After having responded in writing to inquiries from the Department of Government Services and Lands on its efforts to stay in business in Newfoundland, the CEO of The Co-operators expressed shock today when she learned that provincial cabinet minister Minister Walter Noel issued a release condemning the insurer’s decision not to renew the auto insurance policies of 5% of its clients in the province.
At issue is The Co-operators decision not to renew approximately 1,300 clients in the St. John’s region. The clients, who represent 5% of The Co-operators total client base in Newfoundland, are not being offered renewal on The Co-operators preferred rates based on the loss experience of their group. The insurer says its data indicates that clients with only auto insurance in this region have substantially higher losses than multi-product clients or even auto-only clients in other parts of the province.
“In St. John’s, we currently pay out $2.05 in claims for every $1 we collect in premium to people who have only their auto insurance with us. That tells us that in that region, drivers in the auto-only category need to pay far more for their auto insurance, or that our 28,000 other drivers in the province have to subsidize these higher risk drivers,” said Kathy Bardswick, The Co-operators president and CEO, in a release. “We will sell auto-only but at a more appropriate rate in a higher risk market.”
Having lost $9 million in Newfoundland last year, almost $5 million on auto insurance alone, the insurer say it is focusing its strategy on clients with whom it has multi-product relationships and ensuring that drivers are paying appropriate rates.
In responding to the allegations, Bardswick said, “the steps we have taken are perfectly legal. They are somewhat drastic but we are trying to stay in business in the province.” She also called on the government to take immediate and decisive action. “The government cannot simply make these allegations and then do nothing to reform an auto insurance system that is fundamentally flawed,” she said.
Co-operators responds to Newfoundland minister’s allegations
Decision not to renew 1,300 clients spurs controversy
- By: IE Staff
- August 30, 2002 August 30, 2002
- 15:30