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Insurance cap no solution, says Newfoundland consumer advocate

Consumer Advocate Dennis Browne takes questions from reporters Monday outside of the Public Utilities Board hearing room in the Prince Charles Building in St. John’s.
Consumer Advocate Dennis Browne says it's better if insurance companies adjust deductibles rather than cap minor injury compensation. - Ashley Fitzpatrick file photo

Dennis Browne says in PUB submission that increased deductible a better way to tackle issue

The province’s consumer advocate says he is against a cap being imposed on compensation for minor injuries sustained in automobile accidents in the province because he believes there will be very little change to insurance rates for consumers, and it will impede victims’ rights to access the court system.

He is, however, suggesting an increased deductible.

Dennis Browne, in his submission to the Public Utilities Board (PUB) in relation to the PUB’s review into automobile insurance in Newfoundland and Labrador, said that after considering all the evidence presented during the PUB’s hearings, it is difficult to conclude that the introduction of a cap would be an improvement or translate into long-term, stable rates for consumers.

“A cap in other jurisdictions has resulted in litigation to determine if a claimant falls within the legislative definition of ‘minor injury’ which would be subject to the cap,” the submission states.

“This could prove an expensive proposition for consumers. Currently our courts determine the value of claims, rather than pre-determined legislative definitions. Consumers should maintain their right to access the court system unencumbered. The imposition of caps will impact adversely on consumers generally.”

The PUB was asked by the provincial government to review and report on a number of issues with respect to automobile insurance in the province, including the reasons behind increasing claims costs for private passenger vehicles and taxi operators, and options to reduce the costs.

The PUB was specifically asked to examine the impact on rates and implications for claimants of introducing a monetary cap on claims for non-economic loss for minor/mild injuries or continuing with the current deductible of $2,500, or increasing the deductible.

“On balance after considering all of the evidence, it is in the best interests of consumers at this juncture to continue with a deductible regime, but one which will ensure reduced and sustainable premiums.”
Consumer Advocate Dennis Browne

The Insurance Bureau of Canada (IBC), the national trade association that represents 90 per cent of Canada's property and casualty insurers, has stated that insurers in Newfoundland and Labrador are losing money because claims costs are escalating.

Reforms the IBC are proposing to help stabilize the auto insurance industry in the province include replacing the existing $2,500 deductible with a $5,000 compensation cap on minor injuries.

Browne notes in his submission there is varying evidence concerning the profitability of the insurance industry in this province and its long-term sustainability.

“On balance after considering all of the evidence, it is in the best interests of consumers at this juncture to continue with a deductible regime, but one which will ensure reduced and sustainable premiums,” Browne suggests. “A change to the legislation … with an increase in the deductible of up to $10,000 is therefore recommended.

“This substantial deductible would be more difficult to disregard and could serve to balance the interests of insurers and consumers, provided that the insurers are committed to premium reduction and long-term premium stability.

“There is evidence a deductible of $7,500, could result in premium savings of $45. A deductible of $10,000, could result in premium savings of $65. These savings are not impressive. The industry must offer better. Furthermore, the deductible may be optional. For those consumers who do not want to opt into the legislated deductible, the industry can offer the purchase of an appropriate policy.”

Other recommendations

Browne’s submission also discusses and makes recommendations on a number of other areas covered by the PUB’s review.

They include: the causes of poor claims experience for taxi drivers and operators — including details regarding the underlying causes of loss and high claim costs incurred; the problem of uninsured drivers; highway safety and accident prevention; law enforcement efforts; and education and awareness.

“In this submission rate design and caps on compensation and the focus on reducing the frequency and severity of accidents have been examined,” Browne noted.

“Our roads can be safer. This can be achieved by more robust enforcement and co-ordination of key players. The taxi experience in this province can be improved by instituting driver monitoring, enforcement of Service NL taxi-related measures taken in 2018, and by having Facility Association re-examine their rating approach. Insurers have a role to play by implementing various methods of vehicle data monitoring for taxis and private passenger vehicles.

“This submission deals with the insurance product, and that it may be improved by increasing the existing deductible for injury claims, making accident benefits mandatory with enhanced medical and rehabilitation benefits, the establishment of pre-approved evidence-based treatment protocols and instituting direct compensation for property damage.”

Brown also stated that the high number of uninsured drivers on the roads can be reduced by assigning licence plates to individuals, and creating a mechanism for better communication/notification as between insurers and the Motor Vehicle Registry.

The PUB’s final report to the provincial government is expected sometime this fall.

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