No long-term savings for consumers
TORONTO, Aug. 5, 2004 – The insurance industry is deeply troubled that
the government of Newfoundland and Labrador has proclaimed an insurance bill
that is not in the long-term best interest of consumers. Insurance Bureau of
Canada will put forward the industry’s concerns during detailed discussion of
that legislation at public hearings slated for the fall.
“The fact of the matter is that the legislation is merely short-term
relief. It just won’t produce the long-terms savings for consumers that the
government has promised,” says Stan Griffin, President and CEO, Insurance
Bureau of Canada. “The government has mandated an across-the-board reduction
of 15 per cent but the government’s very limited reforms do not lower the
costs of providing coverage. That makes it impossible for consumers to see
those savings for the long-term,” adds Griffin.
The industry contends that public discussions should have preceded the
proclamation of the bill. “We would have preferred public hearings prior to
proclamation, but at least now the facts can come out and Newfoundlanders and
Labradorians can judge for themselves,” Griffin adds.
The provinces of New Brunswick, Nova Scotia and Prince Edward Island all
implemented auto insurance reforms based on a cap on pain and suffering awards
for minor injuries. Newfoundland and Labrador has legislated a deductible for
pain and suffering awards. IBC says this move will not prevent costly lawyer-
driven settlements for these minor injuries. As a result, the cost of
providing insurance will continue to rise.
“It’s unfortunate that the government did not follow the example set in
the neighbouring Atlantic provinces where insurance premiums continue to come
down as a result of informed legislation,” added Griffin.
For example, in contrast to Newfoundland, where some companies have
stated their intention to withdraw from the Province, New Brunswick’s reforms
are attracting even more companies that will compete on price and offer more
choice for insurance consumers.
“New Brunswick’s reforms have not only resulted in lower premiums,
insurance consumers are also benefiting from a more stable and more
competitive market,” says Griffin. This is far from the case in Newfoundland
and Labrador where access to pain and suffering awards for minor injuries has
not been addressed,” Griffin adds.
Insurance Bureau of Canada is the national trade association of the
private property and casualty insurance industry. It represents more than 90%
of the non-government home, car and business insurance in Canada. To view news
releases and information, visit the media section of IBC’s website at
www.ibc.ca.
