Auto Service World
News   December 20, 2002   by Auto Service World

Newfoundland Insurance Reform Hits Opposition

Newfoundland’s auto insurance reform legislation introduced by government will not create a better insurance climate for consumers in the province, according to the Insurance Bureau of Canada.
While many of the details are still unknown, it is clear the bill does not contain the substantive measures necessary to control the cost of settling claims, the cost of which is reflected in insurance premiums. In a news release issued this week, Government Services and Lands Minister Walter Noel has outlined Bill 28-the auto insurance reform bill- stating it will improve the auto insurance system.
In its current form, the legislation does not focus on the real problem of hefty awards for pain and suffering, according to the Insurance Bureau of Canada (IBC).
“This bill will not improve the system in the manner consumers want- namely controlling auto insurance costs,” says Don Forgeron, vice-president, IBC Atlantic. “We believe consumers want an immediate solution to the problem, not more government regulations focused only on the symptoms.
“With this legislation, the government is effectively tying the hands of insurance companies by putting in place unrealistic underwriting restrictions which will only hinder competition and provide consumers with less choice in the marketplace.”
The government has opted to try to micro manage the industry when instead, it should be looking to solve the problems it has acknowledged exist and then allow competition to benefit consumers.
The problems acknowledged by government include pain and suffering awards for soft tissue injuries. Instead of addressing this crucial issue, Bill 28 pledges to focus on more government regulation of the private sector.
Forgeron maintains the amount of money paid by insurance companies for minor accidents is the most significant factor behind the issue of higher auto insurance costs. “The minister agrees with this assessment,” says Forgeron. “It’s time he introduced the legislation required to effectively control costs.”
Minister Noel also outlined the possibility of ‘choice systems’ in Pennsylvania, and recently introduced in Saskatchewan. It would most certainly prove to be a hurdle to maintaining two separate auto insurance systems for only 500,000 people.

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