The Newfoundland government has launched a review of its auto insurance system that will include a closed claims study and public hearings conducted by the province’s Public Utilities Board.
Service NL, a provincial government department that is responsible for regulating insurance matters, will conduct its own separate consultations, including exploring issues outside the scope of the PUB’s mandate.
That includes the rate-setting process.
The province is hoping to have changes resulting from the review enacted by the fall of 2018.
Insurers have been calling for action with the system for several years amid escalating premium rates and claims costs.
“The fact that (the government) has announced the broad parameters is great news for Newfoundland drivers,” said Amanada Dean, Atlantic vp for the Insurance Bureau of Canada.
“It has been 13 years since a review, claims costs have risen and Newfoundlanders and Labradorians pay the highest premiums in Atlantic Canada but that is not covering claims costs so ultimately the review is good for consumers.”
The last closed claims study was conducted in 2003. The IBC had been preparing to conduct the closed claims study itself as it had in 2003.
“But with the government’s announcement that they would like the Public Utilities Board to undertake it, the industry is eager and willing to work with the PUB,” Ms. Dean said.
“For consistency’s sake we would have liked to provide that service but it’s the government’s decision at the end of the day.”
She said the review and closed claims study are merely the first steps to fix the province’s beleaguered auto insurance system.
“At this point there are substantial changes needed to bring stability to that market.
“Profitability is a big discussion and a very important one because insurers can’t serve customers as well as they’d like if they are concerned with claims outpacing returns.”
Ms. Dean said the relatively short timeline for the review shows the government recognizes the seriousness of the situation.
“It reveals that government knows this is a serious situation and undertaking the review is something that can relieve pressure.”
In announcing the review last week, Service NL Minister Perry Trimper acknowledged that claims costs and insurance rates have increased steadily since the last review.
“We have heard the concerns of consumers and stakeholders who are finding it difficult to deal with the rising cost of insurance, so we have asked the Public Utilities Board to undertake this independent review as a way to find solutions that will benefit consumers.”
The president and ceo of Aviva Canada also applauded the announcement.
“Now is the time to put the brakes on the increasing cost of insurance in Newfound-land,” Greg Somerville said.
“Aviva believes consumers should be entitled to an auto insurance system which provides them with products and services at an affordable price, yet Newfoundland drivers pay the highest premium in the region.”
Mr. Somerville said Aviva is also pleased the government will review other issues such as the rate-setting process and it is looking forward “to participating in the public consultation process to ensure this system is in place by the fall of 2018.”