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IBC head says Newfoundland and Labrador auto insurance review is chance to find parity with other Atlantic Canada provinces

By: , Published on , Last Update on March 2, 2018 04:41 AM


Newfoundland and Labrador is currently undergoing a comprehensive review of its auto insurance market and the head of the Insurance Bureau of Canada (IBC) has urged the revamp to focus on care over cash.

Don Forgeron, president and CEO of the IBC, says drivers in the province are paying 40 per cent over the odds for auto insurance, compared to the other Atlantic Canada regions.

“In 2003 all four Atlantic provinces, in fact the four Atlantic premiers, committed to finding a solution because they were all suffering from the same problem,” Forgeron said. “And the three Maritime provinces introduced a cap and enhanced the benefits. The Newfoundland government of the day put in a deductible.”

The other provinces introduced a $2,500 cap for minor injuries in 2004, while Newfoundland and Labrador instead embraced a $2,500 deductible.

“There’s a big difference between the two. And 14 years later the Maritime provinces’ solution worked and the solution in Newfoundland and Labrador didn’t work because claims costs continued to go up and consumers are paying for that now. We never did fix the problem.”

The average cost of insuring a vehicle for personal use in Newfoundland and Labrador is around $1,100, while drivers in other Atlantic Canada provinces are paying a more reasonable $800 per year.

A review of the auto insurance market is currently underway in an effort to overhaul the system and reduce premiums. Speaking in the province on Thursday, Forgeron said this is a chance for Newfoundland and Labrador to find parity with the other Atlantic Canada provinces. He highlighted a unique situation in the province that is not found anywhere else on the continent.

“Every auto insurance system in Canada and in the U.S. and in Europe that have gone through issues like this can be all traced back to how we compensate people for their injuries,” Forgeron said. “If you are injured in a motor vehicle accident in Newfoundland and Labrador today, regardless of how serious the injury is or isn’t, you sue.

“And there are two types of payments you get as a result of that, if you are successful — a payment for what you’ve lost economically such as time off work, special rehab and so on, and pain and suffering awards.

“And study after study across the country has come to the same conclusion — which has led to changes in those provinces — that pain and suffering awards from minor injuries is why claims costs have gone up and why premiums have gone up.

“So it’s not compensating people with serious injuries, or compensating people for what they lost economically, it’s pain and suffering awards for minor injuries that have caused the problems.”

Category: News    Tags: News, canada, insurance, news

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