Insurers, trial lawyers lock horns over New Brunswick’s minor auto injury cap

The Insurance Bureau of Canada (IBC) has rejected the contention of the Canadian Bar Association (CBA) that New Brunswick’s cap on minor auto injuries should be removed.
In particular, IBC has challenged any assertion that bodily injury claims costs were not responsible for the spike in insurance claims costs and insurance premiums prior to 2003.
The New Brunswick government introduced the Cdn$2,500 cap on minor auto injury claims as part of a broader auto insurance reform package in 2003.
The province’s cap is currently subject to a court challenge. Some speculate the decision will be rendered sometime over the next year.
“Court challenges to minor injury caps were recently heard in both Alberta and Nova Scotia,” IBC says in a press release. “Despite rendering opposite final decisions, the judges in both provinces rejected the personal injury lawyers’ argument that bodily injury costs were not responsible for the spike in premium levels that occurred, and that insurance companies had purposely misled the government.
“In 2003, the Nova Scotia Utility and Review Board found that increasing premiums were directly caused by rising claims costs for minor, non-permanent injuries.”
The IBC says it was responding to a press conference the CBA organized on Apr. 20.
The CBA held the press conference to release the contents of a report it commissioned. The report says the cap “is contributing to skyrocketing insurance industry profits well in excess of industry norms,” according to the Telegraph-Journal.
An email to the CBA to obtain a copy of the report went unreturned as of press deadline.
According to the Telegraph-Journal, figures in the CBA’s report show the insurance industry in New Brunswick made a 40.3% return on equity (ROE) and a Cdn$124-million profit in 2004, the first year after the introduction of the minor injury cap.
The profit levels dropped in 2005 (Cdn$106 million) and again in 2006 (Cdn$87 million).
The Telegraph-Journal reports the CBA study does not contain financial results for 2007 and 2008, which show insurers’ profits continuing to fall, as well sharply increasing loss ratios on the auto side.