NLIS 6
May 14, 2001
(Government Services and Lands)

Minister reviewing insurance legislation

Government Services and Lands has completed its examination of a recent Public Utilities Board ruling regarding rates charged by the Facility Association and is reviewing existing Facility Association legislation and regulations.

The Facility Association is a non-profit organization of insurers established under the Insurance Companies Act to provide automobile insurance to high risk drivers. It reported profits of $22.4 million during the past four years in Newfoundland and Labrador, and paid out $15.7 million to its member insurance companies over the same period. The PUB ruling says insurance companies are entitled to this money.

The province intervened at the PUB hearing in an effort to have the profits of the association used for the benefit of consumers since profits appear to have been generated because of higher than necessary rates.

Minister Walter Noel said: "In order to ensure automobile insurance rates properly reflect risks, only high risk drivers should be placed in the Facility Association, which was established to ensure insurance would be available to them at affordable rates. My officials are now conducting a review of legislation and regulations with the aim of determining whether anything further can be done to ensure insurance rates in the province are as low as possible.

"I am consulting with interested parties to identify whether new initiatives are required."

Media contact: Rick Callahan, Communications, (709) 729-4860.

2001 05 14                                    2:15 p.m.