Bid to increase some car insurance by 25% rejected by N.S. board

Thousands of Nova Scotia drivers who rely on the insurer of last resortfor auto insurance have been spared huge premium increases.

The Facility Association,which insures drivers who can't get insurance anywhere else,asked the Nova Scotia Utility and Review Boardto increase rates for private passenger vehicles by 21.3 per cent,or $434 more per year. For taxi drivers,the proposed increase was 25.1 per cent,or another $596 per year.

In Nova Scotia, the Facility Associationinsures almost100 per centof the taxi market.

"Another increase in insurance premiums will force those drivers to work extra-long hours, which may result in more accidents," said Darshan Virk of the United Cab Drivers Association in a letter he submitted to the utility and review board.

Taxi rates to rise by 3.1%

The board rejected the application. But in a recent decision, it approvedmetrics used by the Facility Association to set rates.

The Facility Association told CBCNewswhat that will mean interms of rate increases for its 3,638 private vehicle and 1,397 taxi policy holders in Nova Scotia.

It said for passengervehicles, it will be a 0.6 per centinsurance premium rate increase and a 3.1 per centincrease for taxis. The utility and review board is expected to authorize those increases next month.

"We put forward what our actuaries believe to be the best estimate of our pricing needs based on their view of how that future will unfold," Facility Association CEO David Simpson told CBC News.

"The [board] obviously took a somewhat different view. The reality is that we won't know which view is ultimately closer to being 'correct' for several years."

Affects 1% of Nova Scotia market

The Facility Association fills the gap across Canada where, by provincial law, drivers must have auto insurance, but cannot find insurers willing to provide coverage. It's a non-profit organization of all automobile insurance providers in several provinces and territories, including Nova Scotia.

Private passengervehicles insured by the Facility Association make up about oneper cent of the auto insurance market in Nova Scotia, the lowest in the Atlantic region.

It's highest in Newfoundland and Labrador, where 3.2 per centof drivers are insured through the association. New Brunswick's rate is 1.4 per cent and Prince Edward Island's is 1.5 per cent.