Canadian Underwriter

Facility voices opposition to Newfoundland auto plans

December 3, 2001   by Canadian Underwriter

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In a response to the Newfoundland government’s consultation paper on auto insurance reform, the Facility Association (FA) has come out strongly against several proposed changes to its operation in that province.
The plan calls for the government to control the membership and composition of the board of directors of FA, a move the insurance pool, which covers high-risk drivers, is staunchly against. “This alarming intrusion into private enterprise governance sends a clear, negative signal to the international business community about the climate for business in Newfoundland,” states the FA’s official response.
The FA is also against plans Newfoundland may have to change its “Plan of Operation” in that province, specifically citing the “increased costs in regulatory compliance, regulatory oversight, and administration that could result” from one province have different rules than the rest. “All of these costs will ultimately have to be paid by taxpayers and consumers.” The government plan would give this authority to the Insurance Superintendent, Winston Morris, who has publicly stated his disapproval with several FA policies.
Some elements of the government’s proposal seem to stand in conflict with findings made by the province’s Public Utilities Board (PUB) in March, 2001, following hearings about the FA. Among these is the proposal that FA not be considered a non-profit organization, despite the PUB’s statement that is in fact non-profit.
One element of the proposed reforms the FA is in favor of is the requirement for consumers to be informed when they have been placed in the pool. “As early as 1999, and reiterated on several occasions since, we have been on record as advocating such notice.” In fact, the FA response questions why this requirement has not been put in place sooner.
The association is also pleased with the government’s recognition that any profits made by the FA should be passed along to member insurers, just as any losses would be. This had been a bone of contention in the past with Superintendent Morris, who attempted to have FA profits returned to consumers in the form of lower rates. This move was blocked by the PUB in its March ruling.

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