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IBANS Information on Auto Rate Changes on November 1, 2004
1. Changes to underwriting rules come into effect on November 1, 2004 as part of Bill 1, as passed by the Government with the support of the Official Opposition. These changes prohibit the use of Age to rate drivers for auto insurance purposes.
In order to smooth the transition to the new rating regime, the Insurance Review Board has capped all private auto rates at a maximum increase of 10%. This means that the largest increase that a consumer will pay for renewals beginning on November 1, 2004 is 10%. The 10% cap will probably be taken off for the consumer's renewal next year.
2.The Impact of Removing Age:
- drivers younger than 25 years could pay quite a bit less,
- drivers older than 25 could pay as much as 10% more,
- new drivers under 25 could pay a little less,
- new drivers over 25 could pay as much as 10% more.
3. Among those who pay more, drivers over 55 years will likely pay to the limit of 10% more as the change means the end of seniors discounts. Before November 1, drivers over the age of 55 enjoyed a discount of 11 to 14% below published rates, depending on the Insurer. Prohibiting discrimination on age has resulted in the end of discounts based on age. [ top ]
4. The Impact on Seniors:
- experienced drivers aged 55 to 65 could pay up to 10% more,
- experienced drivers over 66 years could pay up to 10% more,
- new drivers in these age groups could pay even more, as per point 6 below, but no more than 10% more.
5. The Impact on New Drivers:
- newly licensed males, regardless of age, could pay a little less
- newly licensed females, regardless of age, could pay up to 10% more
6. Not discriminating on the basis of age sounds fair but we often accept it as a matter of course. Examples of acceptable age discrimination for different services and products include: Life insurance, movie tickets, various public transportation, and some banking services. The case for using age to determine insurance premium is borne out by various facts such as drivers aged 16-19 years old account for less than 5% of the driver population but they represent 9% of the drivers killed and 11% of those seriously injured. On the other hand, there are plenty of examples where age discrimination can work against a person.
7.These changes mean that Nova Scotia is adopting a rating system based mainly on driving experience. When all things are considered, expecting people to pay for insurance based on their driving record is the fairest way to pay for insurance. Indeed, there is nothing fairer than that. Many other provinces have adopted a similar system. [ top ]
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