Nova Scotia Auto Insurance Facts

It’s time for an auto insurance system that makes sense

Drivers in Nova Scotia deserve better auto insurance

You wouldn't buy a paddle for a hockey game – so why are you paying for auto insurance options you don't need?

Auto insurance shouldn't be one size fits all, but it's treated that way in Nova Scotia. At one point in time, this may have made the best sense, but in 2022, this means some drivers are paying too much.

Nova Scotia's auto insurance system is not working for the province's 600,000 drivers. In these challenging economic times, Nova Scotians need affordable auto insurance that is tailored to their individual circumstances. Drivers are best served by a competitive insurance industry that is responsive to them, and what they need.

Auto insurance rates in Nova Scotia are unsustainable. After years of claims costs spiraling out of control, some insurers have been forced to file with the Nova Scotia Utility and Review Board to charge more for auto insurance, although the increases are not enough to keep pace with increases in claims costs. If the insurance system does not improve, premiums may be further driven upward by rising claims costs within the province.

To help reduce costs, and stabilize premiums, drivers should be able to tailor their policy to fit their individual circumstances. For example, every auto insurance policy in Nova Scotia includes income replacement coverage that replaces part of the driver's wages if they are injured in a collision and are unable to work. However, many drivers already have this coverage through workplace benefits. Drivers who don't feel that they need additional income replacement should be able to opt out of this coverage to reduce their premium.

At the same time, drivers should have the option to purchase higher limits if they want them. For example, every auto insurance policy includes up to $50,000 for standard medical treatment and rehabilitation. However, unlike in many other jurisdictions, drivers do not have the option to purchase higher medical coverage limits if they want them. Drivers should have the option to tailor their coverages to fit their individual circumstances, whether that means less or more coverage.

It's time to fix the auto insurance system so that drivers can get the insurance coverage that's right for them with more affordable premiums.

We’ve proposed a package of solutions to the provincial government that can help stabilize rates and offer drivers more choice.

We can fix Nova Scotia's auto insurance system

The best insurance systems around the world place a greater emphasis on providing medical care and benefits after a collision, and less of an emphasis on cash-based settlements that do little to help the driver get better. The current system in Nova Scotia too often focuses on cash-based settlements that result in administrative and legal back logs, instead of providing the necessary medical care to help those injured in collisions recover.

What we’re proposing

We are proposing that after a collision, accident victims are eligible for roughly twice as much medical treatment – pre-approved, no questions asked – than they are today. We're also proposing an expansion in the types of medical care available after a collision compared to what's available today. Updating Nova Scotia's auto insurance legislation and regulation will help stabilize premiums and ultimately make auto insurance more affordable. It will give Nova Scotians more and better options for care if they've been injured in a collision.

The auto insurance that Nova Scotians purchase is prescribed by the Insurance Act and its supporting regulations, which needs to change in order to improve the auto insurance product. These are the changes needed to help stabilize insurance rates and ensure that those injured in a collision receive proper care:

Flexibility: Drivers should be able to tailor their policy with the option to purchase more coverage if they wish or decline coverages that they don't need.
More choice: Drivers should be able to opt out of coverage they already have through their employee health insurance plan.
Stronger focus on providing medical care and treatment: The current insurance system is too focused on cash-based settlements for people injured in a collision. And sometimes, this takes a long time to settle. Instead, it must focus on providing greater access to medical treatment needed to recover from injuries, including mental health supports following a collision – paid directly by the insurer.

It's time for an auto insurance system that makes sense

Our recommendations for Nova Scotia's auto insurance system are designed to reduce red tape, increase medical care, expand policy options for drivers and stabilize costs.

In December, 2022, the Nova Scotia government released its discussion paper on the "Proposed Changes to the Nova Scotia Auto Insurance Product." The insurance industry is committed to working with the government to modernize and improve the insurance system. We're ready to speak on behalf of consumers to ensure insurance is affordable, and that it provides more choice and better care for consumers when they need it.

FairNS Fact Check

Understanding the Nova Scotia government’s proposed auto insurance changes

There’s a lot of misinformation going around about the proposed auto insurance changes in Nova Scotia. We know it’s important for you to understand how your premiums are calculated and what the government’s auto insurance review will mean for you and your family. Insurance Bureau of Canada (IBC) and the property and casualty (P&C) insurance industry are committed to presenting full and transparent information about how auto insurance works and is priced, and about the proposals to improve the product for drivers. Here are some facts to clear up any myths you may have heard.

