Minister addresses two insurance reform issues

George Sweeney, Minister of Government Services and Lands, today addressed two issues following the release of the government�s proposed automobile insurance reforms yesterday.

First, the value of a cap on pain and suffering compensation has been discussed. "A large degree of misinformation has been circulating in the public surrounding a cap on these type injuries," said Minister Sweeney. "We agree with the other Atlantic Provinces that the rising cost of minor personal injury claims is the root cause of rising insurance rates. However, we do not believe that setting artificial caps will appropriately address the issue.

"By putting the choice into the hands of consumers, we have developed a unique way of reducing rates and preserving that right for those who want to keep their coverage the same as it is today. Setting artificial caps will create a check-writing exercise to settle claims for lesser amounts and will not result in the desired rate reduction." Seventy per cent of people in Canada currently face restrictions on their right to sue for pain and suffering.

Second, the government would also like consumers to know that this reform package is meant to provide an expanded choice when purchasing insurance.

"The automobile insurance system has always been multi-tiered in Newfoundland and Labrador. Each individual must carry public liability coverage by law. Beyond this minimum coverage, consumers have the choice to purchase additional liability, accident benefits, collision and comprehensive as required. It is misleading to suggest that the insurance system is two-tiered.

"Government has created an additional option for consumers who have told us that they would rather not be burdened with the cost of expensive pain and suffering compensation claims," said Minister Sweeney.

For more information on this reform package, please contact the Department of Government Services and Lands at (709) 729-4834, or visit the Automobile Insurance Reform Web site at: //www.gov.nl.ca/gsl/cca/ip/air/

Media contact: Jeff Mackey, Communications, (709) 729-4860

2003 08 27                                        2:05 p.m.