Province clarifies misleading information in message from insurance brokers

Government Services Minister Dianne Whalen responded today to misleading information contained in a message from the Insurance Brokers Association of Newfoundland (IBAN) that is being mailed to consumers in their premium notices.

IBAN�s message suggests that the average savings achieved in this province is only nine per cent, which is misleading. The nine per cent savings is on the third-party liability portion only. The average savings for consumers in this province is 15 per cent, depending on your coverage and where in the province you live.

"The insurance brokers association should be more accurate in circulating information as part of the current debate on the future direction of insurance in this province," said Minister Whalen. "The complexity and range of insurance issues can be confusing enough for consumers without misleading information being distributed."

The message encourages consumers to request the provincial government to put a cap on pain and suffering claims as opposed to the deductible that was implemented in this province in August 2004. In doing so, IBAN uses numbers that they could not verify when requested to do so by the department.

In arguing for a cap, IBAN claims that consumers in New Brunswick have seen liability rates decrease by 22 per cent since a cap was introduced in that province. However, the regulator in New Brunswick has not calculated the average amount of savings and, to date, IBAN has not been able to produce where they reached that number.

"My officials asked the brokers association in December how they arrived at the 22 per cent number and they have not responded to our request to verify the accuracy of that number," Minister Whalen said.

The province laid out its comprehensive approach to auto insurance reform in March 2004. This included a one-year freeze on rates; legislated reductions of an average of 15 per cent based on savings achieved through a series of reforms, including a $2,500 deductible on pain and suffering claims; and a public review of auto, homeowner, commercial and marine insurance by the Public Utilities Board. Public hearings into the auto insurance portion of that review will begin in St. John�s on February 15 before heading out across the province. Once the PUB submits its report, government will determine what, if any, additional measures will be taken.

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

2005 02 08                      3:10 p.m.