Newfoundland and Labrador still dealing with higher auto insurance rates

ST. JOHN’S, NF, March 21 – Automobile insurance rates in
Newfoundland and Labrador have more than doubled since 1990 primarily due to claim
payments for pain and suffering awards involving minor injuries.

Don Forgeron, vice president of the Insurance Bureau of
Canada’s Atlantic Region, says since 1990, there have been no changes made to the system
that would alter this trend, and claims paid out have skyrocketed compared to premiums collected.

In an address to the St. John’s Rotary Club today, Forgeron
praised Newfoundland and Labrador for being the first government in the Atlantic region to
deal with the issue. He also cautioned that unless changes are made to the current system,
the future remains bleak, as claims costs will most likely continue to rise.

“Newfoundland and Labrador has been in the lead
compared to all other Atlantic provinces by undertaking a comprehensive review of
automobile insurance reform,” says Forgeron. “That work could easily be
completed with the introduction of reforms designed to help control auto insurance costs.”

Studies on closed claims released in both Nova Scotia and
New Brunswick show the primary factor linked to auto insurance costs is the number of soft
tissue injury claims (sprains and strains).

“We’ve learned that public interest in this issue is
driven by rates and nothing else. When rates are stable – like they were in this province
for a few years in the late 1990s – there is less public pressure on government to make
changes. Right now in Nova Scotia and New Brunswick, there is tremendous pressure on
elected officials to fix the problem.”

Nova Scotia has asked the Nova Scotia Utilities and Review
Board to conduct a review and New Brunswick has announced the establishment of a select
all-party government committee.

Forgeron also points to the heavy tax burden imposed on the
P&C insurance industry. Currently, more than 19% of auto insurance premiums paid by
Newfoundland and Labrador consumers are used to pay provincial premiums and sales taxes –
the highest in the country.

Consumers are urged to take an active role in this
important discussion by contacting their MHAs, and by learning more about how to help
control insurance costs. People can contact the Insurance Bureau of Canada’s consumer
information centre at 1-800-565-7189 extension 227, or call their insurance agents or
brokers to discuss the different insurance options available to them.

The Insurance Bureau of Canada is the
national trade association of the private property and casualty insurance industry. It
represents about 200 companies that provide more than 90 per cent of the non-government
home, car and business insurance in Canada. Visit the media section of our Web site at for more news releases and information.