Brunswick, Newfoundland & Labrador and Nova Scotia Are Up To 45% Higher Than In British Columbia, Manitoba, and Saskatchewan FINDING #2 Atlantic Provinces Capital Cities Have Some of the Highest Rates In Canada FINDING #3 Larger Cities In New Brunswick, Newfoundland & Labrador, and Nova Scotia Have Much Higher Rates Compared to Similar Cities in British Columbia, Saskatchewan and Manitoba FINDING #4 - Medium Sized Cities In New Brunswick, Newfoundland & Labrador, and Nova Scotia Have Much Higher Rates Compared to Similar Cities in British Columbia, Saskatchewan and Manitoba FINDING #5 Small Towns In New Brunswick, Newfoundland & Labrador, and Nova Scotia Have Much Higher Rates Compared to Similar Sized Towns in Saskatchewan FINDING #6 Rates Are Consistently High Across Many Communities In Atlantic Provinces Compared To Victoria BC FINDING #7 Halifax Rates Are Almost Double The Rates In Victoria, BC FINDING #8 - Rates Across New Brunswick Are Consistently About 65% Higher Than in Victoria, BC 6

7 FINDING #1 Rates in New Brunswick, Newfoundland and Nova Scotia Are Up To 45% Higher Than British Columbia, Saskatchewan and Manitoba 7

8 FINDING #2 Atlantic Provinces Capital Cities Have Some of the Highest Rates In Canada 8

9 FINDING #3 Larger Cities In New Brunswick, Newfoundland & Labrador, and Nova Scotia Have Much Higher Rates Compared to Similar Cities in British Columbia, Saskatchewan and Manitoba 9

10 FINDING #4 Medium Sized Cities In New Brunswick, Newfoundland & Labrador, and Nova Scotia Have Much Higher Rates Compared to Similar Cities in British Columbia, Saskatchewan and Manitoba 10

11 FINDING #5 Small Towns In New Brunswick, Newfoundland & Labrador, and Nova Scotia Have Much Higher Rates Compared to Similar Sized Towns in Saskatchewan 11

12 FINDING #6 Rates Are Consistently High Across Many Communities In Atlantic Provinces Compared To Victoria, BC 12

13 FINDING #7 Halifax Rates Are Almost Double The Rates In Victoria, BC 13

14 FINDING #8 Rates Across New Brunswick Are Consistently About 65% Higher Than in Victoria, BC 14