Minister says automobile insurance rating territories reasonable and fair

Government Services and Lands Minister Walter Noel said today that automobile insurance rating territories established by his department are reasonable and fair and were agreed upon by a Select Committee of the House of Assembly.

Minister Noel said: "Recent media comments made by Ms. Victoria Harnum of Harbour Grace regarding rating territories unfortunately leave the impression that these rating territories were established without sufficient thought and that they are inappropriate. Her comments also give the impression that her concerns and those of 13,000 others who signed a petition on this matter were ignored.

"I want to assure all residents of Newfoundland and Labrador that their concerns are welcomed, valued and carefully considered when decisions are made in my department.

"Ms. Harnum stated that the1997 rating territories change was not based on the Report of the Select Committee on Property and Casualty Insurance because its final report did not come out until 1998. The committee made the rating territory recommendation in 1997, prior to its final report, because it felt that this was something that did not have to wait until its final report was issued.

"Setting these rates is a complex process. Our superintendent of insurance, following careful reflection on the committee's recommendation, revised the rating territories in 1997 and we believe that the new territories are reasonable and fair.

"Insurance is a pooling mechanism. Premiums collected from the many pay the claims of the few. A pool of people must be established, statistics collected and premiums set. If rating territories were not set carefully, we could face a situation where insurers would not want to do business in certain areas as the opportunities for a viable business might not be present.

"I would also like to point out to Ms. Harnum that insurers place drivers in general categories for the purpose of establishing premiums. When drivers in a particular category are considered a lower risk than others, insurers are often in a position to offer discounts. One such discount is for low mileage drivers.

"Persons who drive only short distances or who do not regularly visit St. John's from outlying areas should discuss such matters with their insurance company and shop around for the best rates available."

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

2001 06 20                                                              3:55 p.m.