Auto insurance reform is here

Government Services Minister Dianne Whalen announced today that Bill 30 was proclaimed into law August 1, 2004 and consumers will soon see the savings reflected on their auto insurance bills. The mandated reductions contained in the auto insurance legislation will save consumers an average of 15 per cent.

The minister said the reforms being taken are justified and sustainable on an industry-wide basis. Further reforms may result from the public hearings on insurance which will be held in the fall.

"These reforms will ease the immediate burden of the high cost of auto insurance until the public hearing by the Public Utilities Board is completed," Minister Whalen said. "We committed to the people of the province that we would achieve savings for the consumer and Bill 30 achieves this goal. Consumers will soon receive notice of the changes to their policies."

Government is now drafting the terms of reference for the hearing, and the Public Utilities Board (PUB) is conducting an updated study of the costs to the industry of recent auto insurance claims which will be used at the hearing. The hearing will also look at homeowner, marine and commercial property and liability insurance.

Government is urging insurance companies to work as quickly as possible to get these refunds processed for the benefit of consumers, although consumers should understand that insurance companies will need time to make the necessary adjustments to client accounts. Any adjustments will be retroactive to the proclamation date of August 1, 2004. Consumers are asked to be patient and to not adjust the amount of any automatic monthly bank payments until they receive notice of the new premium from their insurer.

Those consumers who pay semi-annually or annually will receive a refund cheque in the mail once the adjustments are processed. If less than three months remains on a policy, the amount will be credited toward the next policy unless the policyholder would prefer a refund. Consumers will be issued notices of any changes and refunds as insurers work through their client accounts. Any questions should be directed to a person�s insurance agent or broker.

Bill 30 includes the one-year freeze on the industry�s ability to seek rate increases from the PUB that was announced March 17, 2004. The reforms will save consumers $25 million in premiums annually. A person carrying only third-party liability will save nine per cent, while a person carrying full coverage will see significantly more savings, up to 20 per cent in some areas. The package also contains a series of reform measures restricting how companies can calculate rates and when they can refuse coverage. It also allows drivers to legally exclude someone living in their household from their policy.

Government has listened to the concerns expressed by the industry over Bill 30. Government wants to have a positive business climate in which industry can operate and looks forward to the participation of industry and all stakeholders during the public hearing.

An information brochure will be distributed to every household in the province explaining the reforms. The brochure and other details on Bill 30 can be found on the government Web site at //www.gov.nl.ca/gs/

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

2004 08 02                                         2:05 p.m.