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The Injury Regulation: Insurance Reform Gone Wrong
The Injury Regulation: Insurance Reform Gone Wrong
The Injury Regulation: Insurance Reform Gone Wrong
The Injury Regulation: Insurance Reform Gone Wrong
The Injury Regulation: Insurance Reform Gone Wrong
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Report

New Brunswick’s Injury Regulation: Automobile Insurance Profits, Premiums, and Costs .pdf

How You Can Help

If you have been a victim of the Injury Regulation, you realize how easily you could become one, you are bothered by the fact the insurance industry is being allowed to profit unreasonably at the expense of victims and the New Brunswick economy, or you simply have a problem with the basic unfairness of the cap, you can do your part to help us persuade the government to remove it from the books.

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Insurance Industry Profits

The accepted measure for profitability by the Insurance Industry is after tax Return On Equity (ROE).  According to the Insurance Industry and the New Brunswick Insurance Board, a reasonable rate of profit is achieved by return on equity of approximately 10%.

Since the implementation of the $2500 cap, the Insurance Industry has experienced unprecedented level of profits.  As was predicted by then MLA Bernard Richard (now New Brunswick's Ombudsman) profits for the Insurance Industry have been excessive with, after tax, return on equity of anywhere from double to quadruple what is considered reasonable.

Year

Avg
Premiums

Avg Bodily Injury Claims

Profits
(millions)

ROE

1996

$737

$333

25

11.3%

1997

$741

$352

15

6.7%

1998

$735

$403

(7)

-2.8%

1999

$737

$444

(23)

-9.4%

2000

$746

$436

(19)

-7.4%

2001

$808

$424

(7)

-2.7%

2002

$943

$382

18

6.8%

2003

$1095

$280

86

31.4%

2004

$1120

$189

124

40.3%

2005

$1044

$224

106

30.7%

2006

$951

$212

87

24.5%

The Insurance Industry has not disclosed its economic data for the years 2007 and 2008.

In order to determine how much of an economic impact the Injury Regulation has had on auto accident victims and the New Brunswick's economy, you simply have to calculate how many millions of dollars were earned by insurance companies over and above what is accepted as a reasonable rate of profits of 10% return on equity. 

Year

Actual Profits (millions)

Actual
ROE

Adjusted ROE

Adjusted Profits (millions)

Drain on NB Economy (millions)

2003

86

31.4%

10%

27

59

2004

124

40.3%

10%

31

93

2005

106

30.7%

10%

35

71

2006

87

24.5%

10%

36

51

Total Drain on the New Brunswick Economy from 2003 to 2006

274


Insurance Industy Return on Equity

Again, the Insurance Industry has not disclosed its economic data for the years 2007 and 2008.

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