AFTER MORE than a year reviewing the vexing problem of auto insurance in Newfoundland and Labrador, the province’s Public Utilities Board has concluded that the problem is . . . likely to remain vexing.
The PUB’s 166-page report, submitted to the provincial government on Jan. 31, spelled out the problems besetting the sector — high rates for consumers, poor returns for industry — but did not recommend a course of action to resolve them.
Instead, it advised the government that adopting any of the measures put forward during the review — a minor- injury cap, increased deductibles on damage awards, regulatory reforms — would not reduce premiums for Newfoundland drivers.
“At the end of this review there does not appear to be any one measure that will result in both lower rates for consumers and improvements in the auto insurance market in this province,” the board said in its report.
ServiceNL Minister Sherry Gambin-Walsh said she intends to introduce pertinent legislation in the spring sitting of the legislature, which begins March 3.
“We’re going to try to find a way to help the consumers of the province,” she said.
Newfoundlanders pay 35% more for auto insurance than their counterparts in the rest of Atlantic Canada, but that’s not enough to make the product profitable for the handful of insurers still doing business in the province.
“To reduce the potential for large premium increases and restore cost stability industry stakeholders suggested product reform would be required to achieve approximately 30% in bodily injury claim cost savings,” the report said.
“Savings at this level would bring the premium charged close to the required premium but would not be expected to result in rate decreases.”
Industry submissions called for a $5,000 cap on pain and suffering damages for minor injuries, while lawyers, medical care providers and consumer advocates insisted there is no crisis in bodily injury claims costs and said the focus should be on accident reduction.
“A monetary cap on pain and suffering awards presents the best opportunity for the reduction of bodily injury claims costs but would also have significant implications for claimants,” the PUB said.
“It’s difficult to argue with the concept of ‘care not cash’ put forward by the insurance industry.”
IBC Atlantic VP Amanda Dean said the report underlines the need for dramatic changes to the provincial auto insurance system.
“The bottom line is that this province needs a sustainable, affordable product that helps injured people get better faster,” she said.
She said the PUB report in general supports what the insurance industry has been saying since the review began.
“If you dig into the report and the commentary the PUB provides for the information that was presented, there is an abundance of support for the recommendations by industry through IBC to make substantive changes to the auto insurance product,” Ms. Dean said.
“Changes that will render real results for consumers and provide relief that industry needs to keep providing these products for consumers.”
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