Canadian Underwriter

Battle over New Brunswick auto heats up

March 7, 2003   by Canadian Underwriter

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A consumer group has thrown the latest attack in the battle over how to deal with New Brunswick’s auto insurance system. In a press release, the Consumers Coalition Against No-Fault Insurance says that it fears the government is going to “cave in” to insurer demands which it says would create a “no-fault” system in effect.
The consumer group blames insurers for the current system, in which insurers are losing money and in some cases leaving the province. The situation is so bad that some brokers in northern New Brunswick have been left with only Facility Association to write policies with.
The coalition accuses the industry of having “manufactured” the current crisis as a “pressure tactic” to force the government institute a no-fault system.
“If it [the insurance industry] get its way, accident victims won’t get fair compensation for their true losses, premiums will continue to go up and access will still be a problem,” the press release states. “The only difference is that insurers will have legislation that in effect guarantees they will make more money.”
Lawyer Stephane Viola says insurers are throwing out a “red herring” by blaming rising rates on claims. “Recent figures show that for every dollar collected in premiums the industry is now making 7.8 cents in profit.” He did not note where the figures come from.
Last year, a Legislative Committee report outlined proposals for change that insurers said would not fix the problems in the system. At the time, Insurance Bureau of Canada regional vice president Don Forgeron said, “The reasons for high rates are crystal clear, but the committee has chosen to focus on the symptoms of the problem instead of solving the larger issues behind the increases, namely, soft-tissue injury awards.” Among the proposals in the package was an end to the file-and-use rate setting system, a system insurers support. No limits on tort access via thresholds were part of the package.
The coalition is asking the government to implement that package, introduced late last year.

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