Government introduces auto insurance reform legislation

Legislation that will provide for auto insurance reforms and a reduction in premiums in this province has been introduced in the House of Assembly.

Premier Danny Williams said government officials have worked hard over the past seven months to produce a package of reforms that will achieve real savings for people.

"We made a commitment to the people of the province prior to the election that we would bring in meaningful auto insurance reforms. We started the process as soon as we entered office and we took the necessary time to develop a comprehensive reform plan," Premier Williams said. "Bill 30 is the first step in that process."

The legislation will give effect to the auto insurance reform measures the provincial government announced March 17, and will provide for an average overall savings of 15 per cent on consumers� auto insurance bills.

"I�m pleased to bring legislation to the House of Assembly that will result in significant reductions for consumers on their auto insurance polices," Government Services Minister Dianne Whalen said. "These reforms will save consumers $25 million a year on premiums, money consumers will now have to spend in other areas of the economy."

The savings will be achieved through a combination of a $2,500-deductible on claims for pain and suffering, and mandatory reductions on coverage for collision, comprehensive and the uninsured motorist. Savings will also come from basing compensation on 100 per cent of net wages instead of gross, and by eliminating double recovery from more than one insurance plan.

Some policy holders in the province have received an increase in their premiums since government announced an immediate freeze on rates on March 17. This is a result of previously-approved rate increases by the Public Utilities Board (PUB) before the freeze came into effect. Once this legislation is proclaimed during this session of the House of Assembly, these policy holders will see their premiums reduced by the legislated amounts.

Government�s legislative package also includes a series of other reform measures around underwriting guidelines, Facility Association, uninsured drivers and parents being able to legally exclude driving-age children in the household from their policy.

The reforms will be effective the date the legislation is proclaimed, except the rate freeze which is retroactive to March 17, 2004 when government first outlined auto insurance reform measures. This is the first step in government�s comprehensive reform package.

Government is taking action to regulate the industry more closely. The legislation provides the PUB with authority to review all forms of insurance, and with greater access to information and records pertaining to the industry. The PUB will conduct a full public hearing full into auto, homeowner, commercial and marine insurance once a closed claims study into past claims is complete.

The legislation can be found at the government Web site at //www.gov.nl.ca/hoa/sr/

Media contact: Tracy Barron, Communications, (709) 729-4860 or 690-6157

2004 05 31                                       12:25 p.m.