FREDERICTON, N.B. – New Brunswick insurance companies must offer drivers lower premiums by Aug. 15 or face stiff penalties.

Premier Bernard Lord said companies that fail to comply will have their rates automatically cut by a minimum of 20 per cent.

Insurers caught violating the law may be fined $5,000 per policy-holder.

“We are here to defend the interests of the people of New Brunswick,” Lord said. “That’s what this bill does. It puts consumers first and it imposes new penalties that did not exist before.”

The premier said the new rates will be made retroactive to July 1.

If a company decides to withdraw its auto insurance products, it must give the government six months notice or be fined $100,000.

Lord said he’s upset that only a few of the 70 insurance companies in the province have filed lower rates in response to the decision to cap awards for minor injuries at $2,500 – something the insurance industry asked for.

Don Forgeron, spokesman for the Insurance Bureau of Canada, said many companies are in the process of lowering their rates but they are mired in bureaucracy.

“The industry has been at the ready to file lower rates,” Forgeron said in an interview yesterday. “We’ve been caught in a process that wouldn’t allow us to do so.”