New insurance industry zoning deems Moncton a greater risk area; premiums may increase up to 10 per cent

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By Cole Hobson
Times & Transcript Staff

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Drivers in two of New Brunswick's major centres will pay more for auto insurance as a result of a policy change which has deemed certain areas of the province to carry greater road risks.

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Greg Agnew/Times & Transcript

Changes in the regulations governing insurance companies means that drivers in Metro Moncton will probably see increases in their rates. This will also affect Saint John and Acadian Peninsula motorists as well.

Moncton and Saint John, as well as the Acadian peninsula, are the three zones of the province assessed as having the greatest degree of risk in the government's current classification system. Drivers in those areas can expect auto insurance increases of up to 10 per cent this year, the result of changes to the insurance industry brought in by the provincial Liberal government in late 2006.

Lisa Ferguson, spokeswoman for the New Brunswick Insurance Board, said some people will see their premiums increase, while others in the province will save money from the change.

"The perceived risk associated with certain areas has been distributed more fairly. It other words, where the risk is," Ferguson said.

The changes are the result of a switch from a four-territory insurance rates system to one that splits up the province into 11 different zones. About 114,000 drivers are expected to face an increase in premiums and another 266,000 will experience a decrease, based on where they live.

Bill Adams, acting vice-president for Atlantic Canada for the Insurance Bureau of Canada, said the new territories provide more detailed risk analysis, based on information such as traffic patterns, vehicle density, terrain, road conditions and speed limits.

"They look at that data when they determine what kinds of premiums are required to cover the cost in those areas. The riskier areas obviously have to pay for themselves," Ferguson said. "It's no different than a driver who has a clean driving record shouldn't be paying for a driver who doesn't have a clean driving record."

Even if you are a driver in one of the zones perceived to have higher risk, there's still hope for lower premiums.

IBC recommends a number of options for earning a lower insurance rate, including increasing your deductible, dropping collision coverage on an older car, installing an approved theft deterrent system in your vehicle and packaging home and auto insurance with the same company. Of course, having a spotless driving record also helps.

"The better you drive, the better your rates will be," Ferguson said. "It just goes back to distributing the risk appropriately. When you have 11 territories it's a lot fairer of a system to be able to put those similar locations together versus chunking everyone into four (territories)."

Adams also said, like with any purchase, it's important for car owners to shop around.

"Increasingly, for example, people are looking at gas mileage for automobiles -- when they're purchasing they should also look at what the insurance is going to cost them," he said, noting each type of vehicle is rated by the auto insurance industry on a number of factors including how it performs in collisions and what it costs to repair.

"There's a general misconception in the market that when you talk to one insurance rep that one (quote) is representative of the entire industry, when in fact that's not the case."

Adams said with more than 60 auto insurance companies in New Brunswick, the competition for business can also help the province's drivers get lower rates.

"When you have competition that usually is a strong sign that the market is healthy and customers are being well served," he said. "If you go and get one rate that's not necessarily the best rate you're going to get."

Despite the fact people in higher risk territories will face higher insurance rates, Adams stresses that a lot of what goes into determining insurance rates has to do with the individual.

"A 35-year-old male driving a Volkswagen in Moncton is going to get one rate, but not all 35-year-old males in Moncton driving a Volkswagen are going to pay the same rate," he said. "Insurance is based on how likely a customer or a group of customers with similar circumstances will be likely to make a claim when every risk factor is included."

n With files from Canadaeast News Service