Bank of Canada reviewing car insurance rates
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The Bank of Canada is for the first time reviewing auto insurance premiums, over concerns the soaring rates are pushing up Canada's inflation figures. CTV.ca News Staff  The Bank of Canada is for the first time reviewing auto insurance premiums. The central bank says insurance rates are rising so high, so fast, they're worried about the effect the premiums ar having on the inflation rate. According to Statistics Canada, car-insurance premiums have jumped 26 per cent across Canada in the past year. Some residents in Atlantic Canada have seen increases of up to 40 per cent, while motorists in Alberta -- even those who are accident-free -- have seen their rates hiked 50 per cent. Only the provinces that have not-for-profit public insurance -- Sascatchewan, Manitoba and British Columbia -- have been spared huge hikes. The rate increases have the Bank of Canada concerned. In April, the inflation rate stood at 3.0 per cent. But if increases in auto insurance premiums had been excluded, the rate would have been just 2.1 per cent. Insurers say they have to charge more with payout costs skyrocketing along with health care costs. "The cost of repairing vehicles has been relatively well-behaved. The biggest pressure is on injuries assocatied with car accidents," explains Paul Kovacs, chief economist at the Insurance Bureau of Canada. Kovacs say his group also disputes the inflation numbers, complaining that Statistics Canada is using incorrect methodology to calculate rate increases. He says auto insurance has actually increased by 15 to 20 per cent over the past year -- not 30 per cent as StatsCan claims. Joanne Moreau, a Statistics Canada official in the pricing division, told The Globe and Mail the agency is reviewing its methodology with respect to the auto insurance industry. Election topic In Ontario, the finance minister says her government will bring in new regulation to reign in prices. In Nova Scotia, consumer advocate George Jordan has released an interim report claiming the province's drivers saw car-insurance rate increases of between 20 and 110 per cent over the last year. In his report, Jordan recommended the province put in place tougher regulations that would force automobile insurers to better explain why they are raising rates. The Nova Scotia government has now decided to introduce a system of no-frills automobile insurance within the next three weeks, the newspaper goes on to say. Jordan also recommended the Atlantic provinces create a common system with the same regulations for auto insurance. Aside from Nova Scotia, rates went up dramatically over the past year elsewhere in the Atlantic -- 71 per cent in New Brunswick, 64 per cent in Newfoundland and Labrador and 58 per cent in Prince Edward Island. |
