I was happy to see conversation on the Newfoundland and Labrador auto insurance system in Blair Rogers’ letter on The Northern Pen’s website. However, I think there is merit in clarifying some of the points made.
The letter reads that the government is reviewing how the auto insurance industry responds to “life-altering” collisions. In all of the correspondence that Insurance Bureau of Canada (IBC) has seen, the government, through the Board of Commissioners of Public Utilities (PUB), is actually reviewing minor injury claims. The issues at the centre of this discussion are not related to major or life-altering collisions.
The letter also contains misinformation about what a minor injury cap is. In provinces other than NL, the minor injury cap applies only to the amount that is over and above any wages that an injured person may lose while receiving treatment, and the cost of that treatment. Through the review process, the insurance industry is recommending a process that would result in injured people getting access to better treatment, and recovering more quickly.
When the frequency of minor injury claims in NL is compared to that of the neighbouring provinces—it is clear there are a significantly higher number of claims in NL. However, claims frequency is just part of the picture. The other part of the picture is that claims payouts are much higher in NL.
It is important to note that not all claims make it into the Royal Newfoundland Constabulary’s data. Due to the high volume of collisions in the province, regulation states that if there are no bodily injuries at the scene, and if the damage appears to be less than $2,000, law enforcement are not needed on scene. However, sometimes people don’t report injuries until days after they have been in a collision.
The letter also reads that the industry has made investment profit of $986 million in the first quarter of 2017. I would sincerely appreciate knowing where that number came from. In 2017, insurers had a 3.4 per cent rate of return on investments. In 2016, the General Insurance Statistical Agency released a profitability report on auto insurers. The actuarial professionals who the government regulators hired to keep track of the insurance industry indicated that auto insurers within the province had a 3.1 per cent return on equity in 2016. That number was -28 per cent in 2015, -12.5 per cent in 2014, 0.7 per cent in 2013 and 2.6 per cent in 2012.
These numbers represent a challenging competitive environment that would make it difficult for any business to survive. If insurers made $100 million in 2016, as Rogers’ letter stated, the insurance industry would be in a very different situation. In fact, insurers would likely be eager to do business in the province. Unfortunately, the reality is that many insurers have left the province due to the lack of profit, and those that remain will be forced to make some tough decisions about staying if things don’t change.
The insurance industry remains hopeful that real change for NL drivers will result from the government’s review to the benefit of all NL drivers.
Insurance Bureau of Canada