March 21, 2002 by Canadian Underwriter
Despite a change in public attitudes towards tort reform in Newfoundland, the Insurance Bureau of Canada is continuing to push for changes to the auto insurance system there.
In an address to the St. John’s Rotary Club, IBC regional vice president Don Forgeron reiterated the industry lobby group’s position that changes are needed to the Newfoundland auto system lest rates continue to rise. Claims costs are to blame for the fact that Newfoundland and Labrador residents have seen their auto rates more than double since 1990. Those rising claims costs are primarily for pain and suffering awards for those with minor or soft tissue injuries from car accidents, he says.
The provincial government has been looking at reforming the auto system, but changes to the tort rules proposed have fallen under public scrutiny. Minister of Government Services and Land, Walter Noel, has stated his belief that limits need to be placed on accident benefits payments, reserving them for only those severely or permanently injured. However, a recent public opinion poll showing distaste with the proposal may have the government shying away from instituting the changes.
Nova Scotia has recently begun to look into auto insurance reform, as well as New Brunswick, in light of rising rates and claims costs throughout the region. “We’ve learned that public interest in this issue is driven by rates and nothing else. When rates are stable – like they were in this province for a few years in the late 1990s – there is less public pressure on government to make changes. Right now in Nova Scotia and New Brunswick, there is tremendous pressure on elected officials to fix the problem,” says Forgeron.
He also used the speech as a chance to advance the IBC’s lobby effort against the tax levels insurers are exposed to. Currently, more than 19% of auto insurance premiums paid by Newfoundland and Labrador consumers are used to pay provincial premiums and sales taxes – the highest in the country,” states an IBC press release.