A Newfoundland and Labrador Board of Commissioners of Public Utilities report on automobile insurance in the province had a contentious buildup — including a campaign launched by personal injury lawyers to create opposition to a soft tissue injury cap — but response to the board’s findings has been muted.
“The report tries to be objective and neutral. It reaches conclusions without making recommendations,” says Jamie MacGillivray, founder and managing partner of MacGillivray Injury and Insurance Law, which has offices in Nova Scotia and Newfoundland and Labrador.
The board reaches two significant conclusions in its 166-page report.
“The report says increasing the deductible to $5,000 or $7,000 isn’t going to help but putting a minor soft tissue injury cap will possibly stabilize rates,” MacGillivray says.
Increasing the current $2,500 deductible even to the highest level of $10,000 would reduce loss costs for private passenger vehicles in the range of nine to 13 per cent, according to the report. This is equal to a premium savings of $49 to $65, well below the $190 required to achieve an adequate rate level. Rate increases are expected under this scenario.
A $5,000 cap, on the other hand, would likely result in reductions in the range of 23 to 29 per cent. This translates into premium decreases of $121 to $151.
“As a result,” the board states, “there was general consensus that the implementation of a cap may contribute to rate stability in the province but is unlikely to result in rate decreases for consumers, in the absence of additional reform measures.”
There is no optimal solution, says the board.
“It is clear that the introduction of both a cap on pain and suffering for minor injuries and an increased deductible would have serious implications for claimants. Further the implementation of a minor injury cap would represent a significant change for claimants in this province since a cap would have very different impacts than the current deductible.”
The government is now inviting representatives for both lawyers and insurance companies to come together to discuss the report.
According to the Insurance Bureau of Canada, drivers in Newfoundland and Labrador currently pay 35 per cent more, on average, for automobile insurance than drivers in the Maritime provinces.
In its speech from the throne on April 4, the Newfoundland and Labrador provincial government made the following statement regarding auto insurance: “Building on measures our government has already taken to enhance highway safety and reduce accidents, we intend to introduce legislation in the spring on auto insurance, using information in the report of the Board of Commissioners of Public Utilities.
“Newfoundland and Labrador has the highest automobile insurance rates in Atlantic Canada, and the PUB review focused on identifying opportunities to lower rates that will benefit consumers and help bring stability to the automobile insurance industry. Modernizing the automobile insurance system to provide the best value, benefits, and affordability for consumers is the foremost consideration.”