July 12, 2020 by Canadian Underwriter Staff
Canada’s most easterly province had a tough start to 2020, says Kelly Hickman, president of South Coast Insurance in St. John’s.
The province’s brokers have been working through a tough commercial market. They’re seeing “tighter underwriting restrictions, and less capacity,” says Hickman.
On a positive note, following a lengthy auto review, the province introduced changes to the Automobile Insurance Act that went into effect Jan. 1, 2020. The intent of the reform is to make premiums more affordable and stabilize the class.
Most significantly, the province shifted away from an adversarial tort system to a direct compensation system. In addition, insurers are now allowed to use telematics to offer discounts; and they are required to offer discounts when drivers use winter tires.
That said, the deductible for bodily injury claims doubled from $2,500 to $5,000. The deductible is a sore point for insurers, who would prefer to see it replaced with a cap on minor injuries — something that has been introduced in other Atlantic provinces.
At Insurance Bureau of Canada’s (IBC) annual general meeting in April 2019, IBC CEO Don Fergeron told Canadian Underwriter that raising the level of the deductible “is simply going to inflate claims costs by the increase in the deductible, which is what happened when they introduced the deductible in the first place.”
Looking at the commercial side of the coin, any positive auto reform didn’t help the taxi industry. “Insurance rates as high as $12,000 to $15,000 per car, with future increases to come, has created a situation where the industry is no longer sustainable. Drivers are leaving the industry and not being replaced,” said Taxi-NL in a news release.