Proposal to increase Nova Scotia’s AB coverage estimated to cost drivers an average premium increase of between $6 and $7.50

A proposal to increase Nova Scotia’s standard accident benefits package up to the higher limits contained in a Section 48 endorsement would result in an average premium increase of between $6 and $7.50 per driver.
The Nova Scotia Utility and Review Board made the estimate in response to specific questions posed by the province’s finance minister. The minister asked the board to calculate the costs of various proposals to raise the limits, as outlined in the CFN Consultants (Atlantic) Inc.’s Final Report Addressing: The Nova Scotia Automobile Insurance Review.
CFN’s final report contained three potential options for increasing the province’s accident benefits coverage. Currently, standard AB coverage includes $25,000 for med-rehab benefits, and consumers have an option to “buy up” to higher limits under a Section 48 endorsement (up to $50,000 for med-rehab benefits).
Nova Scotia’s finance minister asked the board to cost out and compare each of the three CFN options.
Option 1 was to make the new standard limits the same as the Section 48 limits. The board estimated this would increase costs to the insurance industry of between $4 and $6 per vehicle. The estimated impact on premium pricing would be an average increase of between $6 and $7.50 per driver.
Option 2 would be the same as Option 1, except the consumer would have a “buy-down” option to a “basic level” of coverage equal to the current standard limits.
Option 3 was the same as Option 2, except consumers could buy up to even higher levels of coverage for income replacement benefits. These would be subject to a maximum limit of $1,000 per week, for example, or 80% of insured gross weekly income from employment. Under the Section 48 endorsement, the weekly limit is $250 limit. The weekly limit under standard coverage is $140.
The board found the costs to the industry of Option 3 would be slightly higher than those for Option 2, with the costs for both ranging between $0 and the Option 1 cost of $4 to $6 per vehicle (assuming the “buy down option is not selected).
The board’s full report can be found at:
http://www.nsuarb.ca/images/stories/pdf/Decisions/11Sep/195646%20insurance%20reforms.pdf