Insurers pleased with NB cap on minor injury claims

Insurers are applauding the news that New Brunswick will cap “pain and suffering” awards for minor injuries as a result of auto accidents. The announcement follows an intense election in that province, where rising auto insurance rates become a key issue.
The re-elected Conservatives are now moving to cap pain and suffering awards as a means to curb claims costs, acknowledging this as a major factor in premium increases.
“Minor personal injury claims have driven up costs and are part of the problem of increasing automobile insurance premiums. Capping these claims will help to bring rates down,” says New Brunswick Justice Minister Brad Green.
Effective July 1, awards for pain and suffering will be capped at $2,500. This does not impact economic loss claims, such as lost wages, Green points out, nor does it limit awards in serious and permanent injury cases.
Indeed, the province expects to see rates drop quickly as a result of the change. “We expect insurance companies to file new, lower rates as of July 1 with the Public Utilities Board,” says Green. The Public Utilities Board will investigate all of these new rates to ensure they are fair and reasonable. Any rates that are deemed excessive will be lowered.”
New Brunswick has already changed its Insurance Act such that any rate increase of more than 3% in one year will be reviewed by the PUB.
“The industry is optimistic that this new legislation will control escalating claims costs,” says Don Forgeron, vice president of IBC’s Atlantic region.
He notes that despite a 20% rise in claims between 2001-2002, since 1996 claims costs have outpaced premium hikes by a six-to-one ratio. This is largely the result of minor injury claims, where claimants were regularly seeking larger “pain and suffering” awards beyond the health care and vehicle repair payouts included in their insurance coverage, the IBC says.
“This legislation will combat the costly awards that now accompany every accident,” says Forgeron. “It’s encouraging that the government is taking the necessary steps to target the root cause of increasing premiums.”