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IBC and IBANS committed to working with Nova Scotia on auto cap amendments


April 29, 2010   by Canadian Underwriter


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Insurance Bureau of Canada (IBC) and the Insurance Brokers Association of Nova Scotia (IBANS) say they are committed to working closely with Nova Scotia to monitor the effect of the changes to the auto cap regulations in the province.
Changes to auto insurance announced by the Nova Scotia government – including a tripling of the existing cap on minor injuries to $7,500, and a revision of the minor injury definition – will add to claims costs, according to the IBC. But the effect on premiums won’t be known until consumers and the insurance industry have had time to adapt to the new environment.
“An effective auto insurance system must maintain a balance between benefits and stable premiums,” IBC vice-president of the Atlantic region Bill Adams said in a release. “The government has changed that balance to provide more benefits.
“We are committed to helping implement the changes and hope that the new balance works to the benefit of Nova Scotia drivers.”
Insurance companies must price the product before knowing what the claims and other associated costs will be, IBC said.
There is a background uncertainty about claims costs that comes with the constitutional challenge against the cap, which still remains today. “We do know that caps work,” Adams said.
IBC notes the $2,500 cap introduced in 2003 provided Nova Scotia drivers with a 26% decline in average auto insurance premiums.
IBANS, meanwhile, noted the government took heed of its recommendations to index the cap to inflation and review the minor injury definitions.
IBANS made a submission in February 2010 stating that the cap should remain in place.
“IBANS is pleased that the voice of brokers was heard as we are the consumer’s advocate and work on their behalf,” the association said in a release. “Brokers support any initiative that results in the protection of consumers and the stability of the marketplace.”
The broker association said it is eager to work with the government as the auto review planned for this fiscal year is carried out.


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