Fact: Insurers want you to have more choice in auto insurance and control over what you pay for it.
IBC and its members are advocating for increased benefits and care following a collision, while giving drivers more control and choice over their auto insurance coverage and premiums. The best auto insurance systems provide more care and recovery benefits for those injured in a collision while giving drivers more say about their policy and the premiums they pay. All drivers should have the ability to sue to recover damages for pain and suffering or for potential lost income. However, for minor injuries, such as sprains and strains that typically resolve in weeks or months, drivers should be allowed to choose if they want to have the ability to sue for financial compensation for pain and suffering or if they would like to forgo this option in favour of a lower premium.
Fact: Over the last few years, Nova Scotia private passenger vehicle (PPV) insurers have been paying out more in claims costs and operating expenses than they collected in premiums.
Over the last few years, insurers operating in Nova Scotia’s auto insurance market have typically been paying considerably more in claims costs, operating expenses and premium taxes than they earned in premiums and investments. This is reflected by the very poor financial returns for the province’s P&C insurers. While most PPV insurers aim for a long-term return on equity (ROE) of approximately 10% to 12%, insurers experienced negative ROEs until 2020 when the COVID-19 pandemic began.
Our data comes from the General Insurance Statistical Agency (GISA), a not-for-profit corporation that has nine participating insurance regulatory authorities across Canada.
This GISA data is here.
During the COVID-19 pandemic, reduced driving levels led to decreased claims costs. Consequently, insurers saw an improvement in combined loss ratios, which had been negative and unfavourable for several years.
The threshold between profit and loss is measured at 100%. A combined loss ratio below 100% indicates an underwriting profit. A combined loss ratio above 100% indicates an underwriting loss and means that insurers are paying more in claims costs and operating expenses than they are collecting in premiums.
To account for times of uncertainty, insurers across Canada stepped up and provided over $3.7 billion in relief to households and businesses affected by the pandemic. The relief came in the form of rebates, re-rating policies and deferred premiums as well as other methods of support. In Atlantic Canada alone, the industry provided approximately $76 million in premium relief for car insurance customers, and an overall relief package of approximately $117 million.
Fact: In recent years, insurers were paying out more in claims costs and operating expenses than they were receiving in premiums.
Despite decreased driving and claims during the pandemic, the average insurer’s return on equity (ROE) was below the target of 10% to 12%.
As noted earlier, insurers were experiencing losses in Nova Scotia prior to 2020. Between 2017 and 2019, rising claims costs and falling premiums meant that Nova Scotia insurers’ ROEs were extremely poor, ranging from -12.7% in 2017, to -18.6% in 2018, and -4.3% in 2019. Even though ROEs improved in 2020 and 2021, the figures are still below insurers’ 10% to 12% target. These poor financial results are a reflection of the fact that average premiums have not been enough to cover claims costs, operating expenses and premium taxes.
Fact: GISA collects accurate financial data for the P&C insurance industry. Free reports are available here, while others can be viewed for a small fee.
Fact: Statistics Canada data shows that Atlantic Canada has a lower percentage of individuals working from home compared to other regions.
The inference that an increase in remote work equals higher insurer profit is inaccurate. While it is true that more people are working from home, Atlantic Canada has a lower percentage of individuals working from home compared to other regions, according to a recent Statistics Canada survey. In addition, GISA reports that while there was a lower claim frequency rate during the pandemic, the average claim size increased.
Fact: While some graphs that claim to show insurance industry data have been circulated online, the data cited is not published anywhere on GISA’s website.
The numbers being circulated online are unequivocally incorrect. Accurate industry data can be found from GISA through its published exhibits available here.
The last five years of available GISA data, including the relevant document name, are provided below.
According to GISA Exhibit AUTO9501-NS_2021 (found here, page 85 to 116), Nova Scotia insurers experienced losses in the years leading up to the pandemic. Profits in 2020 and 2021 were $5.4 million and $37.8 million, respectively.
Fact: IBC uses data published by GISA to reference trends in BI claims. This table reflects the number of BI claims, as published by GISA.
While the number of BI claims has fallen since 2017, the average amount of a BI claim increased by over 15%.
Fact: Nova Scotia has a significantly higher cap than any other province, which contributes to higher costs and higher premiums for drivers.
Reducing the cap amount will align with other provinces and help reduce costs in the system. IBC believes that auto insurance should provide injured claimants with ample medical treatment, rather than force them to hire a personal injury lawyer to receive a cash-based settlement.
Fact: IBC believes that under the Protocols, the government’s proposed change will enable Nova Scotians to more easily access treatment and care.
Also, not counting the number of visits for dental and mental health services toward the authorized treatment visits would ensure that individuals could continue with their treatment plans for other injuries without jeopardizing their number of treatment visits.
Fact: The government is not currently considering implementing sub-limits on medical coverage.
In reviewing the government’s proposal, the Office of the Superintendent (OSI) is not considering implementing sub-limits on medical coverage, such as chiropractic services and massage therapy (“Section B”). Rather, OSI is interested in hearing from stakeholders as to whether this area should be further explored. It is the industry’s view that sub-limits are an excellent way to limit the overuse of those treatment modalities that do not lead to an improvement or lasting benefit, leaving more of the overall limits available for other treatment needs for injured Nova Scotians.