Newfoundland legislation prompts Dominion withdrawal

Citing auto insurance reforms tabled by the Newfoundland government last week, The Dominion of Canada is the first insurer to signal it will leave the province.
In a statement, CEO George Cooke says, “We are deeply offended by the punitive insurance legislation tabled last week by the Government of Newfoundland and Labrador. I have written to the Premier today, strongly urging him to withdraw this bill and to start over and get it right.”
Cooke objects to the lowering of auto insurance premiums despite no corresponding reduction in compensation levels.
Bill 30 requires insurers to reduce rates by 9-37%, but reforms will not reduce claims costs by even 5%, Cooke says. At the same time, the bill attempts to prevent insurers from leaving the province, although he maintains shareholders in his company, which is part of a publicly-traded entity, would be harmed by the legislation.
“We have a duty to our shareholders to invest their capital responsibly. These shareholders are members of pension funds, retirees and families who rely on our prudent fiscal management.”
The company has served notice it will no longer write new business in the province, with Cooke noting that despite his attempts, he has not been able to convince the government to engage in discussions on reducing claims costs in the province.
In a press release Monday, the government said the reforms would provide an overall savings of 15% to drivers, with the savings coming from a $2,500 deductible on pain and suffering claims and coverage reductions on collision, comprehensive and uninsured drivers’ portions of the policy. As well, the government will base compensation on 100% of net wages, rather than gross.
On the flipside, the government has also banned certain underwriting criteria, such as age and gender.
Rates in the province have been frozen since March 17. The government says it still intends to conduct a study of closed claims in the province, while going ahead with the reforms. The study will also include commercial and marine insurance claims.